TMI Blog2013 (8) TMI 285X X X X Extracts X X X X X X X X Extracts X X X X ..... n the part of the assessee to disclose fully and truly all material facts for its assessment is not required to be fulfilled - Omission of the assessee to bring to the assessing authority's attention those particular items in the account books, or to particular portions of the documents which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment - Assessing Officer, while framing the assessment under section 143(3) of the Act does not appear to have formed any opinion in regard to depreciation on coal fire boiler building - It was for the petitioner to bring to the notice of the Assessing Officer that it was claiming depreciation in respect thereof as under the heading "plant and machinery" and not as building. The petitioner having failed to do so cannot now contend that the assessment is sought to be reopened on a mere change of opinion - Following decisions of Malegaon Electricity Co. P. Ltd. v. CIT [1970 (8) TMI 8 - SUPREME Court] and Calcutta Discount Co. Ltd. v. ITO [1960 (11) TMI 8 - SUPREME Court] - Decided against assessee. The court while considering a challenge to the reopening of assessment can always exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ils furnished during the course of assessment, disallowed an amount of Rs. 1,63,847 under section 14A of the Act by passing regular assessment order under section 143(3) of the Act on December 15, 2008. Subsequently, the impugned notice dated June 28, 2010, came to be issued reopening the assessment for the assessment year 2006-07. In response to the notice under section 148 of the Act, the petitioner, vide letter dated June 28, 2010, submitted that the original return of income filed on November 1, 2006, may be treated as filed under protest in compliance with the said notice and also requested the respondent to provide a copy of reasons recorded prior to the issue of reassessment notice under section 148 of the Act. Upon receipt of the reasons recorded, the petitioner raised various objections, vide letter dated July 27, 2010, on the merits and requested the respondent to drop the reassessment proceedings. Vide letter dated August 4, 2010, the respondent disposed of the objections holding that the objections raised by the petitioner are not acceptable and rejected the same. Being aggrieved, the petitioner has approached this court by way of the present petition. Assailing the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l type of structure without which it was impossible for the coal fire boiler to function. The particular type of foundation and structure is an essential and integral part of the coal fire boiler which could not be separated from the special type of foundation and building and boiler could not be worked without such special construction. It was pointed out that the petitioner in support of the above contention which was raised before the Assessing Officer had provided technical engineer's certificate along with photographs to substantiate its claim that the entire coal fire boiler was installed on special beams and structure and not in building as is ordinarily understood. Reliance was placed upon the decision of the Supreme Court in the case of CIT v. Karnataka Power Corporation [2001] 247 ITR 268 (SC) wherein it has been held that where it is found as a fact that a building so planned and constructed as to serve an assessee's special technical requirements, it will qualify to be treated as a plant for the purposes of investment allowance, to submit that even otherwise the issue stands concluded in favour of the petitioner by the said decision. It was submitted that all the releva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... submitted that the same can be a subject-matter of rectification and not a ground for reopening of assessment. It was submitted that reopening of assessment has serious consequences and that in no case revenue reopens assessment to give effect to carry forward unabsorbed depreciation and, hence, the second ground for reopening of assessment is also not a valid ground. Reliance was placed upon the decision of the Bombay High Court in the case of Hindustan Unilever Ltd. v. Deputy CIT [2010] 325 ITR 102 (Bom) for the proposition that reopening of an assessment has serious ramifications as once an assessment is validly reopened in exercise of powers conferred by section 147, the Assessing Officer is empowered to reassess the income in respect of any other issue which comes to his notice in the course of the proceedings, though such reasons have not been set out in the notice. Where the power to rectify an order of assessment under section 154(1) of the Act is adequate to meet a mistake or error in the order of assessment, the Assessing Officer must take recourse to that power as opposed to the wider power to reopen the assessment. It was further submitted that the respondent was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e present case, the coal fire boiler building fits into the definition of plant. It was further submitted that the said decision was rendered prior to 2004 and that the post 2004 sub-section (3) of section 43 has been amended whereby buildings or furniture and fittings have been specifically excluded from the definition of plant. It was submitted that, in the circumstances, the said decision would have no relevance to the facts of the present case. Referring to the assessment order, it was pointed out that the only ground which has been discussed in the assessment order is as regards the disallowance under section 14A of the Act and that there is no reference to the issue involved in the present case. It was submitted that, in the circumstances, the Assessing Officer not having formed any opinion, there is no question of any change of opinion. As regards the second issue, it was submitted that there is clearly an aspect of escapement which has not been denied by the petitioner. It is also not the case of the petitioner that the said ground is based on a mere change of opinion. It was contended that merely because there is power under section 154 of the Act, exercise of powers und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2006-07. As per the reasons recorded the Assessing Officer upon a perusal of the submissions made by the assessee during the course of assessment proceedings for the assessment year 2006-07, found that the assessee had capitalised Rs.5,15,27,926 on account of coal fire boiler and claimed depreciation of Rs.4,12,22,341 on it at the rate of 80 per cent. applicable to energy saving devices. The assessee had given a detailed statement of capital expenditure incurred on the coal fire boiler in the relevant financial year (with asset-wise break-up) on page 8 (of 10) to 10 (of 10) of annexure 10 of the submissions during the course of assessment proceedings for the assessment year 2006-07 part of which is reproduced in the said order. According to the Assessing Officer, from the table it is evident that the assessee had clubbed the expenditure on building (equal to Rs. 1,71,89,066) under the head of coal fire boiler and claimed depreciation of 80 per cent. on the building as well (which is meant only for the boiler). As building falls under a separate category of assets, depreciation was eligible at 10 per cent. The rate of 80 per cent. was applicable only for the plant and machinery. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been allowed indicates that the Assessing Officer has applied his mind to the same. It is the case of the petitioner that merely because there is no discussion in respect of the claim of depreciation in respect of coal fire boiler building in the assessment order, it does not mean that the Assessing Officer has not formed an opinion in respect thereto. In this regard it may be pertinent to refer to certain facts. A perusal of the assessment order framed under section 143(3) of the Act indicates that the Assessing Officer had issued a detailed questionnaire on October 3, 2008, which came to be served on the petitioner on October 6 2008. However, the same has not been produced on the record by the petitioner. It appears that in response to the said questionnaire the petitioner filed its reply, vide communication dated October 24, 2008 (annexure B to the petition), providing details in respect of about 25 items. Item No. 16 thereof pertains to "Details of investment in fixed assets". Below the said heading, it is stated that the statement of investment in fixed assets is enclosed in annexure 14 containing the details of description of fixed assets, date of purchase, put to use, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecisions of the apex court. 13.1 In Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC), the court held that the duty of disclosing all the primary facts relevant to the decision in question before the assessing authority lies on the assessee. The court held that the omission of the assessee to bring to the assessing authority's attention those particular items in the account books, or to particular portions of the documents which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment". Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The court further held that so far as the primary facts are concerned, it is the assessee's duty to disclose all of them-including particular entries in account books, particular portions of documents, and documents and other evidence which could have been discovered by the assessing authority, from the documents and other evidence disclosed. 13.2 In the case of Kantam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10(2)(vii) nor even the essential fact, viz., the written down value of the assets sold was supplied to him so as to enable him to find out the price in excess of the written down value realised by the assessee. It is true that if the Income-tax Officer had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realised by the assessee. It can be said that the Income-tax Officer if he had been diligent could have got all the necessary information from his records. But that is not the same thing as saying that the assessee had placed before the Income-tax Officer truly and fully all material facts necessary for the purpose of assessment. The law casts a duty on the assessee to 'disclose fully and truly all material facts necessary for his assessment for that year'. Further, the Explanation to section 34(1) says : 'Production before the Income-tax Officer of account books or other evidence from which material facts could with due diligence have been discovered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he respondent, the Supreme Court held that mere production of evidence before the Income-tax Officer is not enough. There may be a failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the Revenue could have uncovered but did not, then, it is the duty of the assessee to bring it to the notice of the assessing authority. The assessee knows all the material and relevant facts-the assessing authority might not. Testing the facts of the present case in the light of the aforesaid principles, as noted hereinabove, the Assessing Officer in the assessment order has not discussed the issue as regards the claim of depreciation in respect of coal fire boiler building. The Assessing Officer, while recording reasons has formed a belief that the coal fire boiler building being in the nature of building, the petitioner was entitled to depreciation at the rate of 10 per cent. and not at the rate of 80 per cent. applicable to energy saving devices. A perusal of the material on record does not indicate that the petitioner had drawn the attention of the Assessing Officer to the fact that the petitioner had claimed that the coal fired boiler ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of coal fire building has been called for by the Assessing Officer, it is not possible to accept the contention of the petitioner that the Assessing Officer has applied his mind to the said aspect. As regards the contention, that in the light of the decision of the Supreme Court in the case of CIT v. Karnataka Power Corporation [2001] 247 ITR 268 (SC) the issue stands concluded in favour of the petitioner is concerned, as pointed out by the learned counsel for the respondent subsequent to the said decision sub-section (3) of section 43 of the Act which defines "plant" has been amended. Thus, the issue is a debatable one. Besides, it is by now well settled that the Assessing Officer would be acting without jurisdiction if the reason for his belief that the condition precedent for exercise of powers under section 147 of the Act does not exist or is not material or relevant to the belief required under the section. It is open to the assessee to challenge the existence of the belief but not the sufficiency of the reasons for the belief. Thus, the court while considering a challenge to the reopening of assessment can always examine the existence of the belief but the sufficiency of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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