TMI Blog2017 (5) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee to disclose any material fact, fully and truly, necessary for the assessment of the assessee. Once there is no failure on the part of the assessee to disclose the material facts, the assessment could not be reopened by invoking the provisions of section 147 r.w.s. 148 of the Act as that will tantamount the change of opinion. Accordingly, we confirm the order of CIT(A) quashing the re-assessment for the reason that the assessee s case falls under proviso to section 147 of the Act. - Decided in favour of assessee - ITA No.3759/Mum/2013 - - - Dated:- 26-4-2017 - SRI MAHAVIR SINGH, JM AND SRI RAJESH KUMAR, AM For The Revenue : Shri Dr. Suman Ratnam, DR For The Assessee : Shri K.A. Vaidyalingan, AR ORDER PER MAHAVIR SINGH, JM: This appeal by the Revenue is arising out of the order of CIT(A)-27, Mumbai, in appeal No. CIT(A)-27/ACIT 16(3)/258/2011-12 dated 15-02-2013. The Assessment was framed by ACIT Circle 16(3), Mumbai for the A.Y. 2004-05 vide order dated 27-12-2011 u/s 143(3) of the Income Tax Act, 1961 (hereinafter the Act ). 2. The only issue in this appeal of Revenue is against the order of CIT(A) in quashing the reopening under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e was also required to be reduced to arrive at the profit of business due to the o In the course of assessment proceedings assessee submitted details called for and the same is placed on record . 4. The AO reopened by issuing notice under section 148 dated 14-12-2010 after expiry of four years from the end of the relevant AY 2004-05. The AO re-worked the computation of deduction under section 80HHC of the Act and disallowed the deduction in regard to the exchange rate difference on import and exchange fluctuation rate difference of ₹ 2,58,90,275/-. Further, other receipts of ₹ 4,04,47,606/- was also disallowed. Aggrieved assessee preferred the appeal before CIT(A) and challenged the reopening. The CIT(A) quashed the reassessment proceedings by observing that there is change of opinion on the part of AO in regard to recompute deduction u/s 80HHC of the Act and also the time limit of 6 years from the end of the AY was elapsed as the AY is 2004-05 an notice u/s 148 was issued on 14-12-2010 by the DCIT Circle-9, Surat whereas the jurisdiction was transferred vide order u/s 127(2) of the Act on 15-12-2010 with ACIT Circle 16(3) Mumbai where the records were send only a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h was served on the appellant's accountant at 7 p.m. on 31.3.2011. In the meanwhile, on 15. 12,2010, order uls.127(2) of the Act was passed by the CIT-3, Surat, a copy of which was also marked to DCIT Cir-9, Surat that the jurisdiction over the case was transferred with immediate effect to ACIT 16(3), Mumbai. In other words, while the DCIT Cir-9, Surat ceased to have jurisdiction over the appellant w.e.f. 15.12.2010 and nevertheless, he has served the notice u/s.148 dated 14.12.2010 issued by him on the appellant as late as 31.3.2011. In other words, the DCIT Cir-9, Surat has served the impugned notice without having the jurisdiction over the appellant. In my considered opinion, once the DCIT Cir-9, Surat ceases to have jurisdiction over the appellant w.e.f. 15.12.2010 and their being no notice u/s.148 served on the appellant by the DCIT Cir-9, Surat as on 15.12.2010, the mere fact that the DCIT Cir-9. Surat has issued the notice uls.148 dated 14.12.2010 which was lying on his file unserved is of no consequence and it cannot be considered as a valid notice to proceed with the assessment u/s.147 of the Act. The law requires that ACIT 16(3), Mumbai. the present A.O. having jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t dated 14-12-2010. It was claimed that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of the assessee. There is no allegation in the reasons recorded that there is any failure on the part of the assessee to disclose any material fact, fully and truly, necessary for the assessment of the assessee. Once there is no failure on the part of the assessee to disclose the material facts, the assessment could not be reopened by invoking the provisions of section 147 r.w.s. 148 of the Act as that will tantamount the change of opinion. Accordingly, we confirm the order of CIT(A) quashing the re-assessment for the reason that the assessee s case falls under proviso to section 147 of the Act. 6. We find that this issue is squarely covered in favor of the assessee and against Revenue by the decision of Hon ble Supreme Court in the case CIT vs. Foramer France (2003) 264 ITR 566 (SC) has taken the view that the first proviso to section 147 of the Act lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (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 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. This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147. 10. In Rakesh Aggarwal v. Asstt. CIT[1997] 225 ITR 4961, the Delhi High Court held that in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the disposal of the case before the authority or court vide Rajinder Nath v. CIT[1979]120 ITR 141 (SC); Gupta Traders v. CIT[1982] 135 ITR 5042 (All.); CIT v. Tarajan Tea Co. (P.) Ltd.[1999] 236 ITR 4773 (SC) and CIT v. Goel Bros.[1982] 135 ITR 5114(All.), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or section 44BB. Hence, the observation of the Tribunal in Boudier Christian's case was not a direction necessary for the disposal of the appeal relating to the petitioner. The eligibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in the case of Boudier Christian. Moreover, the Tribunal in the appeal relating to the assessment of the petitioner's own case, vide Dy. CIT v. O.N.G.C. As agent of Foramer France[1999] 70 ITD 468 (Delhi), has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and, hence, when the Tribunal in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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