TaxTMI 
TaxTMI 
2011 (11) TMI 482
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....tiny was made under Section 143(2) by issuance of a notice to the petitioner calling upon certain details, which were furnished by the petitioner vide its letter dated 22.9.2006. What is further averred is that the petitioner also replied to certain queries raised by the respondent vide letter dated 27.9.2006. Pursuant to this exercise, an order framing of assessment under Section 143(3) of the Act was passed on 20.10.2006. The respondent did not allow certain contributions made towards Provident Fund received from the employees but not paid in time, which was also challenged before the CIT(Appeals) where the petitioner succeeded and the Revenue appealed against that order before the Income Tax Appellate Tribunal ("ITAT" for short), which concurred with the view of the CIT(Appeals). 3. Subsequently, on 26.8.2009, the petitioner received a notice under Section 148, where the Assessing Officer has sought to reopen the assessment under Section 147 of the Act. Pursuant to the said notice, the petitioner addressed a letter dated 20.4.2010 requesting respondent to treat the original return as return filed in response to the notice under Section 148 of the Act with a further req....
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....ssing Officer and, therefore, further pointed out that the details enumerated are broadly lifted from the statement of income filed by the petitioner and in the reasons disclosed by the respondent, what appears is that from such disclosed material, the respondent is attempting to pick up the details and attempts to reassess which is impermissible in reopening proceedings. According to the learned counsel, as per Section 143(3) of the Act, assessment has been already framed and the reopening is being done beyond the period of 4 years. Learned counsel for the petitioner has further submitted that the assessment year is 2004-05 and the notice issued under Section 148 is dated 26.8.2009, which is clearly beyond the period of 4 years from the end of the relevant assessment year. It is the say of the counsel for the petitioner that earlier the assessment has been framed under Section 143(3) of the Act and for reopening the assessment after the expiry of a period of 4 years from the end of the relevant year, there are three conditions necessary to be fulfilled. Firstly, the Assessing Officer must have a reason to believe that income chargeable to tax has escaped assessment, seco....
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....gned by the Chartered Accountant though certified by him. It is also argued that notice had been issued within 6 years from the end of the relevant assessment year and, therefore, the Assessing Officer acted well within his jurisdiction as conferred under the provisions under Section 147 read with Section 148 of the Act. It is further argued that no expense can be allowed if it has not been debited in the books of accounts and this fact since was not brought to the notice of the Assessing Officer at the time of original assessment proceedings, the same resulted into escapement of the income giving rise to reopening under Section 147 of the Act. The assumption of jurisdiction had been with the recording of valid reason delineating that non-disclosure of fully and truly all the materials and correct facts by the petitioner would lead to the formation of the opinion that the income chargeable to tax has escaped assessment, which is reflected in the reasons recorded by the Assessing Officer. 8. Learned counsel for the department has also argued that the exercise of reassessment and issuance of the notice rejecting objections raised by the petitioner cannot be termed as mere c....
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.... account, but has only been claimed in the statement of income. Thus, the incorrect procedure and omission to scrutinize the records has resulted in an excess assessment of loss to the tune of Rs.1,49,36,72,765/- resulting in potential loss of revenue in the succeeding years." 10. The petitioner while objecting to the notice for reopening, raised several grounds including that it had revealed all necessary facts and with specific emphasis on the fact that there was no new material or tangible material but only the change of opinion on the part of the Assessing Officer which had led to the reopening. These objections filed against reopening proceedings have been disposed of by a detailed order dated 13.12.2010. It would be worthwhile to reproduce relevant aspects noted in the impugned order to justify the reopening while rejecting the objections of the petitioner, which are as under. "The case was reopened mainly on the ground that the assessee had not debited expenses worth Rs.1,49,200 in the profit and loss account for assessment year 2004-05 and has directly claimed them in the computation of income while filing the return of income. Since,....
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.... contained, in all, 83 documents. The statement of total income is reflected where, under the head of income from business/profession, depreciation claimed is of Rs.29,77,350.89/-. There is a specific note regarding said head of income stating that the assessee is also filing copy of the tax audit report along with the P and L account and, therefore, it requested the Assessing Officer to treat this as return of income along with notes to Form 3CD as apart from the submission, with this return of income in Form No. 3CA there is certification from the Nanavati Associates Chartered Accountants that subject to the note Nos.1 and 2, the particulars given in this Form No.3CD read with compilation to page Nos.1 to 71 are true and correct. Form No.3CD when is examined at column No.14 it makes a specific reference to page 36 of compilation, which is also produced for perusal of the Court. It gives entire detail as to how the depreciation has been claimed bifurcating the same under the heads of building,furniture, computer, vehicle and under each head the amount reflected is deducted with the percentage mentioned against column and the final figure arrived at is of Rs.29,77,35,089/....
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.... decision of this Court given in case of Mihir Textiles Ltd. vs. Joint Commissioner of Income Tax in Special Civil Application No.5825 of 2000 (Coram: K.A. Puj and Rajesh H. Shukla, JJ.) "15. It is admittedly stated that audited books of accounts like profit and loss balance sheet along with the notice were submitted and what was necessary was the bifurcative details with all classification and nature of expenditure and receipts, which could have been called for by the Assessing Officer, and therefore, without calling for such record, when there is a specific disclosure in the form of note regarding transfer of an undertaking, 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 case of Indo-Aden Salt MFG. and Trading Co. P. Ltd. v. Commissioner of Income Tax, Bombay (supra), 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 ....
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....taining accounts on the mercantile system was fully justified in claiming deduction of the sum of Rs.1,49,776 being the amount of sales tax which it was liable under the law to pay during the relevant accounting year. It may be added that the liability remained intact even after the assessee had taken appeals to higher authorities or courts which failed. The appeal is consequently allowed and the judgment of the High Court is set aside. The question which was referred is answered in favour of the assessee and against the revenue. The assessee will be entitled to costs in this court and in the High Court." 17. As discussed hereinabove, the assessee has already placed entire material in terms of books of accounts, return of the assessment year 2004-05, notes attached to Form No.3CD and 3CA etc. It had also claimed the expenses worth Rs.1,49,35,727/- in the computation of income while filing the return. and, P and L Account of petitioners were also certified by the Chartered Accountant for the year ended on 31.3.2004 and thus, without calling for further record, Assessing officer had in its possession all requisite materials and therefore, it is simply not possible to accept....