TMI Blog2015 (4) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... eopen assessment is not based on proper reasons but obviously is a result of change of opinion. This is impermissible. In the case of ECGC, there was specific finding that there existed tangible material and reason to reopen the assessment and that was evident from the record in that case. It is not the case of the Revenue that in this case any new material was forwarded to the Assessing Officer. In any event we are not called upon to decide on the merits of the case and the proposed reopening is not justifiable in the facts and circumstances of the present case.- Decided in favour of assessee. - Writ Petition (L) No. 746 of 2015 - - - Dated:- 25-3-2015 - S. C. Dharmadhikari And A. K. Menon,JJ. For the Petitioner : Mr. K. Gopal a/w Mr.Jitendra Singh For the Respondent : Mr. Suresh Kumar ORDER 1. Heard learned counsel for the parties. 2. Rule. Returnable forthwith. By consent the petition is taken up for final hearing at the stage of admission. 3. This petition is filed seeking writ of mandamus directing Respondent No.1 to withdraw and cancel the notice dated 18.11.2013 issued under section 148 of the Income Tax Act, 1961 and the order dated 4.2.2014 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ourse of original assessment proceedings, the Assessing Officer has called for details which were furnished to the Assessing Officer on or about 19.11.2011 and after considering the same the Assessing Officer passed an order dated 7.12.2011. The learned counsel placed reliance on the CIT Vs. Kelvinator of India Ltd. (2010) 320 ITR 521 (SC) which lays down that reason to believe that income has escaped assessment must be recorded in writing. He submitted that in the facts of present case the Assessing Officer has not recorded any reason in writing causing him to believe that any income has escaped tax assessment. The Hon'ble Supreme Court had in the case of Kelvinator of India Ltd. the Court held that one needs to give a schematic interpretation to the words reason to believe failing which section 147 may give arbitrary powers to the Assessing Officer to reopen assessments on the basis of mere change of opinion . Mr.Gopal therefore, submitted that in the present case there was no new material on the basis of which the reassessment could be justified. He, therefore, submitted that it is a fit case for setting aside the impugned notice. 7. Mr.Suresh Kumar, on behalf of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee has claimed set off of brought forward unabsorbed depreciation pertaining to assessment year 1997-98 and 1999-2000 amounting to ₹ 2,70,12,040/- alongwith Long Term Capital Gain along with ₹ 6,18,54,185/-. He contended that since this amount are pertaining to 8 years ago, the same could not be set off against long term capital gain. The omission according to the Assessing Officer has resulted in incorrect set off of unabsorbed depreciation of ₹ 2,70,12,040/-, thereby leading to a short levy of tax of ₹ 61,20,928/-. Further, it was stated that the assessee had claimed deduction of bad debts written off of ₹ 36,72,286/- and the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account amounting to ₹ 1,74,88,918/- from the Net profit of ₹ 3,83,53,319/- while computing income. According to the Assessing Officer, the claim of unabsorbed depreciation of ₹ 1,74,88,918/- in computation of book profit was not in order and the assessee had not made full and true disclosure of income and its particulars in the return or during assessment proceedings. Hence the Assessing Officer had reaso ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der this section after the expiry of four years from the end of the relevant assessment years, 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 sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year; Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity located outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than income involving matters which are subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1 - Production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment and which comes to his notice subsequently in the course of the proceedings under this section or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. In the present case, what is referred to by the Assessing Officer is Explanation-2 (c)(i). What we find from a reading of the impugned notice and the order rejecting the objections is that the Assessing Officer invokes the deeming fiction in Explanation 2. He, therefore, holds that the reasons recorded by him would show that assessment has been made but income chargeable to tax has been underassessed or such income has been assessed at too low a rate. There is also reference made to excessive loss or depreciation allowance or any other allowance which has been computed under this Act. Therefore, the argument of Mr. Suresh Kumar is that there are reasons to believe that income chargeable to tax has escaped assessment. He would also submit that in the light of Explanation- 2 and the deeming fiction therein it is valid ground to presume that the loss or the depreciation allowance has to be recomputed. That has not been properly computed and rather the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered only with reference to the reasons put forth by the Respondents for issuing the notice. The letter dated 27-1-2005, inter alia, states that the Assessment Officer has reason to believe that income has escaped assessment because the Petitioner has wrongly claimed deduction under section 80IA in respect of income which was not derived from the income of the Petitioner's Unit of Kundaim. Further, that long term capital gains have been wrongly claimed by the assessee which have been wrongly considered for the set off of the Unit of Kundaim which has resulted in escapement of income. Nowhere has the Assessing Officer stated that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. Having regard to the purpose of the section, we are of the view that the power conferred by section 147 does not provide a fresh opportunity to the Assessing Officer to correct an incorrect assessment made earlier unless the mistake in the assessment so made is the result of the failure of the assessee to fully and truly disclose all material facts necessary for assessment. Indeed, where the assessee has fully disclosed all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee Corporation of India Limited vs. Additional Commissioner of Income Tax and Ors., 350 ITR 651, nothing has been stated or observed. 16. A complete reading of the notice dated 18th November, 2013, would indicate that the Assessing Officer proposes to reassess the income because the assessee claimed set off of brought forward unabsorbed depreciation pertaining to 1997-98 to 1999-2000 amounting to ₹ 2,70,12,040/- against long term capital gain along with current year's losses of ₹ 6,81,54,185/-. This was the position emerging from the return filed on 29th September, 2009, which was thereafter selected for scrutiny and an assessment order was passed under section 143(3) on 7th December, 2011. The reasons disclose that the Assessing Officer was of the opinion that this unabsorbed depreciation of more than eight years old could not have been set off against long term capital gain. A judicial precedent has been referred in the reasons and it has been opined that the unabsorbed depreciation may be allowable under the new provision but has to be dealt with in accordance with the old provision and is subject to the limitation of being eligible for set off only against bu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has escaped assessment for such assessment year by reason of failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. In the present case, both are referred viz. the first proviso to section 147 and Explanation 2 thereof. However, this is not a case where action under section 147 is taken after the expiry of four years from the end of the relevant assessment year but it is within four years period. Thus, this proviso cannot be of any assistance. At the same time, the Assessing Officer says that he has reason to believe that income has escaped assessment and also in view of sub-clause (1) of clause (c) of Explanation-2. The Court cannot be called upon to indulge in guess work or speculate as to which reason has enabled the Assessing Officer to act in terms of this section. If more than one reason is assigned as in this case then the Court can sustain the notice only if it is of the opinion that an erroneous reference to a statutory provision has been made but still there is an inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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