TMI Blog2020 (1) TMI 685X X X X Extracts X X X X X X X X Extracts X X X X ..... Accountant Member And Shri S.S. Godara, Judicial Member Sh. R.P. Agarwal, Sr. Adv. Sh. Nirav Sheth, FCA, appeared on behalf of the Assessee Sh. Vijay Shankar, CIT(DR), appeared on behalf of the Revenue ORDER Per J. Sudhakar Reddy, AM: These are Cross Appeals filed by the assessee and the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-4, Kolkata ['CIT(A)' for short] dated 25.01.2018 u/s 250 of the Income Tax Act, 1961 ('the Act' for short) for AY 2008-09. 2. The assessee has challenged the validity of re-opening of the assessment u/s 147 of the Act. 3. We have heard both the parties at length. The facts of the case are that the assessee has filed his return of income for the AY 2008-09 on 04.06.2009 disclosing total income of ₹52,08,98,320/-. The assessment was completed u/s 143(3) of the Act on 12.05.2010 determining the total income of the assessee at ₹53,02,64,479/-. Thereafter the assessment was re-opened u/s 147 of the Act and an assessment order was passed u/s 147 r.w.s. 143(3) of the Act on 21.01.2014 determining the total income of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxmann.com 34 (Delhi) and argued that subsequent decision holds in these cases that relevant materials were available with the AO based on which he formed an opinion and re-opened the assessment and what was expected was to form a prima facie and tentative belief at the time of recording reasons. 8. The proviso to Section 147 reads as follows. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... therefore reopening beyond four years was not valid. (A.Y. 2005-06). 4.6. The Hon'ble Delhi High Court in the case of CIT vs. Orient Craft Ltd. reported in [2013] 354 ITR 356 (Del.)(HC) has held as follows: The reasons recorded by the Assessing Officer in the present case do confirm our apprehension about the harm that a less strict interpretation of the words reason to believe vis- -vis an intimation issued under section 143(1) can cause to the tax regime. There is no whisper in the reasons recorded, of any tangible material which came to the possession of the assessing officer subsequent to the issue of the intimation. It reflects an arbitrary exercise of the power conferred under section 147. 4.7. The Hon'ble Delhi High Court in the case of Haryana Acrylic Manufacturing Co. v. Commissioner of Income-Tax and Anor. reported in [2009] 308 ITR 38 (Delhi) has held as follows: 26. Viewed in this light, the proviso to section 147 of the said Act, carves out an exception from the main provisions of section 147. If a case were to fall within the proviso, whether or not it was covered under the main provisions of section 147 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition for overcoming the bar set up by the proviso to section 147. If this condition is not satisfied, the bar would operate and no action under section 147 could be taken. We have already mentioned above that the reasons supplied to the petitioner does not contain any such allegation. Consequently, one of the conditions precedent for removing the bar against taking action after the said four year period remains unfulfilled. In our recent decision in WelIntertrade Private Ltd (supra) we had agreed with the view taken by the Punjab and Haryana High Court in the case of Duli Chand Singhania (supra) that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing officer under section 147 beyond the four y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for assessment. Once the Assessing Officer comes to a finding that there was failure or there was no improper disclosure on the part of the assessee, he forms the belief which is recorded and assumes jurisdiction under section 147. In the instant case, the assessments for both the assessment years were made under section 143(3). There was no dispute that the notices under section 147 were issued beyond four years from the end of the relevant assessment years. Thus, in order to initiate action under section 147 after the expiry of four years from the end of relevant assessment years, there should have been either failure or non-disclosure on the part of the assessee. From the recorded reasons it was found that the Assessing Officer was seeking to reopen the assessments since there was an 'incorrect interpretation of accounts by the Assessing Officer' and for that 'the assessee got the benefit of loss' for the assessment year 1992-93 which was carried forward to the subsequent years. In the instant case, it had nowhere been recorded that there was failure or improper disclosure on the part of the assessee However, the Assessing Officer sought ..... X X X X Extracts X X X X X X X X Extracts X X X X
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