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TMI Blog2024 (6) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... xpired and thus the reopening of assessment proceedings u/s 147 is illegal, void and bad in law. Your appellant submit that the order passed u/s 143(3) r.w.s 147 is illegal, bad in law & void ought to be deleted. 3) Your appellant further reserve the rights to add, amend or alter the aforesaid grounds of appeal as they may think fit by themselves or by their representatives. 2. The assessee is charitable trust registered u/s 12A of the Income Tax Act, 1961 [the Act]. The assessee filed the return of income for assessment year 2009- 10 on 30.09.2009 declaring total income of Rs. Nil. The original assessment u/s 143(3) of the Act was completed vide order dated 23.03.2011 wherein the assessing officer has accepted the income returned by the assessee. Subsequently, the assessing officer issued the notice u/s 148 of the Act dated 17.03.2016 stating that the escapement of assessment within the meaning of section 147 the assessee filed the return of income in response to notice u/s 148 of the Act. The assessing officer was completed the assessment u/s 143(3) r.w.s 147 of the Act assessing the income of the assessee at Rs. 46,12,97,440/- as income from capital gains. Aggrieved, the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated only when failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The Ld. AR submitted that the impugned issue for which the reopening was done by the assessing officer was already verified by the assessing officer during the original assessment proceedings u/s 143(3) and in this regard the Ld. AR draw our attention to notice u/s 142(1) of the Act and details furnished before the assessing officer (Page No. 26 to 34 of the Paper Book). The Ld. AR accordingly argued that the information basis which the assessing officer has initiated the reassessment proceedings is from the records which was already available with the assessing officer and therefore it cannot be said that the assessee has not disclosed the information fully and truly. Therefore, the Ld. AR submitted that the reopening of assessment beyond four years in assessee's case is not valid and liable to be quashed. 5. The Ld. DR on the other hand relevant on the order of lower authorities. 6. We have heard parties and perused the material on record. In assessee's case it is a given fact that the assessment proceedings are completed under section 143(3) (r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a part thereof is invested the corresponding part of the net consideration shall only be considered as utilized towards the objectives of the trust. As no new asset was acquired, the trust was liable to be taxed on the capital gains arising out of transfer of capital assets. Non taxing the gain resulted in underassessment of Rs. 46.13 crore with consequential tax effect of Rs. 10.45 crore. Moreover the Act does not specifically allow carry forward of deficit in case of exempt entities. There shall not be deficit in case of charitable entity as it is supposed to incur expenditure limited to the receipt as trusts are not running on expectation of future profits/income. In view of the same the claim of set off of carry forward deficit against the capital gain is also incorrect. The assessee has failed to disclosed fully and truly all the material facts relevant to the said transaction consequent to which income chargeable to tax has escaped assessment. In view of the above facts, I have reason to believe that income of Rs 46.13 crores has escaped assessment within the meaning of section 147 of the I.T Act 1961." 3. This is for your kind information as per the request made. 7. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad escaped assessment on account of failure of the assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment is sought to be reopened on account of change of opinion of the Assessing Officer about the manner of computation of the deduction under section 57 of the Act. In a similar case where the notice to reopen the assessment was founded entirely on the assessment records and the entire basis for reopening the assessment was the disclosure which has been made by the assessee in the course of the assessment proceedings and where no material to which a reference was to be found, a Division Bench of this Court in 3i Infotech Ltd. v. Asstt. CIT [2010] 192 Taxman 137, relied upon by Mr. Pardiwalla, in paragraph 12 held : "12. The record before the Court, to which a reference has been made earlier, is clearly reflective of the position that during the course of the assessment proceedings the assessee had made a full and true disclosure of all material facts in relation to the assessment. As a matter of fact, it would be necessary to note that the notice to reopen the assessment on the first issue is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee to disclose fully and truly all material facts necessary for the assessment. As already mentioned, 'this cannot be said in the present case. The appeal is consequently allowed; the judgment of the High Court is set aside and the impugned notices are quashed. The parties in the circumstances shall bear their own costs throughout." 19. As already mentioned, it cannot be said in the present case that there was an omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It cannot be stated that the condition precedent to the reopening of an assessment beyond a period of four years has been fulfilled. The statement in the reasons for reopening "I have reasons to believe that income of Rs. 7,66,66,663/- which was chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all facts necessary ....." is clearly made only as an attempt to take the case out of the restrictions imposed by the proviso to section 147 of the Act. As observed in Parashuram Pottery Works Co. Ltd.'s case (supra), it would be in the interest of citizens of India or we shoul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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