TMI Blog2012 (10) TMI 1145X X X X Extracts X X X X X X X X Extracts X X X X ..... 0-2012 - S. Ravindra Bhat And R. V. Easwar, JJ. For the Appellant : Sanjeev Sabharwal, Gayatri Verma For the Respondent : Somnath Shukla, Ajay Verma JUDGMENT S. Ravindra Bhat, J. 1. In this appeal the revenue challenges the Income Tax Appellate Tribunal s (hereafter Tribunal ) order dated 12.12.2008 by which it allowed the assessee s appeal, quashing the re-assessment proceedings instituted against it under Section 147, Income Tax Act, 1963. 2. The relevant facts are that the assessee filed original return of income on 30.11.98 which was revised on 29.03.2000. Regular assessment was completed on 30.3.2001. The AO thereafter had reason to believe that some income had escaped assessment and recorded the following reasons for reopening the assessment: In the profit and loss account the Assesse has claimed software expenditure of ₹ 129.70 lakhs as revenue expenses. By treating the software expenses of ₹ 129.70 lakh in this year the income had been under assessed by ₹ 129.70 lakhs. Therefore, I have reason to believe that income to the tune of ₹ 129.70 lakhs had been under assessed. This has now been confirmed by the order of Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of assessment as accepted by the AO to be revenue in nature. Besides AO while writing the reasons has been sketchy and has indicated to wrong claim of depreciation by the assessee which, in our view, is not a correct reason as the expenditure was claimed as revenue in nature. In the entirety of facts and circumstances, respectfully following Hon ble Delhi High Court Judgment, we have no hesitation to hold that there was no failure on the part of assessee of disclosing material facts and particulars so as to warrant reopening of assessment. Therefore, we quash the re-assessment proceedings. In this eventuality, there is no desirability to go into the merits of the case. 4. Before this Court, the Revenue s counsel argued that even when full disclosure has been made, income can still be held to have escaped assessment. In this regard, he relied on Bawa Abhai Singh v. DCIT, 253 ITR 83 and Praful Chunilal Patel v. M.J. Makwana, Assistant Commissioner of Income Tax, [1999] 236 ITR 832 (Guj). Counsel further submitted that the Proforma for obtaining the approval of CIT under Section 151 for issuance of notice under Section 148 does not, at any place, use the word depreciation , and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ition was not met. The AO, in the reasons recorded, after relying on the Tribunal s decision in the assessee s own case for a different assessment year, has merely made a bald statement that the assessee had failed to disclose truly and fully all legal facts . It is borne out from the record that the assessee had provided in its P L A/c software expenses as revenue in nature. The AO in the original assessment had, without any discussion in the assessment order, allowed these software expenses as revenue expenditure, and this was sought to be disturbed in the reassessment proceedings after expiry of four years. This is a clear case where the primary facts were available before the AO, and therefore, the assessee cannot be held to have failed to disclose fully and truly all material facts . In our opinion, it was for the AO to draw the appropriate inference. The assessee is/was under no obligation to draw the inference of fact or law based on the primary facts available on record. The following extracts from Calcutta Discount (supra) are pertinent here: 11. Does the duty however extend beyond the full and truthful disclosure of all primary facts ? In our opinion, the answer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o, we consider it unnecessary to rule finally on the above question. We, however, add that the answer to this question as provided in A.L.A. Firm v. CIT, (1991) 189 ITR 285 (SC) and followed in Saradbhai (supra) and other decisions cited by the assessee are of little assistance in the facts of the present case. 10. The Supreme Court in Commissioner of Income Tax, Delhi v. Kelvinator of India Limited [2010] 320 ITR 561 (SC) held that there should be tangible material to arrive at the conclusion that there is escapement of income from assessment. Arguably, it cannot be held that a judicial decision (in this case the Tribunal s decision in assessee s own case for a different assessment year) is tangible material. Section 147, as it existed prior to the Direct Tax Laws (Amendment) Act, 1987: 147. Income escaping assessment.- If-- (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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