Tax Management India. Com
                        Law and Practice: A Digital eBook ...

Category of Documents

TMI - Tax Management India. Com
Case Laws Acts Notifications Circulars Classification Forms Manuals SMS News Articles
Highlights
D. Forum
What's New

Share:      

        Home        
 

TMI Blog

Home List
← Previous Next →

2014 (5) TMI 1167

rt of the petitioner to disclose fully and truly all material facts necessary for its assessment - Held that:- All material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which culminated in the assessment order dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act. - On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income had escaped assessment. As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore evident that Respondent No. 1 after passing the original assessment ord .....

X X X X X X X

Full Text of the Document

X X X X X X X

assessment order on 30th December, 2008 under section 143(3) of the Act. Hence, the purported re-opening of the assessment was based merely on a "change of opinion" which was impermissible in law. 4. The brief facts are as follows. '(a) For the Assessment Year 2005-06, the Petitioner filed its return of income on 31st October 2005 declaring a loss of ₹ 3,855.30 lakhs as per the provisions of the Act and book profits of ₹ 918.02 lakhs as per the provisions of section 115JB, of the Act. The return of income was then revised on 7th November 2006 declaring a loss of ₹ 2,436.78 lakhs. The original return of income was accompanied with the copy of the balance-sheet, audited financial accounts for the year ended 31st March 2005 and a tax audit report under section 44AB of the Act. The petitioner also enclosed an Auditor's Certificate under section 35(2AB) certifying the claim for weighted deduction in respect of research and development expenditure incurred at Lupin Research Park, Pune. Annexure VII to Enclosure IV clearly stated that the legal and professional charges included payment made towards patent applications filed outside India amounting to & .....

X X X X X X X

Full Text of the Document

X X X X X X X

35(2AB)F this amount was allowable as revenue expenditure, but the Petitioner had claimed as weighted deduction only on the sum of ₹ 57.39 lakhs because the balance amount of ₹ 270.97 lakhs was paid for filing patent applications outside India. The said letter further stated that the details of these expenses had already been filed with their earlier letter dated 16th July 2007. (f) By a further letter dated 1st September 2008, the Petitioner once again enclosed the details of the legal and professional charges incurred by the Petitioner that was claimed as a deduction. In the said letter, it was further stated that the revenue expenses, though not allowed under section 35(2AB) of the Act by the DSIR as scientific research expenses, were still allowable as deduction under section 35(l)(i) or section 37(1) of the Act. It was further stated that non-allowing of the petitioner's claim for weighted deduction under section 35(2AB) did not act as a bar for allowing the same under section 35(l)(i) or section 37(1) of the Act. It was further brought to the notice of the Assessing Officer that such revenue expenditure had always been allowed in the past assessments of the P .....

X X X X X X X

Full Text of the Document

X X X X X X X

aterial facts necessary for its assessment, I have reasons to believe that income chargeable to tax has escaped assessment for this assessment year, coming within the meaning of section 147 of the Income tax Act, 1961. The estimated amount of escaped income is ₹ 2,85/33,925/- in this case. 4. In view of the same, notice u/s 148 is issued after approval of CIT-LTU vide letter No. CIT-LTU)/147 approval/2010-11/2461 dtd. 19/03/2012." (i) By a detailed letter dated 23rd October 2012, the Petitioner filed its objections for re-opening the assessment for the Assessment Year 2005-06. The petitioner inter alia contended that all the necessary facts and details were disclosed by the Petitioner in the scrutiny assessment regarding the expenditure/deduction claimed by them with reference to legal expenses and other charges and the Assessing Officer, after considering the said details and facts, had passed an assessment order under section 143(3) of the Act. Since in the present case, the notice under section 148 was issued beyond the period of four years from the end of the relevant assessment year, and since there was no failure on the part of the Petitioner to disclose all materi .....

X X X X X X X

Full Text of the Document

X X X X X X X

assessment 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 section 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. 6. In the present case, admittedly, a scrutiny assessment was done and an assessment order was passed under section 143(3) of the Act for the Assessment Year 2005-06 and the proposed re-assessment is sought to be done after the expiry of four years from the end of the relevant assessment year. In such a situation, the first proviso to section 147 of the Act is attracted. Thus, no action for initiation of re-assessment proceedings for Assessment Year 2005-06 could be initiated unless the income chargeable to tax had escaped assessment by reason of the failure on the part of the Petitioner to disclose fully and truly all material facts. Mr. Pardiwala, the learned counsel appearing on behalf of the Petitioner, submitted that apart from making a bald assertion that there was a failure on the part of the Petitioner to disclose fully and truly all material facts necessary for its assessment, no details whatsoever were .....

X X X X X X X

Full Text of the Document

X X X X X X X

ection 147 of the Act. This is absent in the present case. In our view therefore, on this ground alone, the Petitioner is entitled to succeed in this writ petition. 10. Even otherwise, from the record we find that the Petitioner has disclosed fully and truly all material facts for the Assessment Year 2005-06 and that Respondent No.1 considered the same before making his assessment order under section 143(3) of the Act. This is clear from the return of income filed by the Petitioner for Assessment Year 2005-06 on 31st October 2005, the queries raised and the material sought for by Respondent No.1 by its letters dated 1st June 2007 and 7th August 2007, the Petitioner's replies thereto dated 16th July 2007, 13th August 2007 and 1st September 2008 and the assessment order passed on 30th December 2008 under section 143(3) of the Act. 11. In the return of income filed on 31st October 2005, the Petitioner enclosed its balance-sheet as well as its Auditor's Certificate under section 35(2AB) certifying the claim for weighted deduction in respect of research and development expenditure incurred at Lupin Research Park, Pune, Note No.3 to Annexure VII to Enclosure IV of the Auditor' .....

X X X X X X X

Full Text of the Document

X X X X X X X

rial facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which culminated in the assessment order dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act. 14. We also find force in the submission of Mr. Pardiwala that the initiation of re-assessment proceedings for the Assessment Year 2005-06 is merely based on a "change of opinion". On a perusal of the reasons for initiating to assessment proceedings, we find that it is not even the case of Respondent No. 1 that any new tangible material was brought to his notice which led him to believe that income had escaped assessment. As stated earlier, all material facts were disclosed by the Petitioner in proceedings that were undertaken under sections 142(1) r/w 143(2), which finally culminated in the assessment order dated 30th December 2008 under section 143(3). It is therefore evide .....

X X X X X X X

Full Text of the Document

X X X X X X X

 

 

← Previous Next →

 

 

|| Home || About us || Feedback || Contact us || Disclaimer || Terms of Use || Privacy Policy || Database || Members || Refer Us ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.
|| Blog || Site Map - Recent || Site Map ||