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TMI Blog2007 (2) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 263 was issued by the Commissioner of Income Tax for revision of the assessment order passed by the Assessing Officer dated 10.03.2004. 4 While admitting Special Civil Application No.2353 of 2005 relating to the challenge of notice under Section 263, this Court stayed the proceedings under Section 263 for revision of the assessment order. 5 Notice was also issued to the respondents in Special Civil Application No.16306 of 2006 relating to reopening of the assessment in pursuance of notice under Section 148. 6 Heard learned counsels for the parties. 7 The facts are not in dispute. The assessment order for the assessment year 2001-02 was passed on 10.03.2004. The total income assessed was Rs.5,41,22,967/-. 8 Learned counsel for the assessee Shri K.C. Patel submits that when a proceeding under Section 263 for revision of the assessment order dated 10.03.2004 is pending, the Assessing Officer has no jurisdiction to issue notice under Section 148 to reopen the same assessment order on the same grounds for which the notice under Section 263 has been issued. He further submits that before issuance of notice under Section 148, the Assessing Officer should have reason to beli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the part of an assessee to make a return under section 139 for any assessment year to the Income-tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income-tax Officer has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in sections 148 to 153 referred to as the relevant assessment year). Explanation 1. - For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where income chargeable to tax has been under-assessed; or (b) where such income has been assessed at too low a rate; or (c) where such income has been made the subject of excessive relief u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant assessment year would be attracted even in cases where there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance, and whether it is an error of fact or law that has been discovered or found out justifying the belief required to initiate the proceedings. In our view, the words "escaped assessment" where the return is filed, are apt to cover the case of a discovery of a mistake in the assessment caused by either an erroneous construction of the transaction or due to its non-consideration, or, caused by a mistake of law applicable to such transfer or transaction even where there has been a complete disclosure of all relevant facts upon which a correct assessment could have been based. 9. As noted above, the provision of Section 147 requires that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment. The word "reason" in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has a cause or justification to think or suppose that income had escaped assessment, he can be said to have a reason to bel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enses: x Exempted interest income Total Receipts 5,03,64,454 x Rs.1,44,038/- 36,71,43,081 Hence, disallowance of Rs.1,44,038/- should have been made instead of Rs.3,544/-. Therefore, an amount of Rs.1,40,494/- has escaped assessment. 2. The year under consideration the assessee has claimed deduction u/s 80 HHC of the Act amounting to Rs.5986965/-. While passing the order u/s 143(3) of the Act the deduction u/s 80HHC was restricted to Rs.50,37,685/-. While calculating the 'profit of the business', the 90% of the interest receipt of Rs.56,50,605/- has been reduced. The interest income includes the following. (i) Interest on HDFC debenture 1,74,075 (ii) Interest on income-tax refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sp; Rs.2,18,454 (v) Forfeiture of advance Rs.5,53,600 (vi) Exchange rate fluctuation Rs.1,09,181 Hence, the deduction will further be reduced by excluding the above other income from the profit of the business. 3. Royalty During the year, the assessee has added back provisions for Royalty of Rs.62.92 lacs and claimed deduction of Rs.50,18,616/- on the ground that this provisions for Royalty was allowed last year for non deduction of tax at source. However, during the year TDS has been paid on the said amount and hence as per proviso to section 40(a)(i), the said Royalty payment is an allowable deduction. In this connection, if is seen that the assessee has paid TDS on 19.04.2000 as under:- Rs.6,45,905/- dated 19.04.2000 Rs.1,06,887/- dated 19.04.2000 Total Rs.7,52,792/- As per provisions of section 40(a)(i), the deduction is allowable provided TDS has been deducted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 11.2000 and the closing balance as on 31.03.2001 was shown at Rs.15,50,000/-. This point requires verification. 7.Provision for expenses It is seen that the assessee has made a provision of Rs.4 lacs for Expenses as on 31.03.2001. However, it is seen that hardly any payment was made out of this provision in the next year, and as on 31.3.2002 the surplus provision of Rs.2,82,099/- has been written back. This point also requires verification. 8.Bad debts During the year the assessee had written off bad debts of Rs.1,08,91,355/-. The major items of bad debt written off were as under:- (i) M/s. Essar Ferro Alloys Co. 9,99,100 (ii) M/s. Elite Enterprise 5,00,000 (iii) M/s. Herleen Synthetics Pvt. Ltd. 61,75,268 (iv) M/s. Isibaras Ltd. 7,82,212 (v) M/s. Vijay Electricals Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come escaped in the original assessment should be taxed. 18 In Commissioner of Income Tax, Bhopal vs. Ralson Industries Ltd. [2007] 288 ITR 322 (SC) ; [2007] JT (1) SC 356, the issue before Their Lordships is that once notice under Section 154 of the Act has been issued by the Assessing Officer and some mistake is corrected, can that deprive the Commissioner to exercise his revisional power under Section 263 of the Act. Their Lordships in paragraph no.12 have observed as under: "12. When different jurisdictions are conferred upon different authorities to be exercised on different conditions, both may not be held to be overlapping with each other. Jurisdiction under Section 154 of the Act is only to be exercised by him when there is an error apparent on the face of the record. It does not confer any power of review. An order of assessment may or may not be rectified. If an order of rectification is passed by the Assessing Authority, the rectified order shall be given effect to. However, only because an order of assessment has undergone rectification at the hands of the Assessing Officer, in our opinion, the same would not mean that revisional a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. 24 So far as the Civil Application is concerned, the applicant has challenged the assessment order dated 29.12.2006. Shri Patel submits that this assessment order has been passed, though there was assurance given by the learned counsel for the Revenue that they will not make the final assessment. That assurance was given by the Counsel for the Revenue. We do not know whether the learned counsel for the Revenue conveyed this to the Assessing Officer. At this stage, we do not want to go into that question. But, admittedly, this Court has not stayed the proceedings consequent to notice under Section 148 of the Act, therefore, the Assessing Officer was at liberty to proceed with the proceedings and make final assessment. Moreover, we give liberty to the petitioner to move an application before the concerned Assessing Officer for obtaining appropriate orders on the issue whether the Assessing Officer should pass a fresh order after hearing the assessee, which we leave it to the Assessing Officer. 25 Even otherwise also, if some assessment order is passed after reopening of the original assessment, the petitioner has remedy by way of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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