TMI Blog2021 (1) TMI 600X X X X Extracts X X X X X X X X Extracts X X X X ..... r has fulfilled the pre-condition as stipulated by the 1st Proviso of section 147 of the Act by the Revenue? - We find no merit in the reasons recorded for reopening of assessment finally on 20.05.2014, in the absence of any allegation made by Revenue against the assessee for his failure to disclose truly and fully all relevant material facts for assessment for the year under consideration thereby failed to fulfil the pre-condition provided by the 1st Proviso of Section 147 of the Act. The entire proceeding of reassessment dehors the statute, is not maintainable in the eyes of law and hence liable to be rejected. We, therefore, quash the reopening/reassessment proceedings initiated u/s. 147/148 of the Act.- Decided in favour of assessee. - I.T.A. No. 724/Kol/2018 and C.O. No. 11/Kol/2020 (in I.T.A No.724/Kol/2018) - - - Dated:- 16-12-2020 - Waseem Ahmed, Member (A) And Madhumita Roy, Member (J) For the Appellant : Manish Kanojia, DR For the Respondents : K.K. Chhaparia and Nirav Sheth, FCAs ORDER Madhumita Roy, Member (J) 1. The instant appeal filed by the Revenue and cross-objection filed by the assessee are against the order dated 25.01.2018 passed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at all. 6. We have heard the respective parties, we have also perused the relevant materials available on record. Since this ground of maintainability of the reassessment proceedings has been urged by the appellant, we would like to address the issue first. In this regard we have perused the order passed by the Ld. A.O. and the reasons so recorded dated 20.03.14 within the statutory period reflected at page 56 of the paper-book which is as follows: The assessment u/s. 143(3) was completed on 08/12/2011. Subsequently, on perusal of the records, it is noticed that the assessee-company had shown decreased value of some stocks b ₹ 97.26 Crores keeping the quantity of the stocks intact. As a result, there was decrease in application of fund by ₹ 97.26 Crores. Consequently, it had effect on cash flow. As per cash flow statement, the increase of stock transaction was understated by the said sum of ₹ 97.26 Crores which resulted in shortfall of cash balance due to non-cash adjustment on account of revaluation. As such, the said amount of ₹ 97.26 Crores attracted the provisions of section 69A of the I.T. Act, 1961. I have, therefore, reason to believe t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no latches on the part of the Revenue in recording reasons by issuing of the Memo on 20.03.14 there would have not been any necessity in issuing the further reason recorded on 20.05.14. Therefore the submission made by the Ld. Counsel appearing for the assessee that the proceeding itself has initiated on the basis of the reasons recorded on 20.05.14 is justified. 9. Now the moot point arises as to whether the subsequent notice dated 20.5.14 issued after the expiry of four years from the date of completion of the relevant assessment year has fulfilled the pre-condition as stipulated by the 1st Proviso of section 147 of the Act by the Revenue. It appears that the reason recorded on 20.05.2014 does not allege failure on the part of the assessee in disclosing fully and truly all material facts necessary for assessment for the assessment year 2009-10 which is the pre-condition stipulated by the 1st Proviso of section 147 of the Act since the said notice dated 20.05.14 has been issued after the expiry of the four years from the date of completion of the relevant assessment year. Thus, the proceeding initiated by the said reasons fails to have any basis rather not in consonance with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o Section 147 makes it clear that 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 Section 147, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the concerned assessment year. However, where an assessment under Sub-section (3) of Section 143 has been made for the relevant assessment year, no action can be taken under Section 147 after the expiry of four years from the end of the relevant assessment year, 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 disclose all material facts necessary for his assessment for that assessment year. 20. In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was March 31, 1997, and from that date if four years are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advanced. 22. Having recorded our finding that the impugned notice itself is beyond the period of four years from the end of the assessment year 1996-97 and does not comply with the requirements of the proviso to Section 147 of the Act, the Assessing Officer had no jurisdiction to reopen the assessment proceedings which were concluded on the basis of assessment under Section 143(3) of the Act. On this short count alone the impugned notice is liable to be quashed and set aside. 11. We have also considered the judgment passed by the Gauhati Bombay High Court wherein relying upon the judgment passed by the Hon'ble Apex Court in the case of Parashuram Pottery Works Co. Ltd. vs. ITO [1977] 106 ITR 1(SC) decided the matter in favour of the assessee. The relevant portion whereof is as follows: 44. The apex court while dwelling on the scope of the requirement to disclose fully and truly all material facts as comprehended in the proviso to Section 147 held in Parashuram Pottery Works Co. Ltd. [1977] 106 ITR 1 (SC), that the duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts and it is not its responsibility to advise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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