TMI Blog2021 (8) TMI 456X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal filed by the assessee is against the order of the learned Commissioner of Income Tax, (Appeals)-15, Chennai in I.T.A. No.101/2018-19/CIT(A)-15 dated 21.06.2019 relevant to the Assessment Year 2011 - 2012. 2. Brief facts of the case are that the Assessee company filed its return of income for the Assessment Year 2011 2012 on 29.11.2011 by declaring a total income of ₹ 67,57,69,760/-. The return of income filed by the Assessee was processed u/s.143(1) of the Income Tax Act, 1961 on 10.11.2012. The Assessee has filed a revised return of income on 31.03.2013 admitting an income of ₹ 64,86,88,971/-. The return was taken up for scrutiny under CASS and a notice u/s.143(2) was issued and the scrutiny assessment was completed u/s.143(3) of the Income Tax Act, 1961 on 30.03.2014 by assessing a total income of ₹ 70,53,32,202/-. 3. Subsequently, a notice u/s.148 of the Income Tax Act, 1961 was issued to the Assessee for the Assessment Year 2011 2012 on 29.03.2018 on the ground that there is an escapement of income by recording the reasons as under: -------------------------------------------------------------------------------------- ANNEXURE Vid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is beyond four years and Proviso to Section 147 of the Act applies. As per the Proviso, unless the Assessing Officer has recorded in the assessment for reopening that there is a failure on the part of the Assessee to disclose fully and truly all the materials facts to complete the assessment, the Assessing Officer cannot reopen the assessment. Since, such finding is not available in the reasons recorded, the reopening is not valid. For the above preposition, the learned Counsel for the Assessee relied upon the decision of the Hon‟ble Supreme Court in the case of Commissioner of Income Tax and Another Vs. Foramer France reported in 264 ITR 566. He also relied upon the decision of the Jurisdictional High Court in the case of Fenner (India) Limited Vs. Deputy Commissioner of Income Tax reported in 241 ITR 672 and submitted that in view of the above two decisions of the Hon‟ble Supreme Court and the Hon‟ble High Court the reopening u/s.147 of the Income Tax Act, 1961 is invalid. 8. On the other hand, the learned Departmental Representative strongly relied upon the order passed by the authorities below. 9. We have heard both the sides, perused the materials avail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ok and reproduced at paragraph 3 of this order). 14. In this context, the Hon‟ble Supreme Court in the case of Commissioner of Income Tax and Another Vs. Foramer France (supra) held as under: From the decision of the High Court (see [2001] 247 ITR 436 that (i) section 147 substituted in the Income-tax Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987, had made a radical departure from the original section 147, inasmuch as clauses (a) and (b) had been deleted and under the proviso thereto notice for reassessment would be illegal if issued more than four years after the end of the assessment year, it the original assessment were made under section 143(3); (ii) section 153 related to the passing of an order of assessment and not to the issuing of a reassessment notice under section 147 / 148, (iii) the direction or finding contemplated by section 153(3)(ii) had to be a finding in relation to the particular assessee and the particular year and to be a finding it had to be directly involved in the disposal of the case; (iv) on the facts, the notices issued under section 148 on November 20, 1998, to the Assessee for reopening the original assessments for the assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sonably entertained by the Assessing Officer that any income chargeable to tax has escaped assessment for the assessment year. In cases where the initiation of proceedings is beyond the period of four years from the end of the assessment year, the Assessing Officer must necessarily record not only his reasonable belief that income has escaped assessment but also the default or failure committed by the Assessee. Failure to do so, would vitiate notice and the entire proceedings. Mere escape of income is insufficient to justify the initiation of action after the expiry of four years. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Thus, the duty of an assessee is limited to fully and truly disclosing all the material facts. The Assessee is not required thereafter to prepare a draft assessment order. If the details furnished by the assessee were in conformity with the requirement of all applicable laws and known accounting principles, it is for the Assessing Officer to reach such conclusion as he considered was warranted from su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the said finding is per se unsustainable and submitted that on this count also reopening is invalid. 18. On the other hand, the learned Departmental Representative relied upon the orders of the learned Commissioner of Income Tax as well as the Assessing Officer. 19. We have heard both the sides, perused the materials available on record and gone through the orders of the authorities below. 20. In this case, the Assistant Commissioner of Income Tax forwarded the letter to the Deputy Director of Revenue Audit dated 06.03.2018, wherein he has stated that the break-up for the cost of provision as on 31.03.2011 of ₹ 63.61 crores and details of payment made subsequently from April 2011 to September 2011. The cost of provision booked of ₹ 35.36 crores during the year has ascertained liability and not the ad hoc provision, the same has been settled. He further noted that the Assessee has followed the accounting standard-VII consistently and the provision for cost made by the Assessee for the Assessment Year 2011 2012 is an ascertained liability. They were incurred subsequently and they are well supported with the technical estimates. Besides, there is no provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, he may record his reasons for doing so and inform the AG accordingly within two months from the date of receipt of the LAR. No remedial action needs to be taken in such cases. 21. It is the submission of the learned Senior Standing Counsel appearing for the Revenue by inviting the attention of this Court to sub-para No.3 to Para 4 of Circular No.8/2016 dated 17.03.2016 that such an exercise was contemplated by the Principal Commissioner of Income Tax / Commissioner of Income Tax and whereas the order for reopening of the assessment was passed by the Assessing Officer / Income Tax Officer and as such, the said instructions will not apply to the facts of this case. 22. It is also pointed out by the learned Senior Standing Counsel appearing for the Revenue that the Assessing Officer, after reopening of the assessment, had recorded a categorical finding that the credit balance as on 31.03.2017 amounting to ₹ 5,30,99,960/- is treated as deemed dividend in the hands of the respondent / Assessee and it is an independent finding recorded dehors the contents of the audit objections and the Tribunal, in the impugned common order, had failed to deal with the said issue and me ..... X X X X Extracts X X X X X X X X Extracts X X X X
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