TMI Blog2015 (1) TMI 1463X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the impugned proceedings. Whether the petitioner had made full and true disclosure with regard to the year of commencement of business? - Assessment proceedings are not a one way proceedings, even in the case of the assessee, the Assessing Officer while completing the regular assessment, called for details and documents which were furnished by the assessee - no hesitation to hold that the materials disclosed by the assessee were available with the Assessing Officer and it is from such material, the present impugned reopening proceedings have been initiated. Thus, the respondent had initiated proceedings purely based on existing information which was provided by the assessee in the course of original assessment and based on the return of income filed by the assessee for the relevant year. The petitioner before the Assessing Officer placed the profit and loss account and the balance sheet and the relevant annexures and notes to the financial statements. The notes are important material because it would disclose the details pertaining to various entries in the profit and loss account and balance sheet and explain the stand taken by the assessee. So far as the fixed assets is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner would state that during the assessment proceedings, the case of the petitioner was referred to the Transfer Pricing Officer (herein after referred as 'TPO' for brevity) under Section 92 CA (1) of the Act, for determination of the arm's length price of international transaction done by the petitioner with its associated enterprises. 3. The petitioner participated in the assessment proceedings as well as in the proceedings before the TPO. The TPO vide order dated 27.12.2012 under Section 92 CA (3) of the Act accepted arm's length price of the international transactions done by the petitioner with the associated enterprises. The petitioner's case is that their Assessing Officer after considering the order of the TPO and independently examining the submissions / documents placed on record by the petitioner, completed the assessment vide order dated 25.02.2013 passed under 143(3) of the Act, and assessed the total loss of the petitioner after making certain disallowances by the impugned notice dated 24.03.2016. The 1st respondent seeks to reopen the assessment for the relevant year. Pursuant to such notice, the petitioner vide letter dated 03.05.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m of Understanding with the Government of Tamil Nadu to set up a Truck manufacturing facility at SIPCOT, Oragadam over 398 acres of land. Further, the brief note refers to the in-house R D facility activity for research and development of new products and variants towards supporting its manufacturing activity. 6. The learned senior counsel then referred to the order passed by the TPO dated 27.12.2012, wherein the officer has noted that the petitioner proposes to start commercial production in the year 2012. Further, it was pointed out that the details of the international transactions and the payment for research and development charges paid to their associated enterprises in Germany. Thus, it is a case of the petitioner that the Assessing Officer, while completing the scrutiny assessment and passing the order dated 24.01.2013 took note of the referral made to the TPO, the stand taken by the assessee that they are approaching the ICICI bank for obtaining a loan of ₹ 2,200/- crores for the purpose of seting up the facility for manufacture of commercial vehicles and specifically in paragraph no.4.1 (iv), the Assessing Officer has noted that during the relevant year, the Comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al on record, reassessment is invalid; the mere change of opinion does not constitute reason to believe that income chargeable to tax has escaped assessment and reassessment merely on the basis of denial of deduction claimed in the subsequent year is invalid, as no fresh tangible material is available. The petitioner referring to the decision of the Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Limited. vs. ITO reported in 259 ITR 19 requested that a speaking order be passed on their objection, the respondents vide impugned order dated 25.10.2016 has rejected the petitioner's objections stating that there has been no discussion about the reasons for which the case has been reopened now in the original assessment order, Hence no opinion has been formed in this regard which may not amount to change of opinion. Further in the original assessment, there is no discussion, no details were called for, no finding, either positive or negative was arrived at during the course of original assessment. Hence there is no question of change of opinion. That mere production of books of account by assessee before the Assessing Officer, there can be no presumption tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted on mere change of opinion, which is impermissible. The following decisions were referred to support the propositions as framed by the learned senior counsel for the petitioner. (i).Reasons do not record failure on part of the assessee to disclose true and material facts-reassessment invalid: a.Fenner India Ltd.v.DCIT (Mad): 241 ITR 672 (Mad) b.Avtec Ltd. v. DCIT:395 ITR 434 (Del) (ii).Full and true disclosure reassessment invalid: Karti P.Chidambaram v. ACIT: (2017) 88 taxmann.com 27 (Mad) (iii).Explanation 1 to section 147 not applicable CIT v. Baer Shoes(India) (P.) Ltd:331 ITR 435 87(Del) (iv).Re-assessment on mere change of opinion - invalid CIT v. Kelvinator of India Ltd:320 ITR 561 (SC) (v).Re-assessment in absence of fresh tangible material invalid CIT v. RPG Transmissions Ltd:359 ITR 673 (Mad) 8. Mrs.Hema Murali Krishnan, learned senior standing counsel for the Revenue sought to sustain the impugned proceedings by contending that there is a clear failure on the part of the assessee in making full and true disclosure and while completing the scrutiny assessment, the assessing officer will not go into the details contained in Form III CEV, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note the legal position with regard to the exercise of powers by the first respondent under Section 147 of the Act. For this purpose, I would refer to one of the earliest decisions on the issue namely, the decision of the Hon'ble Supreme Court in Calcutta Discount Company Limited Vs. ITO, reported in 1961 (41) ITR 191 (SC). The said appeal was against the decision of the Division Bench of the Calcutta High Court, which reversed the order passed by the Single Bench under Article 226 of the Constitution of India, pertaining to reopening of the assessment under Section 34 of the Income Tax Act, 1948. The legal principles laid down in the said decisions are culled out as hereunder: (i)Duty of disclosing of primary facts relevant to the decision of the question before the Assessing Authority lies on the assessee. (ii)When some account books or other evidences has been produced, there is no duty on the assessee to disclose further facts, which on due diligence, the income tax officer might have discovered. (iii) Duty on the assessee does not extend beyond the full and truthful disclosure of all primary facts. (iv)Once all primary facts are before the Assessing Authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... closing all the material facts and is not required to prepare a draft assessment order. 14. Bearing the above legal principle in mind, we may look into the factual scenario in the case on hand. As pointed out the reasons for reopening, the Assessing Officer would admit that he has referred to the details mentioned in the annexure to the return filed by the assessee for the assessment year 2009-10. Thus, there was no independent material to come to the conclusion that there has been no full and true disclosure made by the assessee. In such circumstances, it has to be seen whether the 1st respondent was justified in reopening the assessment year The revenue contends that they can do so, based on the decision in A.L.A firm (supra). The High Court of Delhi in the recent decision in the case of TATA Power Delhi Distribution considered this very issue wherein the Revenue relied upon the decision in A.L.A firm. It was pointed out that the expression reason to belief was subject matter of the extensive discussion by the Full Bench of the Hon'ble High Court of Delhi, in CIT Vs. Kelvinator of India Limited, reported in 256 ITR 1 (Delhi) and the Hon'ble Supreme Court considered t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material available with the Assessing Officer except that which was disclosed in the return of income filed by the petitioner for the relevant assessment year. This has been held to be not a sound foundation for exercising power under Section 147 read with Section 148 of the Act. This would be sufficient to set aside the impugned proceedings. However, since elaborate submissions were made on either side, touching upon the factual issues only to test whether reopening was justified or whether it was a change of opinion. I proposed to consider the said issue. The question revolves upon whether the petitioner had made full and true disclosure with regard to the year of commencement of business. The assessee would contend that there has been full and true disclosure. 17. The learned senior counsel for the assessee pointed out that this aspect was mentioned in the return of income and duly explained in the notes to the financial statements, which forms part of the return of income and specifically dealt with by the TPO, as it was disclosed by the assessee in Form No.3 CEB. The Assessing Officer issued notices under Section 142(1) of the Act and called for information, which were fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income filed by the assessee for the relevant year. The petitioner before the Assessing Officer placed the profit and loss account and the balance sheet and the relevant annexures and notes to the financial statements. The notes are important material because it would disclose the details pertaining to various entries in the profit and loss account and balance sheet and explain the stand taken by the assessee. So far as the fixed assets is concerned in the balance sheet, the petitioner has indicated that the capital work is in progress. 19. Thus, in the absence of any new material in the hands of the Assessing Officer or discovery of some materials or a new insight after the completion of the original assessment, the question of reopening does not arise. The conclusion arrived by the Assessing Officer in the impugned order that merely the petitioner has produced books of account before the Assessing Officer and that there is no presumption that all the books were seen by the Assessing Officer is factually incorrect, as during the course of assessment proceedings, documents and evidences were called for from the assessee which were produced and after perusal of the same, the a ..... 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