TMI Blog2014 (1) TMI 947X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 36(1)(vii) and 36(1)(viia) of the Act - Both these cannot be considered as arising on account of any failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment - Both these also cannot be construed as on account of any evidence which could not come to the notice of the Assessing Officer for want of due diligence. The decision in CIT v. Kelvinator India Ltd. [2010 (1) TMI 11 - SUPREME COURT OF INDIA] followed - unless and until tangible materials are available with Assessing Officer, and failure of the assessee to fully and truly disclose material particulars necessary for assessment is established, reopening could not be done after the expiry of a period of four years from the end of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the broken period interest at the time of purchase of securities was allowed. The Supreme Court in the case of M/s Vijaya Bank reported in 187 ITR 541 has held that the interest accrued till the date of purchase of securities cannot be set off as an expenditure against the income by way of interest on securities since the entire price paid would be in the nature of capital outlay. For the assessment year 1986-87, the amount of expenses by way of broken period interest claimed and allowed in the assessment was Rs. 12,81,04,670/-. In the light of the Supreme Court decision in M/s Vijaya Bank, the deduction of the above expenses is not in order. I have reason to believe that income chargeable to tax has escaped assessment." Reasons record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hence the assessment is to be reopened to restrict the deduction u/s 36(1)(viia) for bad and doubtful debts by the amount which was not taxed in earlier years." 4. Argument of the assessee before CIT(Appeals) was that the reopening was done after four years from the end of the impugned assessment years. As per assessee, for assessment year 1986-87, there was no failure on the part of the assessee, for filing any particulars relevant to the assessment. The reopening was resorted only for a reason that there was a decision of Hon'ble Apex Court in the case of Vijaya Bank v. Addl. CIT (187 ITR 541) on broken period interest. Assailing the reopening for assessment year 1989-90, submission of the assessee was that the reopening was resorted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngly assailing the order of CIT(Appeals) for both the years, submitted that the reopening was resorted after the end of four years. Therefore, according to him, proviso to Section 47 of the Act became applicable. It was necessary to the Revenue to show that there was an escapement of income on account of failure of the assessee to disclose fully and truly all material facts necessary for the assessment. It was not the case of the Revenue that material evidence placed were such that it could only be discovered by due diligence. The decision of Hon'ble Apex Court in the case of Vijaya Bank (supra) came after completion of the assessment. As for the circular of CBDT, relied on by the Assessing Officer for resorting to reopening, learned A.R. s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pugned assessment years. Therefore, the first proviso to Section 147 will squarely apply. It is required for the Revenue to show that there was failure on the part of the assessee to disclose fully and truly material facts necessary for the assessment. It is not the case of the Revenue that material evidence could not be found for want of due diligence of the Assessing Officer from the account books or evidence filed by the assessee. Reopening was done for assessment year 1986-87 on account of a reason that decision of Hon'ble Apex Court in the case of Vijaya Bank (supra), which dealt with broken period interest, came subsequent to the assessment. Reopening for assessment year 1989-90 was done for a reason that CBDT circular was not correct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, in our opinion, the decisions rendered by various Courts, under Section 147(b) would have no applicability, where a reopening has been done after four years from the expiry of an assessment year, when proviso to Section 147 as it stands today, applied. Decision of Hon'ble Apex Court in the case of Saradbhai M. Lakhani (supra) was also rendered in relation to a reopening done under Section 147(b) of the Act. Similar is the decision of Hon'ble Apex Court in the case of P.V.S. Beedies Pvt. Ltd. (supra) as well. Thus, the CIT(Appeals) had relied on the decisions which were rendered by various courts, prior to the substitution of Section 147 of the Act, through Direct Tax Laws (Amendment) Act, 1987 with effect from 1.4.1989. Coming to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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