TMI Blog2023 (2) TMI 719X X X X Extracts X X X X X X X X Extracts X X X X ..... facts were embedded in such a manner that the same could not be discovered with due diligence. As difficult to accept this plea inasmuch as all these details were contained in the return of income in the audited accounts and profit and loss statement, also explained in the notes attached to the auditor s report, besides the communication issued by the AO pursuant to which the order of assessment u/s 143(3) came to be passed. There was no failure on the part of the petitioner to disclose fully and truly any material fact to the AO relevant to the assessment year 2015-16. An order of assessment u/s 143(3) having been passed must be deemed to have been passed after considering all material facts in regard to the queries raised which stood duly answered in terms of the judgment of the Full Bench decision of Delhi High Court in Commissioner of Income-tax Vs. Kelvinator of India Ltd [ 2002 (4) TMI 37 - DELHI HIGH COURT] . As stated that there was no new information received by the AO and reference was made to the notes attached to the annual accounts submitted by the assessee-company for the purposes of reopening. It is, thus, clear that no new information was received by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s leading to the said reversal was also given in note No.25 forming a part of the financial statement for the year ended 31st March 2014. 3. The case of the petitioner is that the revenue from the sale of the TDR was treated as business income and were accordingly offered to tax in the return of income for the assessment year 2012-13, which was selected for scrutiny under order of assessment under section 143(3) of the Act. It is further stated that in the return of income from the assessment year 2014-15, the loss resulting from the reversal of the sale of TDR was treated as the business loss and the deduction thereof was claimed under section 28 of the Act. The claim of such loss as a deduction from business income was specifically disclosed in the return of income and profit and loss account for the assessment year 2014-15. It is stated that during the course of assessment proceedings for the assessment year 2014-15, the petitioner had, along with return of income, also furnished the audited financial statements. The return was selected for scrutiny for the assessment year 2014-15, during the course of which the respondent No.1 made enquiries into cancellation of TDR sale. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment of the assessment year 2014-15 on the ground that income had escaped income within the meaning of section 147 of the Act. The reasons for reopening as furnished to the petitioner read as under : In this case, assessment for AY 2-14-15 was completed on 02.12.2016 accepting the returned loss of Rs.11,83,03,084/-. As per provisions of section 37(1) of the IT Act, any expenditure incurred by a person, not being in the nature of capital expenditure laid out wholly and exclusively for the purposes of business, shall be allowed as deduction. It is observed from the note 25(m) attached to annual accounts that assessee company has reversed sale of TDR aggregating Rs.403.80 lakhs in the profit and loss accounts. Further, on perusal of the notes to annual accounts shown assessee company was holding free hold land at Sewree, Mumbai, was part of the land on which the company operated cotton textile mill in earlier years. The assessee company entered into MOU in March, 2012 with a subsidiary company for transfer of TDR on above referred plot. The company followed up its application for FSI with Municipal Authorities, however, could not get the same. Accordingly, it g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion dated 11th March 2015 which had been addressed to the AO during the regular assessment proceedings. A copy of the said communication was also furnished to the AO. However, the AO was not satisfied with the explanation so tendered and vide communication dated 9th April 2022, rejected the plea of the petitioner on the ground that there was no documentary evidence whatsoever that the issue of TDR was discussed during the original assessment proceedings under section 143(3) of the Act and that a mere statement that it was discussed would not establish the said fact. By rejecting the argument of the petitioner in the aforementioned manner, the AO held that the reassessment proceedings could not be said to be a change of opinion . 8. In the present case, since the assessment is sought to be reopened beyond the period of four years in a case where an order of assessment was passed under section 143(3) of the Act, the AO was required to satisfy the jurisdictional conditions, I.e., firstly on the basis of his reasons to believe that income chargeable to tax had escaped assessment and secondly, that there was failure on the part of the petitioner to disclose fully and truly all mat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same could not be discovered with due diligence. It is difficult to accept this plea inasmuch as all these details were contained in the return of income in the audited accounts and profit and loss statement, also explained in the notes attached to the auditor s report, besides the communication dated 11th March 2015 issued by the AO pursuant to which the order of assessment under section 143(3) came to be passed. 12. In our opinion, therefore, there was no failure on the part of the petitioner to disclose fully and truly any material fact to the AO relevant to the assessment year 2015-16. An order of assessment under section 143(3) having been passed must be deemed to have been passed after considering all material facts in regard to the queries raised which stood duly answered in terms of the judgment of the Full Bench decision of Delhi High Court in Commissioner of Income-tax Vs. Kelvinator of India Ltd. [2002] 123 Taxman 433 (Delhi). In the said judgment, the Full Bench of Delhi High Court held : We also cannot accept submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded on analysis of the materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to the same set of facts. While passing the original orders of assessment the order dated February 28, 1994, passed by the Commissioner of Income-tax (Appeals) was before the Assessing Officer. That order stands till today. What the Assessing Office has said about the order of the Commissioner of Income-tax (Appeals) while recording reasons under Section 147 he could have said even in the original orders of assessment. Thus, it is a case of mere change of opinion which does not provide jurisdiction to the Assessing Officer to initiate proceedings under Section 147 of the Act. It is also equally well settled that if a notice under Section 148 has been issued without the jurisdictional foundation under Section 147 being available to the Assessing Officer, the notice and the subsequent proceedings will be without jurisdiction, liable to be struck down in exercise of writ jurisdiction of this court. If reason to believe be available, the writ court will not exercise its power of judicial review to go into the sufficiency or adequacy of the material available. However, the present one is not a case of testing the sufficiency of material available. It is a case of ab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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