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TMI Blog2012 (12) TMI 255X X X X Extracts X X X X X X X X Extracts X X X X ..... . 94,01.147/- only under the head provision for gratuity. It resulted in excess allowance of provision for gratuity amounting to Rs. 51,41,426/-. It was held that this is escapement of income on account of failure on the part of the assessee to add the same in its computation of income and also the failure to furnish the complete details in support of its contention of having paid the amount with necessary documentary evidence. After recording reason that income amounting to Rs. 51,41,426/- has escaped assessment, notice u/s 148 of the Act was issued on 4.3.2010 with prior approval of the Commissioner of Income Tax. In response the assessee filed a letter dated 6.4.2010 requesting that the return filed earlier on 28.11.2003 may be treated as a return filed in response to notice u/s 148 of the Act. The assessment u/s 147 / 143(3) disallowing Rs. 51,41,426/- on account of provision for gratuity was accordingly framed on 29.12.2010. Before the Ld. CIT(A) the assessee reiterated the objections raised before the AO that all the facts / information were available with the AO at the time of making the assessment u/s 143 (3) of the Act. Thus action of the AO in reopening the assessment is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B(A). These are copies of annexures 1 to XV filed alongwith the return of income. He submitted further that during the course of original assessment proceedings, the AO had issued a questionnaire dated 10.8.2005 whereby he vide query No. 13 had directed the assessee to cover the details of contribution of ESI, PF and gratuity expenses with the due date and actual date of payment and vide query No. 18 specifically required the assessee that while the provision for gratuity amounting to Rs. 1.45 crores be not added back to the income. In support he referred page Nos. 108 to 110 of the PB (assesee) i.e. copy of the questionnaire dated 10.8.2005. He submitted that in response to the aforesaid questionnaire the assessee had filed its submission dated 4.10.2005 alongwith the supporting document, a copy thereof has been made available at page Nos. 111 to 115 of the PB (A). Ld. AR submitted that the AO had examined the details as were furnished as per annexure XI. He referred page Nos. 180 to 320 of the PB (A) i.e. copy of reply dated 10.12.2010 of the assessee alongwith the details provision of payment of gratuity actually paid and bonus paid before the due date of filing of the return. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had not furnished the complete details in support of the claim that the same has actually been paid despite the fact that the amount towards the gratuity only aggregating to Rs. 45,57,381/- and which too had been actually paid and was duly examined in the course of the original assessment proceedings. Likewise remaining sum of Rs. 5,84,045/- representing the amount payable bonus which too had been paid as was statutorily required before the due date of filing of return of income and was also duly examined and allowed in the original assessment proceedings. Accepting the submission of the assessee that initiation of reopening proceedings u/s 147 was barred by limitation prescribed under proviso to 147 of the Act the Ld. CIT(A) has rightly come to the conclusion that initiation of reopening proceedings was barred and the assessment made in thereof has been rightly quashed. In support he placed reliance on the following decisions;- a) Shipra Srivastava vs. ACIT reported in 319 ITR 221 (Del) b) KLM Royal Dutch Airlines v CIT at page 63, placitum 19 reported in 292 ITR 49 (Del) c) Pancharatna Cement PVt. Ltd. Vs. Union of India and Others reported in 317 ITR 259 (Gau) d) Bapal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at when notice u/s 148 was issued four years from the end of the relevant assessment year was expired. Now we have to examine the compliance of remaining conditions especially as to whether the assessee had disclosed fully and truly all material facts necessary for his assessment for that assessment year regarding the income which the AO was having reasons to believe that the income chargeable to tax had escaped assessment for such assessment year. On perusal of record we find that during the course of original assessment the AO had issued a questionnaire dated 10.8.2005 whereby vide query No. 13 he had directed the assessee to provide the details of contribution of ESI, PF and gratuity expenses with the due date and actual date of payment and vide query No. 18 specifically required the assessee that why the provision for gratuity amounting to Rs. 1.45 crores be not added back to the income. These queries are reproduced below for ready reference :- Query No. 13 : "13. Please give the details of contribution of ESI and PF & gratuity expenses with the due date and actual date of payment." Query No. 18: "18. Please explain why the provision for gratuity amounting to Rs. 1.45 crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is case was completed u/s 143(3) on 28.3.2006 at an income of Rs. 4,87,28,530/- as against returned income of Rs. 1,98,64,250/-. It has now been noticed that as per para 17 (1) of 3CD report, the assessee has claimed provision for gratuity made on accrual basis amounting to Rs. 1,45,42,573/- which was not allowable. The assessee has added back an amount of Rs. 94,01,147/- only under the head provision for gratuity. This has resulted in excess allowance of provision for gratuity amounting to Rs. 51,41,426/- which is to be added to the assessed income. The escapement of income has been on account of failure on the part of the assessee to truly and fully disclose all the material facts necessary for assessment. In view of the above, I have reason to believe that an amount of Rs. 51,41,426/- has escaped assessment within the meaning of section 147 of the IT Act, 1961. Since the assessment has been completed u/s 143(3) of the Act and period of 4 years has elapsed, proposed is hereby submitted alongwith the relevant assessment record to the Commissioner of Income Tax, Delhi - III, New Delhi for consideration and necessary approval in accordance with the proviso appended with section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s have been put on the AO while reopening the case computed u/s 143(3) of the Act. There was neither fresh material surfaced after the original assessment nor in the reassessment proceedings disallowance made by the AO which was not made by his predecessor in the original assessment order, was based on suppression of primary information on the part of the assessee. In this regard we find strength from the decision of Hon'ble Supreme Court in the case of CIT vs. Kelvinator of India (supra) and the decision of Hon'ble Delhi High Court in the case of KLM Royal Dutch Airlines vs. CIT (supra),M/s. Eicher Ltd.(supra) United Electrical Co. (P) Ltd. Vs CIT (supra). In its decision in the case of Atma Ram Properties (P) Ltd. Vs. DCIT (supra), the Hon'ble Delhi High Court has been pleased to hold as under :- "15. The reasons recorded above do state that the appellant assessee had failed to fully and truly disclose the facts but do not indicate why and how the assessee had failed to make full and true disclosure of the material facts. Mere repetition or quoting the language of the proviso is not sufficient. The basis of the averment / statement should be either stated or should be apparent / ..... X X X X Extracts X X X X X X X X Extracts X X X X
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