TaxTMI 
TaxTMI 
2011 (1) TMI 178
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....ource was claimed. Along with the computation, the status of carried forward unabsorbed business loss and depreciation and bifurcation of accumulated depreciation and accumulated loss as per books for the assessment year 2003-04 were also attached. An intimation under section 143(1) of the Act was passed accepting the return filed by the petitioner. Thereafter, a notice under section 154 of the Act came to be served on the petitioner requiring the petitioner to withdraw excess depreciation claimed and allowed to the petitioner on hotel building at the rate of 20 per cent as against 10 per cent admissible with effect from 1-4-2003 for assessment year 2003-04. The mistake apparent on record was corrected by an order dated 18-2-2005 made under section 154 of the Act. The depreciation was effectively reduced to Rs. 2,18,51,428 from Rs. 2, 99,86,870 and the net reduction was set off against the business loss of Rs. 81,35,442. Thereafter, notice was issued under section 142(1) of the Act. During the course of scrutiny assessment proceedings the Assessing Officer asked the petitioner to clarify the method of claiming depreciation pertaining to fixed assets for the project of Gandhidham an....
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....r while framing assessment order which is the reason why section 147 has been inserted in the Income-tax Act to protect the interest of the Revenue and to tax the escaped income. It is submitted that it appears that according to the respondent some of the facts slipping from the mind of the Assessing Officer is sufficient ground for reopening assessment. It is pointed out that apart from the fact that the reasons recorded do not indicate any failure on the part of the petitioner to disclose fully and truly all material facts, there is also nothing in the entire order rejecting the objections to indicate that there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment and as such, the impugned notice having been issued beyond a period of four years from the end of the relevant assessment year, is barred by limitation and is required to be quashed and set aside. The learned advocate has also advanced submissions on the merits of the case, however, considering the view that the Court is inclined to take in the matter, it is not necessary to set out the same in detail. 6. The petition is opposed by Mr. K.M. Parikh, lea....
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....0, where the Court has interpreted the provisions of Explanation 2 to section 147 of the Act, and held that : "The language employed by the proviso itself indicates that the Legislature has consciously laid down a time frame within which reassessment proceedings in relation to escaped income can be initiated, and beyond the prescribed period of limitation, even if income has escaped assessment, if the required conditions enumerated in the proviso are not shown to exist, no action can be initiated under section 147 of the Act regardless of the fact that income may have escaped assessment." It is, accordingly, submitted that even if resort is made to the provisions of Explanation 2 to section 147, the requirement of the proviso to section 147 of the Act, namely that there should be failure on the part of the assessee to disclose fully and truly all materials facts necessary for its assessment, still has to be satisfied. 7. The undisputed facts of the case are that the assessment year is 2003-04 whereas the notice under section 148 has been issued on 24-3-2010, which is clearly after the expiry of a period of four years from the end of the relevant assessment year. In the circumsta....
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....t, a bare perusal of the reasons recorded indicates that there is no mention whatsoever in the said order that there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment. Nor do the reasons recorded disclose any such failure. 9. Moreover in the petition, categorical averments have been made to the effect that the assessment has been reopened beyond a period of four years in a case of scrutiny assessment under section 143(3) of the Act and there is no failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, however, despite the fact that a detailed affidavit-in-reply has been filed by the respondent, there is no averment in the entire affidavit-in-reply to indicate that there is any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment. Thus, the said contention raised by the petitioner remains uncontroverted. 10. A contention has been taken in the affidavit-in-reply as well as by the learned counsel for the respondent that in the light of the provisions of section 149(1)(b) of the Act, reassessment ....
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.... to section 147 of the Act and sub-section (1) of section 149 operate in different fields and are independent from one another. Thus, in a case where the requirements of the proviso to section 147 of the Act are not satisfied, no notice under section 148 can be issued beyond a period of four years even if the amount of tax escaping assessment is more than or likely to be more than one lakh rupees, whereas, in a case where the amount of tax escaping assessment is not more than or not likely to be more than one lakh rupees, even if the requirements of the proviso to section 147 of the Act are satisfied, no notice can be issued beyond a period of four years. Thus, even in those cases falling under clause (b) of sub-section (1) of section 149 of the Act, if the notice under section 148 is issued beyond a period of four years but within a period of six years from the end of the relevant assessment year, for the purpose of invoking section 147 of the Act, the requirements of the proviso, namely that there should be failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment are still requires to be satisfied. The time-limit of six years....