TMI Blog2023 (8) TMI 1079X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer while recording the reasons and also by the approving authority which granted approval under Section 151 of the Act. Further, in ITR Form 6 filed under Section 139(1) of the Act in clause 40 of Part A - P L account sum was disclosed as provision for doubtful debts and in Schedule relating to MAT, petitioner disclosed the working of book profit - Petitioner in Note No. 24 to the accounts disclosed the provision for bad and doubtful debts. Provision for bad and doubtful debts is in Note No. 14 Trade Receivables of the Audited Accounts as a reduction from trade receivables and also in Note No. 24 Other Expenses . Audited accounts were filed during the course of assessment proceedings - respondent no. 1 records that the details called for have been filed and discussed with petitioner and the book profit is calculated by respondent and is brought to tax under Section 115JB of the Act. Based on these facts, there is no failure to disclose any material facts necessary for the assessment so as to invoke provision of Section 147 of the Act after a period of four years from the end of the relevant assessment year. The details have been filed in the course of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by Godrej Group. The matter pertains to Assessment Year 2013-2014. 2. Petitioner is challenging the notice dated 23rd March 2021 issued by respondent no. 1 under Section 148 of the Income Tax Act, 1961 (the Act) for reopening the assessment for Assessment Year 2013-2014 and the order dated 18th January 2022 disposing petitioner s objections. 3. Petitioner had filed its return of income on 30th September 2013 declaring nil income under regular provisions of the Act on account of losses. Petitioner paid tax on book profit under Section 115JB of the Act. In the computation of income filed alongwith return of income, petitioner claimed deduction under Section 35 of the Act amounting to Rs .2,26,96,494/-. In the ITR Form 6 (the said form), petitioner, in Part A-P L, Item 38 Other expenses (specify nature and amount) disclosed R D expenses of Rs. 47,11,129/- and loss on sale of asset Rs. 8,73,445/- and in Item 40 disclosed provision for bad and doubtful debts for Rs. 15,64,902/-. In Part B, Schedule BP, in Item 26 of the said Form, petitioner claimed a sum of Rs .2,26,96,494/- being deduction under Section 35 of the Act in excess of the amount debited to P L account. In Sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the head Trade Receivables , petitioner disclosed that sum of Rs. 15,64,902/- being allowance for bad and doubtful debts is reduced from the trade receivables. In the statement of P L account under the head Other Expenses , petitioner claimed Rs. 18,86,81,482/- and the breakup of that was to be found in Note No. 24. Similarly, in balance sheet as of 31st March 2013, under the head Current Assets , trade receivable was disclosed at Rs. 60,13,54,109/- and the breakup of that was disclosed in Note 14. 6. Thereafter, respondent no. 1 passed an assessment order dated 25th February 2016 under Section 143(3) of the Act assessing petitioner s income at Rs. 8,74,57,101/- under Section 115JB of the Act. On 23rd March 2021, petitioner was served with a notice under Section 148 of the Act alleging that there are reasons to believe that income for Assessment Year 2013-2014 has escaped assessment within the meaning of Section 147 of the Act. Petitioner was also provided with reasons for such belief. Briefly the alleged reasons state that while computing book profit under section 115JB of the Act, provision for bad doubtful debts of Rs. 15,64,902/- accounted under Note 24 Other Expe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment. This jurisdictional condition is not satisfied as the present re-assessment proceedings are based on details furnished during the course of the regular assessment proceedings and this fact has not been rebutted in the order rejecting the objections; (b) the issues for which the impugned re-assessment proceedings are initiated were subject matter of inquiry and investigation in the course of the regular assessment proceedings and, therefore, the impugned notice is based on change of opinion which is not authorised by the Act; (c) the issues sought to be agitated in the impugned proceedings are covered by binding decisions and, therefore, the pre-condition of reason to believe for initiating reassessment proceedings is not satisfied; (d) there is no tangible material, having come into existence post regular assessment proceedings, so as to confer jurisdiction on respondents for initiating the reassessment proceedings; (e) the approval obtained is without due application of mind and, therefore, violative of Section 151 of the Act; (f) there is no escapement of income nor is there an iota of material suggesting the same and hence, the jurisdictio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er 2015 and 11th February 2016. There is no failure to disclose any facts necessary for the assessment, but on the contrary the claim of deduction under Section 35 of the Act was examined by raising a specific query and after going through the details filed in the course of the assessment proceedings, the same was allowed in the assessment order. The impugned proceedings would amount to review of the earlier order without any fresh tangible material on record. Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. Therefore, the impugned proceedings are wholly without jurisdiction, illegal and bad in law; (i) as regards loss on sale of asset of Rs. 8,73,445/-, the loss on sale of asset has been disclosed in Note No. 24 of the P L account. The Audited Accounts were filed by petitioner vide letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had followed an enquiry with due diligence on the basis of the account books or other evidence produced by the assessee, he could have discovered material evidence. The mere production of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer does not necessarily amount to a disclosure within the meaning of the first proviso to Section 147 of the Act. The nature of the material produced and the circumstances in which it was produced assumes some significance. 11. In our view, the law as laid down in Indian Hume Pipe (Supra) is there for everyone to see. In that case, the Court came to the conclusion that the assessee had not made true and full disclosure because the assessee, in that case, in the return of income that was originally filed, submitted a computation of taxable long term capital gains. After computing the long term capital gains at Rs. 23.19 Crores, the assessee sought to deduct therefrom an amount of Rs. 23.24 Crores invested under Section 54EC of the Act. The statement, however, was silent about the date on which the amounts were invested. During the course of assessment proceedings, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re on the part of the assessee to disclose fully and truly all material facts necessary. Since in the case at hand, the assessment is sought to be reopened after a period of four years, the proviso to Section 147 of the Act is applicable. It is also settled law that the Assessing Officer has no power to review an assessment which has been concluded. If a period of four years has lapsed from the end of the relevant year, the Assessing Officer has to mention what was the tangible material to come to the conclusion that there is an escapement of income from assessment and that there has been a failure to fully and truly disclose material fact. After a period of four years even if the Assessing Officer has some tangible material to come to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee. If we consider the reasons for reopening, as regards provision for doubtful debts, we would first of all observe that the Assessing Officer records Since the provision is made on account of bad and doubtful debts which is not an ascertained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st December 2015 and 28th December 2015, has called for the details of deduction under Section 35 of the Act and same were filed under cover of letter dated 17th December 2015 and 11th February 2016. There is no failure to disclose any facts necessary for the assessment, but on the contrary the claim of deduction under Section 35 of the Act was examined by raising a specific query and after going through the details filed in the course of the assessment proceedings, the same was allowed in the assessment order. The impugned proceedings would amount to review of the earlier order without any fresh tangible material on record and, therefore, the impugned proceedings are wholly without jurisdiction, illegal and bad in law. Under Rule 6(7A), the Department of Scientific and Industrial Research is required to submit its report to the Income Tax Authorities in Form 3CL. There is no requirement of the assessee to file the said form, but Form No. 3CL is required to be submitted by the Department of Scientific and Industrial Research to the Income Tax Authorities. Therefore, the allegation of failure to file the said form cannot be attributed to petitioner. 16. Dealing with similar sit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of the assessment. Petitioner has disclosed all necessary primary facts during the course of the assessment. The reasons as recorded do not disclose as to what are the primary facts which were not disclosed by petitioner during the course of the assessment proceedings and which came to the knowledge of respondents after regular assessment so as to invoke the power under Section 147 of the Act. The reasons recorded admit that reopening is sought based on materials filed in the course of regular assessment proceedings. Inasmuch as petitioner has disclosed all the primary facts necessary for the assessment and the reasons do not disclose what facts which petitioner was obliged to disclose have not been disclosed, the impugned notice dated 23rd March 2021 is barred by first proviso to Section 147 of the Act. In an unreported judgment of this Court in First Source Solutions Ltd. V/s. Assistant Commissioner of Income Tax Writ Petition No. 2762 of 2019 dated 31.8.2021, the Court held that a general statement that the escapement of income is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X
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