9911796707
TMI Blog2014 (8) TMI 8X X X X Extracts X X X X X X X X Extracts X X X X ..... - 2007, had escaped assessment on account of failure on the part of the assessee to disclose, fully and truly, the material facts necessary for the assessment. 3. Briefly stated, the facts of the case are as under: 3.1 The petitioner company is engaged in the business of exploration and development of Coal Bed Methane Gas (CBM Gas) trapped in coal seams in Rani Ganj Coal Field in West Bengal. On 04.07.2005, Energy Ventures, L.L.C (hereinafter referred to as 'Energy Ventures'), a company incorporated under the laws of Delaware, USA, entered into a Memorandum of Understanding dated 04.07.2005 (MOU) with the petitioner company for acquiring upto 20% 'farm-in', i.e. participating interest, in the petitioner's contract area under the Production Sharing Contract with the Directorate General of Hydrocarbon, Ministry of Petroleum and Natural Gas, Government of India. As per the terms of the MOU, Energy Ventures had agreed to fund USD 25,000,000/- against approved work programme during the development phase. The petitioner company had received US$ 200,000/- (Rs.87,13,000/-) as non refundable advance from Energy Ventures, subject to the approval of Government of India. The said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to be addressed in the present petition is whether the impugned notice, reopening of assessment, was in accordance with law. It is noted that whilst the assessment year in question is 2006-07 and the assessment order under Section 143(3) of the Act was passed on 23.12.2008, the impugned notice was dated 28.03.2013, after the expiry of four years from the end of the assessment year. In terms of the proviso to Section 147, no action could be taken after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose, fully and truly, all material facts necessary for the assessment. The proviso to Section 147 reads as under:- "147. Income escaping assessment.- xxxx xxxx xxxx xxxx xxxx Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , when the well is ready to commence commercial production. Capital expenditure incurred for these wells will be allocated to Producing Properties'. It is clear that the company has neither started commercial production nor is ready to commence. But the company has charged Rs. 4,81,29,174/- to the profit and loss account under the head of Administrative and General expenses. Out of Rs. 4,81,29,174/- only Rs. 1,61,09,642/- was disallowed by the Assessing Officer. The mistake resulted in underassessment of income of Rs. 3,20,19,532/- involving tax effect of Rs. 1,43,34,436/-. The assessee company has deducted the amount of Rs. 47,72,982/- in the computation of income under the head of depreciation. Since the assessee has not commenced its business, the depreciation charged should have been disallowed by the assessing officer. The mistake resulted in underassessment of income of Rs. 47,72,982/-involving tax effect of Rs. 21,36,756/-." 6. Thus, according to the AO, income is stated to have escaped assessment on four counts. The first being on account of depreciation claimed on computer software. In this respect, it is noted that the returns furnished by the assessee had been duly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure with regard to the deduction claimed on account of the aforementioned sum. 9. The other two reasons given by the AO, justifying reopening of the assessment, pertain to allocation of expenses and depreciation relating to pre-production period. This issue was also, undeniably, considered by the AO as is evident from the fact that he disallowed a sum of Rs. 1,61,09,642/- on account of the expenses being relatable to a period prior to commencement of business activities. 10. As we see it, the AO has sought to reopen the assessment not on account of failure on the part of the assessee to disclose any material particulars, but on account of the change of opinion with regard to certain deductions claimed and allowed by the assessee. It is now well settled that assessment cannot be reopened on mere change of opinion. The Hon'ble Supreme Court in the case of CIT v. Kelvinator of India Limited: (2010) 320 ITR 561 (SC) affirmed the decision of the full Bench of this Court that a mere change of opinion cannot form the basis for reopening of assessment. 11. Although the AO has recorded that he has reasons to believe that income chargeable to tax exceeding Rs. 1 lac. had escaped assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad fully and truly disclosed all the material facts necessary for the assessment, the precondition for invoking the proviso to section 147 of the said Act had not been satisfied. In this connection, it may be relevant to note one decision, although there are several others. The said decision is that of the Punjab and Haryana High Court in the case of Duli Chand Singhania v. Asstt. CIT : (2004) 269 ITR 192. In the said decision, the High Court of Punjab and Haryana was faced with a similar situation. The court noted that there was not even a whisper of an allegation that the escapement in income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The court observed that absence of this finding, which is the sine qua non for assuming jurisdiction under section 147 of the Act in a case falling under the proviso thereto, makes the action taken by the Assessing Officer wholly without jurisdiction. We agree with these observations of the Punjab and Haryana High Court and are of the view that in the present case also, the Assessing Officer has acted wholly without jurisdiction. The invocation of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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