TMI Blog2014 (12) TMI 725X X X X Extracts X X X X X X X X Extracts X X X X ..... full and true disclosure of the material facts pertaining to the closing stock and that the allegation raised by the respondents is not borne out by the records. The initial view of the AO also coincided with the view taken by the assessee but because there was some circular which had been issued by the CIT, even though the AO disagreed with the audit objection, he had to take “remedial” steps u/s 148 - this also discloses the fact that the AO had not applied his own mind but was dictated to by the circular which he felt he was bound to follow - The provision for reopening of assessment u/s 147 specifically requires that it is the AO who must have reason to believe that income chargeable to tax has escaped assessment - The belief must b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 28.03.2013 Reasons for re-opening of assessment by issue of notice u/s 148 I have, reason to believe that by reason of failure on the part of the assessee to disclose fully and truly all material facts for the said year necessary for the assessment of the said year, the aggregate amount to the extent of ₹ 22,76,19,293/- has escaped assessment as under:- 1. Insurance and other claims receivable of ₹ 1,18,46,599/- were not included in the income. 2. Excess depreciation of ₹ 1,66,79,750/- on buildings vehicles was claimed and allowed. 3. There was understatement of closing stock by an amount of ₹ 19,90,92,944/- As in view of reasons cited above, the CIT also, having been satisfied that it is a fit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is annexed as Annexure 4. From above its clear that notice of escapement of income is wrongly issued. 6. The objections, however, were not accepted by the Assessing Officer who passed the impugned order dated 14.03.2014. 7. The learned counsel for the petitioner submitted that the notice under section 148 was issued beyond the period of four years from the end of the relevant assessment year and, therefore, it was necessary for the revenue to establish that there was failure on the part of the assessee to fully and truly disclose all material particulars necessary for the assessment. He submitted that in this context during the original assessment proceedings as also in the return and the balance sheet and Profit and Loss Account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... However, the issue may be a debatable one as far as vehicles are concerned, although available high court decisions favour the assessee on this issue. Now, considering the very nature of the issue involved action U/S 154 is out of question. Time limit for action U/S 263 has expired on 31st March 2011 (assessment was completed on 24th December 2008) Time limit for action U/S 147 expires on 31st March 2013 but such time is available only if the statement of income is attributable to failure on part of the assessee to fully and truly disclose all material facts. This may not be possible because during the course of assessment proceedings a specific query was raised by the assessing officer (Item no. 5 of AO's letter dated 6th October 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies (57,642,819) It was pointed out that the petitioner did not have any opening stock as of 01.04.2005. The initial stock was received on account of a transfer from Hindustan Motors Ltd. as per the Business Transfer Agreement in the course of the year. That initial stock which comprised of work in progress, finished goods and scrap amounted to ₹ 19,90,92,944/-. At the end of the year, that is, on 31.03.2006, the inventories were valued at ₹ 25,63,82,828/-. The difference between the said initial stock and the closing stock was ₹ 5,76,42,819/-, which is clearly reflected as the increase in inventories. This figure of ₹ 5,76,42,819/- has been indicated in the Profit and Loss Accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... losure of all material facts and, therefore, the notice under section 148 was bad in law and was liable to be quashed. 11. The learned counsel for the respondent reiterated the stand taken by the Assessing Officer in the order dated 14.03.2014 and submitted that the stock position has not been accurately indicated. 12. After having heard the learned counsel for the parties, we are of the view that the position taken by the learned counsel for the petitioner is correct. The petitioner did not have any opening stock on 01.04.2005. By virtue of a Business Transfer Agreement dated 19.02.2005, the petitioner received a stock valued at ₹ 19,90,92,944/- from Hindustan Motors Ltd. which became its initial stock in the year in question. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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