TaxTMI 
TaxTMI 
2010 (2) TMI 961
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....ss of Rs. 4,54,42,033 and also computed the business loss of Rs. 11,29,45,200 and depreciation of Rs. 89,23,688 to be carried forward to the future years. A note was also annexed forming a part of the return which is stated in detail in the memo of petition. It is averred that the Assessing Officer has passed an assessment order under section 143(3) of the Act dated March 23, 1998 (at annexure B). Thereafter, the Assessing Officer did not accept the submission in the note that the petitioner is not liable to tax in respect of the sale of its undertaking and the claim for deduction was considered by the Assessing Officer and he computed the gross total income of Rs. 5,24,06,934 by deducting Rs. 7,43,82,025 of business loss from Rs. 12,67,88,959 from the total capital gain of Rs. 12,61,19,259 as well as income from other sources to the tune of Rs. 6,69,700. It is averred that the said gross total income of the peti-tioner to the tune of Rs. 5,24,06,934 was a capital gain for which he gave the deduction of unabsorbed depreciation from previous year of Rs. 2,06,01,400 and the past unabsorbed depreciation of Rs. 88,41,290. The Assessing Officer passed the assessment order and computed s....
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....ndent contending, inter alia, that it is not necessary for the Department to furnish the assessee, the reasons recorded for reopening the assessment along with its notice under section 148 of the Act. It is also contended that the notice under section 148 of the Act has been issued after obtaining necessary approval from the Com-missioner of Income-tax, and as per the provisos of section 149(ii) and (iii), the notice could be issued within the time limit of 10 years, and, therefore, it is very much within the time. It is also stated that the petitioner could have availed of the alternative remedy in respect of challenging the impugned notice by way of the present petition under article 226 of the Constitution of India. It is contended that the petitioner has right of a remedy by way of appeal before the Commissioner of Income-tax (Appeals) after the assess-ment is made. It is also stated that the points raised by the petitioner before this court in this petition could also be raised before the Commissioner of Income-tax (Appeals), as the Commissioner of Income-tax (Appeals) is vested with all powers to strike off the reopening of the assessment, and, therefore, as the petitioner ha....
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....termination of correct taxable income but the bifurcative details with all classification and nature of expenditure and receipts is absolutely necessary, which are lacking due to paucity of time available and co-operation of the asses-see in general." 8. Further, affidavit-in-reply is also filed by the respondent, again con-tending that the petitioner-assessee-company sold its spinning mills to M/s. Ashima Syntex Ltd. as ongoing concern. However, the sale proceeds of the same were not offered for taxation by the assessee in the statement of total income. The assessee appended the note being the note forming part of the return which is quoted in detail and which is reproduced : "The assessee has transferred its undertaking being a spinning mill to M/s. Ashima Syntex Ltd., as a going concern and on as is where is and as it what is basis. It is submitted that the undertaking is sold as a going concern as a whole and, therefore, the sale consideration is not liable to tax and, hence, not included in the above computation. Without prejudice to the above, it is submitted that even if the undertaking as a whole is considered as a capital asset, no tax liability arises....
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....ted that : "The submission of audited profit and loss account, balance-sheet or notes to the accounts is not sufficient for determination of correct taxable income but the bifurcative details with all classification and nature of expenditure and receipts is absolutely necessary, which are lacking due to paucity of time available and co-operation of the asses-see in general." 11.Learned counsel Mr. Shah pointedly emphasized this aspect and sub-mitted that admittedly the audited accounts were submitted with the notes which clearly reflect and disclose about transfer of an undertaking with unabsorbed depreciation of the claim made. Therefore, it cannot be said that there was withholding of any material fact or could not have noticed. However, due to paucity of time or for whatever reason, it could not be handled to cause harassment to the petitioner and, therefore, the present petition has been filed. Learned counsel Mr. J. P.Shah strenuously sub-mitted that when the law provides about the manner or subject to the fulfilment of the criteria, the powers could be exercised, and when such ground does not exist, the purported exercise of power for issuance of notice is bad a....
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....lls to M/s. Ashima Syntex Ltd., and therefore, since it was a transfer of an undertaking, it would invite liability of tax as capital gain. He submitted that the petitioner-assessee has omitted the offer of sale consideration of taxation as per the scheme of the Act under the head "Capital gain". He submitted that before the Commis-sioner of Income-tax (Appeals), it was also referred to as "the liability for the short-term capital gain". Learned counsel Mr. Bhat submitted that the claim made by the petitioner-assessee that, even if the undertaking as a whole is considered as a capital asset, no tax liability arises as the indexed cost of acquisition is more than the sale consideration, is misleading as there is no material made available for the same. He, therefore, submitted that the hon'ble apex court has held that when a business undertaking is trans-ferred, it is a capital asset, for which, he placed reliance on the judgment referred to in the reply affidavit. Therefore, it was submitted that the asses-see will have all the opportunity to satisfy the authorities, and, therefore, the court may not entertain the present petition at this stage. He empha-sized and submitted that th....
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....Act has been made, it would not be allowed to be reopened unless the criteria provided for allowing such reopening is fulfilled. Thus, from the perusal of the section, it is very clear that as a general rule, normally the assessment is not permitted to be reopened after the period of four years and at the same time, the Depart-ment is not totally deprived of its right and the absolute ban has not been imposed, but such a right to reopen is further qualified subject to the fulfilment of the conditions referred to therein. Therefore, an exception is carved out to enable the Department to have this recourse of reopening after four years subject to fulfilment of the required conditions or the criteria laid down. One of the conditions or the criteria is failure to disclose fully and truly all material facts which has been emphasized by both the sides. Again, whether there was any such failure to disclose fully and truly all material facts will depend upon facts of each case and there cannot be any set norms or the parameters to decide and it will have to be decided with reference to the facts and material in each case depending upon the sound discretion to be exercised by the authority ....
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....dertaking, specifically stated that the petitioner cannot be said to be guilty of not making full and true disclosure as sought to be canvassed. Reliance placed by Mr. Bhatt on the observations of the hon'ble apex court in the case of Indo-Aden Salt Mfg. and Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624 (SC), is also misconceived as the facts were totally different. In that case, what was sought to be claimed was the depreciation on the masonry work, salt work and the depreciation for the salt work is higher than the masonry work which was sought to be added to the same for getting the benefit of higher depreciation and in that context, the observations have been made that if some material for the assessment lay embedded in the evidence which the Revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the assessing authority. In the facts of the case that is not so as there was no evidence required with regard to the disclosure made for transfer of an undertaking and if any clarification was required, thereof with regard to any bifurcation or classification, the Assessing Officer could have called for the said clarification once th....