TaxTMI 
TaxTMI 
2011 (3) TMI 361
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....he assessee that the assessee company has submitted its return of income for AY 1997-98 on 26.11.97, declaring income of Rs.756.48 crores; that the assessment was completed u/s 143(3) of the I.T. Act on 7.2.2000, at an income of Rs.793.72 crores; that the CIT(A) vide order dated 29.03.2000 granted partial relief to the assessee; that the Tribunal vide order dated 20.3.2009 decided the assessee's appeal along with said appeals for other issues; that in the satisfaction note recorded by the AO for reopening the completed assessment, the AO recorded, inter alia, that deduction u/s 80-O of the Act was claimed by the assessee on gross receipts of Rs.630.92 lakhs without deducting the proportionate expenses incurred to earn such income; that the assessee had credited simple interest in the accounts, on credits extended to Andhra Pradesh State Electricity Board (APSEB) in respect of supplies made to Vijaywada TPS, although the memorandum of understanding provided for charging compound interest; and that since the assessee was following mercantile system of accounting, interest accrued to the extent of the difference on simple interest and the compound interest was required to be brought t....
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.... 5. We have heard the parties on this issue and have perused the material available on record. Undisputedly, the reopening of the completed assessment for both the concerned years came after the expiry of four years from the end of the relevant assessment years. The issue up for consideration is as to whether such reopening of completed assessment for both the years involved, is justified in law, considering the first proviso to section 147 of the Act. Section 147 and the first proviso thereto, of the I.T. Act, read as follows: "147. If the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or re-compute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under ....
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.... system of accounting, interest accrued to the extent of difference between simple interest and compound interest is required to be brought to tax. In view of above, I have reason to believe that the true income of the assessee has escaped assessment, thus, proceedings u/s 147/148 are taken up hereby subject to approve. Submitted. Sd/- Dy. Commissioner of Income Tax Circle 2(1), New Delhi. In both the issues there is a prima facie case for taking action u/s 148 of the I.T. Act, 1961. It is recommended that approval may be granted by CIT-I, Delhi. Sd/- 3/3/04 CIT-I, New Delhi. Approved as proposed Sd/- 4/3/04 8. A copy of the satisfaction note for assessment year 1998-99, is contained at page 68 of the assessee's paper book for assessment year 1998-99. This satisfaction note and the CIT(A)'s approval thereon read as under: Satisfaciton Note M/s Bharat Heavy Electricals Ltd. A.Y. 1998-99 The Return of Income was filed on 26.11.98 at an income of Rs.11,01,30,52,670. Scrutiny u/s 143(3) was completed on 20.3.01 at an income of Rs.11,02,40,17,253. It is noted that the deduction u/s 8....
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....ereinabove, not even an allegation of such failure has been made against the assessee company by the AO for either of the assessment years involved. Reliance by the assessee on Indian Farmers Fertilizers Coop. Ltd. (supra) is apt. Therein, it has been held that where in the reasons recorded in reopening, there was no allegation that the assessee had failed to disclose fully or truly all material facts necessary for its assessment, the AO was unjustified in taking action u/s 147/148 after the expiry of four years from the end of the respective relevant assessment year. In the present case also, the Department has not been able to show, the AO to have recorded, in the reasons for reopening the assessment for both the years, any allegation that the assessee had failed to disclose fully and truly all material facts necessary for its assessment, even though both the assessments were reopened after the expiry of four years from the end of the relevant assessment years. 10. The CIT(A) has rejected the assessee's objection in this regard by observing that the re-assessment proceedings were within limitation, since, the notices u/s 148 of the Act were issued within six years from th....