TMI Blog2016 (5) TMI 1159X X X X Extracts X X X X X X X X Extracts X X X X ..... inst the order dated 07-05-2014 of the CIT(A)-V, Pune relating to Assessment Year 2003-04. 2. Facts of the case, in brief, are that the assessee is a company engaged in the business of manufacture of PU Foam, automobile seat assembly etc. It filed its return of income on 29- 11-2003 declaring total income of ₹ 7,22,636/-. Original assessment u/s.143(3) in this case was completed on 30-03-2006. Subsequently the AO reopened the assessment u/s.147 of the Act and a notice u/s.148 of the Act was issued on 26-03-2010 after recording the following reasons for reopening of the case : Annexure- A Reasons for the belief that income has escaped assessment in the case of M/s Alfa Foam Ltd. (PAN AACCA4196J) for A.Y. 2003-04 within the meaning of section 147 of the Income Tax Act, 1961. ------------------------------------------------------------------------ The assessee filed its return of income for A.Y. 2003-04 on 29/11/2003 declaring total income of ₹ 7,22,636/-. The assessment was completed u/s.143(3) of the Income Tax Act, 1961 on 30/03/2006 determining total income of ₹ 8,32,640/-. On verification of the case record from the statement No.II of Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounds : The following grounds are taken without prejudice to each other - On facts and in law, 1] The learned CIT(A) erred in holding that the reasst. u/s 147 r.w.s. 143(3) was valid without appreciating that the reopening was made after a period of four years from the end of the relevant asst. year and as the assessee had duly disclosed all the material facts, the reopening was invalid in law and accordingly, the reasst. be declared null and void. 2] The learned CIT(A) failed to appreciate that in the reasons recorded for reopening, there was no assertion on the part of the A.O. that the escapement of income was due to failure on the part of the assessee to disclose any material facts and hence, the reopening u/s 148 after the period of four years was not justified in law. 3] The learned CIT(A) erred in supplementing the reasons supplied by the A.O. which is not justified and accordingly, the reasst. u/s 147 r.w.s. 143(3) may be declared as void in law. 4] The learned CIT(A) erred in holding that the assessee had not furnished the complete copy of the Audit Report in Form No. 10CCB at the time of filing the return of income and as per the said audit report, the val ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g to the copy of the assessment order passed u/s.143(3) on 30-03-2006, a copy of which is placed at pages 8 to 11 of the paper book, he drew the attention of the Bench to the last page of the assessment order where the AO has allowed the claim of deduction u/s.80IB at ₹ 3,04,867/- . Referring to the copy of the reasons for reopening u/s.148, which is placed at page 3 of the paper book, he submitted that the AO has reopened the assessment on two counts, i.e. (a) delayed payment of PF contribution and (b) claim of deduction u/s.80IB at ₹ 3,04,867/- without furnishing the full certificate in Form 10CCB along with the return of income. 7. So far as the first issue is concerned he submitted that the AO has reopened the assessment on the basis of the audit report filed by the assessee where all the particulars are given. So far as the 80IB deduction is concerned he submitted that the assessee has filed Form 10CCB and on the basis of the certificate enclosed along with the return of income the AO in the original assessment has allowed the claim of deduction u/s.80IB. 7.1 He submitted that the AO has issued the notice u/s.148 on 26-03-2010 which is beyond a period of 4 ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reopening u/s.147 are already reproduced in the para 2 of this order. From the reasons recorded, we find the AO has reopened the assessment on two counts, (a) delayed payment of PF and (b) claim of deduction u/s.80IB without furnishing the full certificate of Form 10CCB along with return of income. 11. So far as the first issue is concerned, i.e. delayed payment of PF, we find the AO reopened the assessment on the basis of the enclosures/schedules filed along with the tax audit report which was furnished along with the return of income. So far as the second issue is concerned, i.e. claim of deduction u/s.80IB we find the AO in the original assessment has allowed the claim of deduction while computing the total income. A perusal of the notice issued u/s.148 nowhere says that there is any failure on the part of the assessee to fully and truly disclose all material facts necessary for completion of the assessment. Under these circumstances, we have to decide the validity of the notice issued u/s.148 beyond a period of 4 years from the end of the relevant assessment year when there is no allegation by the AO in the reasons recorded that there is any failure on the part of the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... de by the assessee u/s.80IB(3) was not correct. At the same time a perusal of the notice issued u/s.148 shows that there is no mention by the AO regarding any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment. Under these circumstances we have to see as to whether the notice issued u/s.148 is a valid one or not ? 20. We find the Hon ble Bombay High Court in the case of Hindustan Lever Ltd. (Supra) while deciding the issue of notice after expiry of 4 years where the AO had nowhere stated in the notice that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment has held the reassessment proceedings to be invalid. The relevant observation of the Hon ble High Court at para 17 to 21 of the order read as under : 17. Having heard the parties at length, we are of the opinion that the petition can be disposed of on the first contention raised by the petitioner, wherein the petitioner has contended that the notice issued under section 148 is without jurisdiction being hit by the proviso to section 147 of the Act as such not within ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to disclose all material facts necessary for his assessment for that assessment year. 19. In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was March 31, 1997, and from that date if four years are counted, the period of four years expired on March 31, 2001. The notice issued is dated November 5, 2002, and received by the assessee on November 7, 2002. Under these circumstances, the notice is clearly beyond the period of four years. 20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble. Therefore, it is not necessary for the revenue to prima facie establish that there has been a failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment, while issuing a notice reopening a completed assessment. However, even in case of reopening of assessment within a period of four years from the end of the relevant assessment year the Assessing officer has to have reason to believe that income chargeable to tax has escaped assessment on the basis of tangible material. The word reason to believe has been construed by the Supreme Court in the matter of CIT Vs. Kelvinator India Limited reported in320 ITR Page 561 wherein the Court has observed as under: However one needs to give schematic interpretation to the words reason to believe failing which we are afraid Section 147 would give arbitrary powers to the Assessing officer to reopen assessment on the basis of mere change of opinion which cannot be per se reason to reopen. We must keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has power to reassess. But reassessment is to be base ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... opinion and would amount to a review of the Assessment Order dated 11/12/2003. Further, the reasons for reopening as communicated by the petitioner is not on the basis of any tangible material but merely on verification of the material and primary facts already on record that the Assessing officer has duly considered while passing the order dated 11/12/2003 for Assessment Year 2007-08 . There is no fresh tangible material which would warrant taking a view different from the one taken during the regular assessment proceedings. In fact even the order dated 15/10/2012 disposing of the objections clearly records that radiography charges and labor charges were made to various persons like Senior Technicians, Senior Radiographer and Jr. Technicians etc. from the chart submitted in the regular assessment proceeding leading to order dated 11/12/2009. Therefore, it is very clear that impugned notice for reassessing the assessment year 2007-08 has been issued merely on change of opinion and in fact seeks to review the assessment which is already completed. 9) One more aspect of the matter must be adverted to and that is in the order dated 15/10/2012 rejecting the objections filed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuing the notice. The letter dated January 27, 2005, inter alia, states that the Assessing Officer has reasons to believe that income has escaped assessment because the petitioner has wrongly claimed deduction under section 80- IA in respect of income which was not derived from the income of the petitioners 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 a failure of the assessee to fully and truly disclose all material facts necessary for assessment. Indeed, where the assessee has fully disclosed all the material facts, it is not open for the Assessing Officer to reopen the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in so far as they relate to the impugned notice dated March 18, 2004, the impugned satisfaction of respondent No.2 under section 151 of the Act, if any, and the impugned assessment proceedings of the petitioner for the assessment year 1997- 98 and after going through the same and examining the legality and validity thereof, to quash and cancel the same. (c) That this hon'ble court may be pleased to issue a writ of prohibition or a writ in the nature of prohibition or any other appropriate writ, order or direction under article 226 of the Constitution of India, permanently restraining and prohibiting respondent No.1 from taking any action in furtherance, or in pursuance of or in implementation of the impugned notice dated March 18, 2004, and permanently prohibiting and restraining respondent No. 1 from reassessing the income of the petitioner for the assessment year 1997-98. Following the above decisions similar view has been taken by the Pune Bench of the Tribunal in the case of Alfa Laval India Ltd. (Supra) and The Jalna District Central Cooperative Bank Ltd. (Supra). 23. Since the assessment u/s.143(3) was completed in the instant case on 24-12-2007 for the A.Y. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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