TMI Blog2013 (7) TMI 536X X X X Extracts X X X X X X X X Extracts X X X X ..... retrospective amendment u/s 115JB - Held that:- Surely, beyond a period of four years this cannot be a ground for reassessment on assessment. - Such legal proposition requires no authority of law. - Following the decision in Denish Industries Ltd. v. ITO (2004 (7) TMI 72 - GUJARAT High) decided in favour of assesse. - SPECIAL CIVIL APPLICATION NO. 16454 of 2012 - - - Dated:- 5-3-2013 - AKIL KURESHI AND MS. SONIA GOKANI, JJ For the Appellant: S.N. Soparkar and B.S. Soparkar. For the Respondent: Ms. Paurami B. Sheth ORDER Akil Kureshi J.-Heard learned counsel for the parties for final disposal of the petition. The petitioner has challenged the notice for reopening of assessment previously framed after scrutiny. For the assessment year 2006-07, such notice was issued on March 7, 2012. At the insistence of the petitioner, the Assessing Officer supplied his reasons recorded for reopening the assessment. Such reasons read as under : "A survey action under section 133A of the Income-tax Act was carried out in the case of certain telecom companies including M/s. Vodafone Essar Ltd. in Mumbai. Non-deduction of TDS on pre-paid mobile sim cards and recharge vouch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ollowing cases : (i) Idea Cellular Ltd. v. Deputy CIT 2008-TIOL-739 ITAT (Delhi) ; [2009] 313 ITR (AT) 55 (Delhi) ; (ii) Vodafone Essar Cellular Ltd. v. Asst. CIT 2010-TIOL-655 (HC) (Karn) ;[2010] 332 ITR 255 (Ker). (iii) Bharti Cellular Ltd. v. Asst. CIT (I. T. A. No. 222 of 2006 (Cal)) since reported in [2013] 354 ITR 507 (Cal). In the Calcutta High Court's decision which is the most recent, the hon'ble High Court has observed : '(i) property of prepaid coupons even after transfer remains with the telecom companies only. (ii) distributors acted only as facilitators for providing services by the taxpayer (telecom companies). (iii) every thing was regulated and guided by the taxpayer (telecom companies) and the distributor did not have free choice to send. (iv) rate of pre-paid coupons was also fixed by the taxpayer (telecom companies).' Accordingly, the hon'ble High Court has held that the relationship between the taxpayer (telecom companies) and distributors are of principal to agent. The hon'ble High Court, therefore, had supported the contention of the Department that as per the wording of section 194H of the Income-tax Act, 1961, commission or brokerage may b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rue disclosure of all material facts necessary for his assessment. As per the amendment to section 115JB, vide Finance (No. 2) Act, 2009, clause (i) to Explanation 1 to section 115JB has been inserted with effect from April 1, 2001, which states that the book profit needs to be increased by amount or amounts set aside as provision for diminution in the value of any asset. However, in the case of the assessee the provision for diminution in the value of asset has not been added back to the book profit and consequently it is to be added back for the purpose of computation of book profit. The assessee has neither disclosed this fact nor has added back such diminution in the value of asset to the book profit during the assessment/reassessment proceedings. Therefore, the assessee has made full and true disclosure of all material facts necessary for his assessment. In view of the above facts, I have reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the act. As per the provisions of section 149(1)(b), the income chargeable to tax, which has escaped assessment for the assessment year 2006-07 is likely to amount to more than Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erved that such duty would not extend beyond true and full disclosure of material facts. Once such primary facts are before the Assessing Officer, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for the assessee to tell the assessing authority what inferences, whether of facts or of law, should be drawn. It is not necessary to list the long line of decisions along this line. We may however, refer a recent decision of Division Bench in case of GVK Gautami Power Ltd. v. Asst. CIT reported in [2011] 336 ITR 451 (AP), wherein referring to large number of authorities on the question of reopening the assessment, Division Bench culled out various principles, relevant of which read as under (page 473) : "(xiv) The words 'failure to disclose fully and truly all material facts necessary for his assessment', in the first proviso to section 147, postulate a duty on every assessee to disclose fully and truly all material facts necessary for his assessment (Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC)). (xv) Every disclosure is not, and cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respect to commission, it was conveyed as under : "Commission paid with respect to services rendered : As regards the details requested by your goodself regarding the commission paid with regards to services availed, the details of the commission paid to parties in excess of Rs. 50 lakhs is enclosed as annexure 2." Correspondingly, annexure II to such letter provided details of the commission paid in excess of Rs. 50 lakhs as under : Name of dealer Amount (Rs.) Prarthana communication 5,094,711 Laxmi group of agencies 5,129,468 Thirty enterprise 5,531,399 Swastik oil traders 5,605,055 Dhaval enterprise 5,648,079 Veer sales 5,668,415 Swastik oil traders 5,998,783 Pooja distributors 6,350,984 Ratan communication 7,280,069 Archeet distributor 8,050,527 Ratan communication 8,545,275 Archeet distributor 9,647,494 Pushp sales 13,550,800 Total 92,110,058 To our mind, on both counts this ground must fail. Firstly, as noted, the petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceedings were pending on April 1, 1986, when the statutory amendment was made, whether assessment proceedings or proceedings by way of appeal or revision or reference, Explanation 8 would have certainly operated. However, on the question whether the assessee had failed to disclose fully and truly all material facts necessary for assessment, it is obvious that when the assessee had filed its return in 1983 it could not have assumed that such a legislative amendment was going to be made in the year 1986 with retrospective effect from the year 1974. In the facts of the present case, it could never be said by any stretch of imagination that in the year 1983 when the assessee filed return claiming investment allowance on the capitalisation of interest paid after the date on which the machinery was first installed and put to use, the assessee had failed to disclose all material facts. On the contrary, the assessee would have got the benefit of the entire interest amount for the post-installation period as revenue expenditure which would have been much higher than the amount of investment allowance and depreciation allowance taken together." In the result, the petition is allowed. The ..... 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