TaxTMI 
TaxTMI 
2010 (9) TMI 391
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....cumstances of the case. (e) award cost to the petitioner." 2. The brief facts of the case giving rise to the present writ petition are that the petitioner is a company incorporated under the Companies Act, 1956 and carried on the business of manufacture and sales of sugar and chemical, etc. The petitioner had two sugar units in the State ofU. P.The first sugar unit was situated at Dhampur, District Bijnor and the other unit was situated at Rouzagaon, District Barabanki. 3. For the assessment year 1995-96, the petitioner filed a return on November 30, 1995, disclosing a loss of Rs. 20,61,04,870, which included the loss suffered in the assessment year 1995-96 to the extent of Rs.69,80,314. Initially, the return of the petitioner was processed under section 143(1)(a) of the Income-tax Act (hereinafter referred to as the "Act"). Subsequently, the case of the petitioner was selected for scrutiny and a notice under section 143(2) of the Act was issued and the assessment under section 143(3) of the Act had been completed onMarch 3, 1998. The assessing authority made an addition of Rs. 6,51,75,548 (Rs. 4,22,93,200 for the Dhampur unit and Rs. 2,28,82,348 for t....
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....earned counsel for the petitioner and Sri Shambhu Chopra, learned standing counsel. 6. Learned counsel for the petitioner submitted that the notice under section 148 read with section 147 of the Act has been admittedly issued onMarch 5, 2002beyond the period of four years. For the assessment year 1995-96, the period of four years expired onMarch 31, 2000while it was issued onMarch 5, 2002. He submitted that the proceeding under section 147 of the Act can only be taken beyond the period of four years in case where there is failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. He submitted that the petitioner has disclosed fully and truly all material facts necessary for the assessment along with the return and during the course of the assessment proceeding and on consideration of such materials, the assessment order under section 143(3) of the Act was passed. He submitted that in the reasons recorded, there is no whisper that the petitioner failed to disclose fully and truly all material facts necessary for the assessment and, therefore, the initiation of the proceeding is patently barred ....
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....ading and Investments P. Ltd. v. Deputy CIT reported in[2009] 308 ITR 190 the decision of the Allahabad High Court in the case of Universal Subscription Agency Pvt. Ltd. v. Joint CIT reported in [2007 UPTC 419 ; [2007] 293 ITR 244 the decision of the Bombay High Court in the case of [1997] 226 ITR 156 and the latest decision of this court in Civil Miscellaneous Writ Petition No. 1057 of 2006 Smt. Raj Rani Gulati v. Union of India [2010] 329 ITR 370, decided on May 3, 2010. On the issue that the proceeding under section 148 read with section 147 of the Act cannot be initiated on account of change of opinion, he relied upon the latest decision of the Supreme Court of India in the case of CIT v. Kelvinator of India Ltd. reported in [2010] 320 ITR 561. He submitted that it is a settled principle of law that excise duty is not part of the closing stock. Reliance is placed on the decision of the Supreme Court of India in the case of Collector of Central Excise v. Polyset Corporation reported in [2000] 10 SCC 241, the decision of the Bombay High Court in the case of Caprihans India Ltd. v. Prakash Chandra reported in [2002] 256 ITR 721 (Bom) and the decision of the Madras High Court in th....
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....recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment years) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year : Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1.-Production before the Assessing Officer of account books or o....
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....as may be, apply accordingly as if such return were a return required to be furnished under section 139 : Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991, and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to sub-section (2) of section 143, as it stood immediately before the amendment of the said sub-section by the Finance Act, 2002 (20 of 2002), but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice : Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991, and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of subsectio....
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.... details of closing stock and on consideration of such details, the value of the closing stock was enhanced and an addition was made towards the closing stock, which has been subsequently deleted in appeal. The issue relating to undervaluation has been considered in the assessment order in paragraph 11. So far as ground No. 2 relating to interest is concerned, the assessing authority has considered it in paragraph 23 of the assessment order in detail. In paragraph 23, the assessing authority has assessed the interest and dividend income as income from other sources which included the interest received from interoperate loans at Rs. 1,07,39,953. The details of Rs. 1,73,00,000 are annexure B to the balance-sheet wherein under the head "Details of interest" the interest received on intercorporate loans of Rs. 1,07,39,953 is shown. The details include the interest received for Rs.7,08,904 and Rs. 12,329 from VLS Finance Limited, New Delhi on product basis, interest of Rs. 8,01,279 from M/s. U. P. Straw Board and Agro Product Limited on product basis, and a sum of Rs. 9,18,357 from M/s. Kotak Mahindra Finance Limited,Bombayon product basis. There- fore, it cannot be said that the comple....
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....w Board and Agro Product Ltd., M/s. V. L. S. Finance Ltd. and Kotak Mahindra Finance Ltd. and the list of interest charged showing the basis of charging interest, whereas at the time of proceeding it imposed interest on year end basis. 28. That the third objection was also dealt with as per schedule 8 of the balance-sheet, which was furnished by the assessing authority. Thus, the petitioner had disclosed the matter fully and truly and the material facts necessary for assessment in course of the regular assessment proceeding under section 143(3) of the Income-tax Act. Therefore, Explanation 1 to the proviso to section 147 of the Act is not applicable, and accordingly, issuance of notice under section 148 of the Act is wholly illegal, without jurisdiction and liable to be quashed." 12. In view of the above, we are of the view that the present is not a case of failure on the part of the assessee to disclose the material facts. All the material facts relating to the valuation of closing stock and interest had been disclosed along with the return and during the course of the assessment proceeding which have been duly examined by the assessing authority while passing t....
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....ing action under the said section within four years and only in the exceptional case mentioned therein, namely, where there is failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment for the assessment year, the proceeding can be initiated beyond the period of four years. Thus, the proviso to section 147 completely prohibits to take action beyond four years unless the case is covered under the exception mentioned in the proviso itself. Section 149 provides limitation for the issue of notice under section 148. Section 149(1)(a) provides general limitation for issue of notice of four years. Section 149(1)(b) provides six years limitation for issue of notice in case escaped income exceeds rupees one lakh. Section 149(1)(a) and (b) read with the proviso to section 147 of the Act clearly provides that where the case falls under the exception mentioned in the proviso to section 147 of the Act the proceeding can be taken beyond the period of four years, but within six years if the escaped income exceeds rupees one lakh and in for all other cases, the limitation for issue of notice remains four years meaning thereby that if the income cha....