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TMI Blog2018 (3) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... a the validity of reopening u/s.147 is that, assessee has filed its original return of income u/s.139(1) on 31.10.2005, declaring loss of Rs. 6,35,44,316/- after claiming deduction u/s.10A of Rs. 2,09,37,331/-. The said return of income was duly processed u/s.143(1); and thereafter, the case was selected for scrutiny by issuance of notice u/s.143(2) dated 14.07.2006 which ensued passing of assessment order u/s.143(3), vide order dated 29.12.2008, at a huge income of Rs. 177,28,37,646/- as against the return loss of Rs. 6.35 crores. But the Assessing Officer had allowed the claim of deduction u/s.10A at Rs. 2,09,37,331/- in the computation given in the assessment order. Post passing of such an order, assessee had filed application u/s.154 and on such an application, order was passed u/s.154/143 (3) on 24.07.2009 and revised income was assessed at Rs. 163.25 crores. The said assessment was also challenged before the ld. CIT (A), who decided the appeal vide order 19.01.2009 and AO had also passed the order giving effect, wherein the revised income stood assessed at Rs. 171.40 crore. After completion of the assessment in the aforesaid manner, the assessee's case has sought to be reopen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the assessment. Omission to disclose may be deliberate or inadvertent. This is not relevant, provided there is omission or failure on the part of assessee. The latter confers jurisdiction to reopen assessment. In view of the above, I hold that the re-opening of assessment was well within the rights of Assessing Officer to invoke the proviso to section 147 of the IT Act." 4. As regards the assessee's objection that all the material facts and information were duly submitted at the time of regular assessment and no new information has come to the knowledge of the Assessing Officer, he held that there is no merit in such a contention, because certain factual error has been noticed by the Revenue Audit party and these objection itself contains fresh information and again after referring to certain decisions he justified the reopening of the assessment. So far as on merits of the assessee's objection that the deduction of 10A was taken for the profit of the undertaking which was purely into exports of software and as per the audit report filed in 'Form 56F' which provides the details of working of freight & insurance of Rs. 2,51,07,605/- and has been clearly specified that it per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of assessment u/s.147, but also on merits which has been dealt and discussed by the ld. CIT (A) in detail in his order. Ld. CIT (A), after considering the entire facts and material on record, assessee's submission and judicial precedents, not only quashed the reopening u/s.147, but also deleted the addition on merits. On the validity of the reopening, his observations and finding can be summarised in the following manner:- * Firstly, learned Assessing Officer has not given the reasons as to what was the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment and no new facts have been gathered or brought on record by the Assessing Officer; * Secondly, re-assessment has been initiated on the basis of information given in the return of income filed and the details submitted during the course of assessment proceedings; * Thirdly, very importantly, Ld. CIT(A) has noted that during the original assessment proceedings the assessee had explained the deduction claimed u/s.10A vide letter dated 10.09.2008, in response to specific show-cause notice by the AO, wherein assessee had clearly explained about the deduction of excise d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated if the Assessing Officer has reason to believe that there has been escapement of income and this escapement is owing to the lack of true and fair disclosure by the assessee. In this regard, it is essential to understand the meaning of the phrase 'true and fair disclosure'. The Court has considered the meaning of this phrase in Honda Siel Power Products Ltd. v. Dy. CIT [2012] 340 ITR 53/[2011] 197 Taxman 415/10 taxmann.com 2 (Delhi) where the Court held that that the term 'failure1 on the part of the assessee is not restricted to the return and the columns of the return or the tax audit report. There can be omission and failure on the part of the assessee to disclose material facts fairly and truly during the course of the assessment proceedings. [Para 42] 4. CIT vs. P.V.S. beedies (P) ltd. (1993) 103 Taxman 294 (SC)/(1999) 237 ITR 13 (SC)/(1999) 155 CTR 538 (SC) Where Hon'ble Supreme Court held that Audit party had merely pointed out a fact which had been overlooked by Assessing Officer and this was not a case of information on a question of law. Reopening of case under section 147(b) on basis of factual information given by internal audit party was valid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 2. Reopening on mere change of opinion in not permissible in law - CIT v Kelvinator of India Ltd: [2010] 320 ITR 561 (SC) - CIT v Kelvinator of India Ltd: [2002] 123 taxman 433(Del)(FB) - ICICI Prudential Life Insurance v ACIT:[2010] 325 ITR 471 (Bom) - Direct Information(P) Ltd v ITO:2011] 203 TAXMAN 70(Bom) - German Remedies Ltd v DCIT:2006] 285 ITR 26 - Sita World Travel(India) Ltd v CIT:2004] 140 TAXMAN 3 81 (Del) - Siemens Information System Ltd v ACIT:[2007] 295 ITR 333(Bom) - Jindal Photo Films Ltd v DCIT: [ 1998] 234 ITR 170(Del) - Sirpur Paper Mills Ltd v ITO: [1978] 114 ITR 404(AP) - MJ Pharmaceuticals Ltd v CIT: [2008] 297 ITR 119(Bom) - Universal Subscription Agency (P) Ltd v Jt CIT:[2007] 293 ITR 244(A11) - 3i infotech v ACIT : [2010] 192 taxman 137 (Bom)." 9. We have heard the rival submissions and also perused the relevant findings given in the impugned orders as well as the material referred to before us. As stated above, here in this case, the assessee in its return of income filed u/s.139(1) had claimed deduction u/s.10A based on certificate given by the Chartered Accountant in "Form No.56F" and had computed the profit at Rs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e in the original assessment order, he mentions that escapement of income has been by the reasons of failure on the part of the assessee to disclose full and true all material facts. Nowhere has he brought out even remotely as to what was the failure on the part of the assessee in making the true and full disclosure. Mere stating these words will not suffice, because Assessing Officer while acquiring jurisdiction u/s 147 beyond the period of four years from the end of the relevant Assessment Year for reopening an assessment which has been completed u/s.143(3) in terms of proviso, can acquire jurisdiction only when the condition precedent given in the proviso has been satisfied, that is, firstly, there is a failure on the part of the assessee to file return of income u/s.139 or in response to notice issued u/s.142(1) or Section 148; and or secondly, there has been failure on the part of the assessee to disclose fully and truly all material facts necessary for that assessment year. If such conditions are not satisfied then assessment completed u/s. 143(3) cannot be reopened beyond the period of four years. It appears that Assessing Officer has blindly gone by the objections raised by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the part of the assessee to disclose fully and truly all material facts; and also on the issue of 'change of opinion' which has been elaborated and discussed in the impugned order and also referred and relied upon by the parties in the open court, therefore, we are not referring to these judgments as these proposition are quite settled. On the facts and the record itself, we hold that there is no failure on the part of the assessee in terms of proviso to Section 147, and therefore, the ld. CIT (A) has rightly held that reopening of assessment u/s.147 in terms of aforesaid "reasons recorded" is unjustified in law. 10. As regards the judgments relied upon by the ld. CITDR, we find that in most of the judgments, it was found that there was a failure on the part of the assessee to disclose fully and truly all the material facts either at the time of filing of return of income or in the course of the assessment proceedings. All these judgments are clearly distinguishable on the facts as we have disclosed hereinabove, and therefore, the ratio decendi of these judgments would not be applicable on the facts of the present case. Thus, order of the ld. CIT (A) on the issue of validity of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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