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TMI Blog2021 (12) TMI 57X X X X Extracts X X X X X X X X Extracts X X X X ..... ner's total income was assessed at Rs. 1,07,75,57,235/- before allowing deduction under Section 33AC of the Act. Subsequently, the total income was revised at NIL wherein deduction under Section 33AC of the Act was allowed to the extent of Rs. 1,07,59,92,027/-. Petitioner received a communication dated 19th October, 2000 from respondents calling upon petitioner to explain why the items mentioned in the said communication should not be treated as income chargeable from other sources and deduction under Section 33AC of the Act be revised accordingly. Petitioner filed reply dated 30th October, 2000 explaining that the deduction under Section 33AC of the Act for Assessment Year 1994-95 was chargeable to the extent of total income provided the amount was credited to a reserve account and is utilised for the purchase of new ship within the specified period. Petitioner also explained that this position in law was amply clear because Section 33AC of the Act has been amended with effect from 1st April, 1996 to restrict deduction to 50% of the income derived from the business of operation of ships only which takes out the purview of deduction of any income arrived from the business other tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s respondents are able to show that escapement of assessment has happened due to assessee's failure to disclose fully and truly all material facts necessary for its assessment, the Assessing Officer cannot exercise jurisdiction. Mr. Pardiwalla submitted that even in the reasons given for reopening, a copy whereof is annexed to the affidavit in reply, there is not even an attempt made by respondent, let alone disclosing which are the material facts which have not been disclosed fully and truly, to even allege that there has been failure on the part of petitioner to disclose fully and truly all material facts. 7. Mr. Sharma submitted that petitioner should have filed its return pursuant to the notice under Section 147 of the Act and on that basis should have sought reasons for issuing such notice as laid down by the Hon'ble Apex Court in the case of GKN Driveshafts (India) Ltd. vs. ITO [2003] 259 ITR 19 and as that has not been done in this case, petition should be rejected. 8. In rejoinder, Mr. Pardiwalla relying upon a judgment of Division Bench of this Court in Caprihans India Ltd. vs. Tarun Seem, Deputy Commissioner of Income-tax [2003] 132 Taxman 123 (Bombay) submitted that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons to believe as recorded in the reasons do not warrant reopening before the reassessment proceedings are commenced. The Assessing Officer disposes of these objections and if satisfied with the objections, then the impugned reopening notice under Section 148 of the Act is dropped/withdrawn otherwise it is proceeded with further. In issues such as this, i.e., where jurisdictional issue is involved the same must be strictly complied with by the authority concerned and no question of knowledge being attributed on the basis of implication can arise. We also do not appreciate the stand of the Revenue, that the respondent-assessee had asked for reasons recorded only once and, therefore, seeking to justify non-furnishing of reasons. We expect the State to act more responsibly. The reasons disclosed by the Assessing Officer, on the face of it, does not indicate any failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. It is settled law that in view of the proviso to Section 147 of the Act no action for re-opening after four years could be taken unless the Assessing Officer has reason to believe that income has escaped assessment by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he amounts capitalised from reserves) of the assessee, no allowance under this subsection shall be made in respect of such excess. It is clear from reading of the provisions of Section 33AC of the Act that the deduction was to be allowed on the basis of total income and not on the income chargeable to tax under the head "Profits and gains of business or profession". Therefore, the view of Respondent No.1 for the reasons that excess deduction has been allowed to petitioner under Section 33AC of the Act in respect of the dividend income, the long term capital gains and interest income is not valid. 11. In our view, the deduction under Section 33 AC of the Act as it stood in the relevant year was to be allowed on the basis of total income. The Finance Act, 1995, amended the said provisions with effect from 1st April, 1996 to provide that the deduction is to be allowed at 50% of the profits derived from the business of operation of ships (computed under the head "Profits and gains of business or profession" before making a deduction under that section). This subsequent amendment made to the section clearly reflects that prior to the amendment the deduction was to be allowed on the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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