TMI Blog2014 (12) TMI 936X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts necessary for assessment, even otherwise, the reasons as recorded give no clue whatsoever as to the alleged failure on the part of the petitioner in disclosing fully and truly, the material facts necessary for its assessment - the jurisdictional parameter, for invoking the provisions of Section 147 of the Act is absent, on both the grounds mentioned in the reasons in support of the notice. Not only was there no failure to disclose fully and truly all the material facts in relation to the determination of MAT liability u/s 115JA, but further such disclosed material facts were duly considered by the AO in making the Assessment Order dated 21 March 2002 u/s 143(3) - issuance of notice and the consequent assessment order is in excess of jurisdictional restraint imposed upon the AO by the proviso to Section 147. Availability of alternative remedy – Held that:- The petition was lodged on or about 25 January 2007 and admitted on 26 March 2007 - at the stage when the petition was filed, the reassessment order dated 26 December 2006 had already been passed - the issues raised, do not involve any disputed questions of fact – AO has not adhered to the jurisdictional restr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of the petitioner and set off the loss of PPGM for the financial year 199899 against the book profits of the petitioner for that financial year for the purposes of determining the petitioner's MAT liability under Section 115JA of the Act; (E) The impugned notice under Section 148 of the Act was issued on 29 March 2006 (ExhibitG to the petition), which is admittedly after the expiry of four years from the end of the relevant assessment year i.e. 1999-00 seeking to reopen the assessment. Reasons in support of the impugned notice were supplied to the petitioner only on 16 November 2006 even though the same were demanded by the petitioner on 20 April 2006. The petitioner lodged its objections on 22 November 2006 and the same were disposed of by the Assessing Officer, on 21 December 2006; (F) Soon thereafter, i.e., on 26 December 2006, the Assessment Officer proceeded to complete the reassessment proceedings and make reassessment order (Exhibit M to the petition). 3] This petition was filed on or about 25 January 2007. Rule was issued on 26 March 2007 and by way of interim relief, the respondents were restrained from taking any steps to recover any demand raised i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Section 143 (3) in regular assessment proceedings. Therefore, it is a clear case of change of opinion. Therefore, the impugned notice and consequent reassessment order are without jurisdiction; (C) The other ground mentioned in the reasons in support of the impugned notice is the alleged debiting of excessive and inadmissible capital expenditure to the profit and loss accounts, thereby resulting in declaration of reduced net profits and book profits under Section 115JA of the Act and the consequent escapement of assessment upon the unstated or understated income. This also was a subject of examination and in view of the law laid down by this Court in the case of Commissioner of Income Tax vs. Veekaylal Investment Co. P. Ltd. 249 ITR 597, which provides that income from capital gains is to be included in the book profits for the purposes of determining deemed income under Section 115J of the Act, as a logical corollary, it follows that capital loss, is also to be taken into consideration for determination of deemed income under Section 115J of the Act. The issue raised, is therefore, no longer res integra. The reason, which the Commissioner has relied upon, for reopening the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under subsection (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 the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 7] From the aforesaid, it is clear that where the assessment under sub section (3) of Section 143 of the Act has been made for the relevant assessment year, no action can be taken under Section 147 of the Act 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 the part ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee company was not a sick company. By doing so, the assessee has under stated its income amounting to ₹ 1,11,15,796/under the book profit u/s 115JA of the IT Act. Further it is seen that the assessees were debiting capital expenditure of various types such as loss on sale of assets, etc. which were inadmissible as per the normal provisions of the act and were added back for computing the income under the normal provisions of the Act. By debiting such excessive and inadmissible capital expenditure to the profit and loss accounts, the assessees succeeded in declaring less net profit and there by less book profits. By doing so, the assessee has under stated its income under the book profit u/s 115JA of the IT Act. By doing so, the assessee understated the income under the book profit u/s 115JA of the IT Act to the above extent. I am, therefore, satisfied that this is a fit case to be reopened u/s. 147 of the IT Act, 1961. Since, assessment u/s. 143(3) has been completed and a period of four years from the end of the relevant assessment year has lapsed, hence, the case needs to be approved by the Commissioner of Income tax, City6, Mumbai under the provisions of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclosure is a vital safeguard against arbitrary reopening of concluded assessment. The reasons so recorded and disclosed, cannot even be supplemented by filing affidavits or making oral submissions. 12] In the context of the reasons recorded, it is to be noted that in the present case apart from there being no allegation therein that there was any failure on the part of the petitioner to fully and truly disclose all material facts necessary for assessment, even otherwise, the reasons as recorded give no clue whatsoever as to the alleged failure on the part of the petitioner in disclosing fully and truly, the material facts necessary for its assessment. The reasons as recorded, in any case, do not disclose any particular fact or material that was allegedly not disclosed by the petitioner during the regular assessment proceedings under Section 143(3) of the Act. Clearly, therefore, the jurisdictional parameter, for invoking the provisions of Section 147 of the Act is absent, in the present case on both the grounds mentioned in the reasons in support of the impugned notice. In fact, in the revised return of income filed by the petitioner on 31 March 2000 alongwith the profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant assessment year. This is applicable to both the grounds mentioned in the reasons furnished in support of the impugned notice. 15] In so far as the objection based upon the availability of alternative remedy is concerned, it is necessary to note that this petition was lodged on or about 25 January 2007 and admitted on 26 March 2007. At the stage when the petition was filed, the reassessment order dated 26 December 2006 had already been passed. This is not a case where the petitioner has already preferred an appeal questioning the reassessment order. The issues raised, do not involve any disputed questions of fact. Besides, in this case though the impugned notice under Section 148 of the Act was issued on 29 March 2006, the reasons in support thereof were furnished to the petitioner only on 16 November 2006. This is despite the fact that the petitioner, by letter dated 20 April 2006 had requested for the supply of the same. The objections lodged, were disposed off by letter dated 21 December 2006 and within a period of five days thereafter i.e. on 26 December 2006, the impugned reassessment order came to be made. Incidentally, the petitioner has pointed out that the period ..... X X X X Extracts X X X X X X X X Extracts X X X X
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