TaxTMI 
TaxTMI 
2011 (5) TMI 364
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....n claimed even though there was no production during the year." Thus, according to the Assessing Officer, though there was no manufacturing activity during the previous year, still the assessee had claimed depreciation on plant, machinery, factory, dies and moulds etc. The assessee had also claimed expenses on power and fuel charges, job charges and raw material, even though there was no production during the year. The assessee filed objection against the reopening which was repelled by the AO vide orders dated 7th November, 2007. Thereafter, the AO passed assessment orders dated 12th November, 2007 as per which expenses of Rs.67,14,144/- and depreciation of Rs.32,15,385/- was disallowed. 2. The assessee preferred appeal thereagainst before the CIT (A). In this appeal, the assessee challenged the validity of notice dated 18th September, 2006 and initiation of reassessment proceedings on the ground that the assessee had no manufacturing activity in this year and this fact was duly brought to the notice of the AO at the time of original assessment proceedings. It was submitted that the assessee is engaged in the business of manufacturing shoes. Its promoters are overseas and ....
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....owever, it has not succeeded in the said attempt as its appeal had been dismissed by the Tribunal vide impugned decision dated 5th February, 2010 affirming the view of the CIT (A) that resort to Section 147/148 was unwarranted as it constituted a change of opinion since the material acted upon had been made available alongwith the return of income. 5. Still dissatisfied, present appeal is preferred by the Revenue under Section 260A of the Act in which following questions of law are proposed. "1.Whether learned ITAT erred in holding that assumption of jurisdiction by the Assessing Officer under Section 147/148 was non-est and invalid. 2. Whether the notice under Section 148 issued by Assessing Officer for reopening the assessment is invalid and bad in law?" 6. Mr. Sabharwal, learned counsel appearing for the Revenue submitted that the notice under Section 148 of the Act was issued, when it came to light that there was no manufacturing activity by the assessee in the relevant previous year and in the absence of any such manufacturing activity, the assessee was not entitled to depreciation. Likewise, in the absence of any such production, the assessee could not claim the expe....
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....d for assessment on greater income than what has been actually assessed. What facts are material and necessary for assessment differ from case to case. Would mere filing of these documents amount to disclosure of primary facts is the question ? Indeed, the answer is given in the dissenting portion of the judgment by Hidayatullah J. (as his Lordship then was) in Calcutta Discount Co.'s case [1961]41ITR191(SC) saying 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 assessed to bring it to notice of the assessing authority because the assessed knows all the material and relevant facts-the assessing authority might not. These observations have been applied and reiterated in subsequent decisions of the Supreme Court and still hold the field. To meet the contention of the assessed that once the afore noted documents had been produced before the Assessing Officer, there was no further obligation cast on him to disclose further facts, which on due diligence, the Assessing Officer might have discovered, Mr. Rajendra, learned counsel for the Revenue, has invited our attention to Expla....
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....tion of Explanation 2 to hold that mere production of the books of account or the documents, etc., without pointing out the relevant entries therein, does not amount to disclosure within the meaning of section 147(a) of the Act." 8. We are unable to persuade ourselves with the aforesaid submission of learned counsel for the Revenue. Reading of the original assessment order dated 30th September, 2004 brings out following aspects:- (i) This was an order passed under Section 143 (3) of the Act (ii) The assessment order specifically notices that the return accompanied by statutory audit report in Form 3CD. (iii) The case was taken up for scrutiny. First notice under Section 143 (2) was issued on 13.10.2003 and duly served upon the assessee. Thereafter, notice under Section 143(2)/142(1) of the Act alongwith questionnaire dated 1.6.2004 was issued for 24.6.2004. The representative of the assessee attended the proceedings pursuant to the said notice and supplied the details from time to time. (iv) The AO examined the details in respect of various items. He specifically recorded that "as in the past the assessee continues to carry on the business of casual....
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.... that originally, an assessment was completed by the Assessing Officer u/s 143 (3) of the Act. During the course of the assessment proceedings, certain queries were raised by the Assessing Officer, which were duly replied to by the assessee and, thereafter, the Assessing Officer completed the assessment u/s 143(3) of the Act. The Assessing Officer, thereafter, issued a notice u/s 148 on 18.09.2006 by entertaining a belief that though there was no manufacturing activity during the previous year, the assessee had even claimed depreciation on plant and machinery etc. and has also claimed expenses on power and fuel, wages and job charges and raw material. The Assessing Officer had entertained a belief that income had escaped assessment by invoking the Explanation 2 (c) (i) and (iv) of Section 147 of the Act. From the reasons so recorded by the Assessing Officer, it is clear that no new facts or material came to the light after the assessment was originally completed u/s 143 (3) of the Act. On the basis of the same material or details available with the Assessing Officer at the time of completing the assessment u/s 143(3) of the Act, the Assessing Officer has entertained a believe that ....