TMI Blog2016 (3) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... Act may not attract in the case of the assessee. - Decided in favour of assessee. - ITA No. 775/CHD/2015 - - - Dated:- 30-3-2016 - Shri Bhavnesh Saini And Ms. Rano Jain, JJ. Shri Sudhir Sehgal For The Appellant. Shri Manjit Singh,DR For The Respondent. ORDER Bhavnesh Saini, This appeal by assessee has been directed against the order of ld. CIT(Appeals)-I Ludhiana dated 27.08.2015 for assessment year 2007-08. 2. In this appeal, assessee challenged the orders of authorities below in re-opening the assessment under section 147/148 of the Income Tax Act and disallowing the expenditure of ₹ 2,07,43,117/- under section 40(a)(ia) of the Income Tax Act. 3. Briefly the facts of the case are that the Assessing Officer has observed that assessment order in the case of the assessee had been passed under section 143 (3) vide order dated 12.10.2009 assessing the income at ₹ 11,34,280/-. The said assessment order was reopened on the ground that assessee had not deducted tax at source on expenditure of ₹ 2,07,43,177/-. The assessee had objected before the Assessing Officer that the issue of allowance of expenditure of ₹ 2.07 Cr had been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessee reiterated the submissions made before authorities below and referred to reasons of re-opening of assessment and submitted that there was no failure on the part of the assessee to disclose all the material facts truly and correctly. The Assessing Officer examined this issue at assessment stage with regard to payment of rent of board. There were no new material available on record against the assessee therefore, re-opening was done on mere change of opinion and on audit objection only. The assessee disclosed all the primary facts before the Assessing Officer at original assessment stage and also explained that there is no rent paid more than ₹ 1,20,000/- to each party. Therefore, provisions of Section 194I would not apply in the case of the assessee. He has submitted that since the documents were lost, therefore, Assessing Officer verified this fact from the concerned Police Station. The ld. counsel for the assessee, in support of the contention, relied upon several decisions, copies of which are filed on record. The ld. counsel for the assessee also referred to various replies filed before Assessing Officer and details submitted in the Paper Book in support ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as above. In view of the above discussed fact, I have reason to belief that the income of ₹ 2,07,43,177/- as discussed above, has escaped assessment. Sd/- DCIT-II (H.S.DHILLON) Dy. Commissioner of Income-Tax Circle-II, Ludhiana. Dated : 28.02.2012 5 (i) PB-26 is the original assessment order dated 12.10.2009 under section 143(3) of the Income Tax Act. The Assessing Officer examined the details produced before him. The Assessing Officer also noted in the assessment order that assessee is engaged in business of advertising. Out of total receipts of ₹ 2.32 Cr, rent of board has been claimed to have been paid at ₹ 2.07 Cr. The assessee was required to justify these expenditures. The Assessing Officer also noted in the assessment order that assessee has been maintaining books of account on day-today basis and accordingly, no adverse inference may be drawn. The Assessing Officer, after considering the explanation of the assessee, noted that the receipts obtained on account of payment have not been produced because same were lost, therefore, expenditure on account of rent of board was disallowed in a sum of ₹ 1 lac. The Assessing Officer a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 year92, 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: 6. Considering the facts of the case, it is clear that in this case, original assessment order under section 143 (3) has been passed and action under section 148 have been taken after expiry of four years from the end of the relevant assessment year. The Assessing Officer, however, in the reasons recorded for re-opening of the assessment, has not mentioned that escapement of chargeable income from tax was due to failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Section 194I of the Income Tax Act also provides that no deduction shall be made under this Section where the amount of such income or a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be made after four years the power conferred by section 147 of the Income-tax Act, 1961, does not provide afresh 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 materials facts necessary for assessment. There is a difference between a wrong claim made by an assessee after disclosing all the true and material facts and a wrong claim made by the assessee by withholding the material facts fully and truly. It is only in the latter case that the Assessing Officer would be entitled to proceed under Section 147. Held, allowing the petition, that the Assessing Officer had not recorded the failure on the part of the petitioner to fully and truly disclose all material facts necessary for the assessment year 1997-98. What was recorded was that the petitioner had wrongly claimed certain deductions which he was not entitled to. The reassessment proceedings initiated in the year 2004 were not valid. 7(ii) Hon'ble Calcutta High Court in the case of Debashis Moulik Vs ACIT 370 ITR 660 held as under : Held accordingly, allowing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer. He had raised the issue and applied his mind. He had accepted the assessee's contention. The court need not examine whether the original decision of the Assessing Officer was correct or incorrect. An incorrect decision by an Assessing Officer does not confer jurisdiction to reopen the assessment even after the amendment of section 147/148. Further, there was also no allegation that there was fault or failure on the part of the assessee to disclose true and full facts. The notice of reassessment having been issued after the end of four years from the end of the assessment year the first proviso to section 147 applied. Thus, the reassessment proceedings could not be initiated. The argument that the court ought not to investigate the existence of one of these conditions, viz., that the Income-tax Officer has reason to believe that underassessment has resulted from non- disclosure of material facts, could not, therefore, be accepted. The court did not examine the contention relating to the audit objection, effect thereof and the non-application of mind by the Assessing Officer. The question was left open. 7 (v) Hon'ble Delhi High Court in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed that the amount of ₹ 33,72,583/- had escaped at was unconvincing and untenable as well. The notice of re-assessment was not valid as it was based on mere change of opinion of the Assessing Officer . 8. Considering the facts and circumstances of the case and material on record, it is clear that all material facts with regard to rent received and rent paid of board for advertisement business were disclosed by assessee in the return of income as well as at assessment stage. The Assessing Officer examined the issue at assessment stage thus, the Assessing Officer reopened the assessment merely on change of opinion on the basis of all the facts and material already available on record. There was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment year under appeal. The Assessing Officer merely on audit objection, reopened the assessment. The assessment is reopened for mistake/omission of the Assessing Officer alleged to have been committed at the original assessment stage which was the sole basis for re-opening of the assessment. The material on record clearly support the submission of assessee that rent pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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