TaxTMI 
TaxTMI 
2013 (8) TMI 285
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssessment and during the course of assessment proceedings, on more than one occasion in general and, vide a show-cause notice dated October 3, 2008, in particular, the respondent called for various explanations/details from the petitioner in respect of several issues including details of additions made to fixed assets. The petitioner's authorised representative clarified all issues and, vide letter dated October 24, 2009, submitted a detailed explanation regarding capital expenditure incurred on coal fire boiler with asset-wise breakup at pages 8 to 10 of annexure 14. The Assessing Officer, after scrutinising various details furnished during the course of assessment, disallowed an amount of Rs. 1,63,847 under section 14A of the Act by passing regular assessment order under section 143(3) of the Act on December 15, 2008. Subsequently, the impugned notice dated June 28, 2010, came to be issued reopening the assessment for the assessment year 2006-07. In response to the notice under section 148 of the Act, the petitioner, vide letter dated June 28, 2010, submitted that the original return of income filed on November 1, 2006, may be treated as filed under protest in compliance with the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... item No. 16 thereof which refers to details of investment in fixed assets as well as to the statement of capital expenditure incurred on fixed assets enclosed therewith. Referring to the items under coal fired boiler, it was submitted that the coal fired boiler building was specifically referred to therein and that the details of capital expenditure of Rs. 15,99,46,392 including the coal fired boiler amounting to Rs. 5,15,27,926 were provided to the Assessing Officer during the course of assessment proceedings. According to the learned counsel for functioning of the coal fire boiler, the petitioner had constructed a special type of structure without which it was impossible for the coal fire boiler to function. The particular type of foundation and structure is an essential and integral part of the coal fire boiler which could not be separated from the special type of foundation and building and boiler could not be worked without such special construction. It was pointed out that the petitioner in support of the above contention which was raised before the Assessing Officer had provided technical engineer's certificate along with photographs to substantiate its claim that the entir....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... on the respondent to initiate reassessment proceedings which were originally completed under section 143(3) of the Act and that the respondent was trying to exercise power of review without there being any tangible material on record. 3.2 Inviting attention to the second ground for reopening assessment, viz., as per appeal effect order dated September 25, 2008, for the assessment year 2005-06, the unabsorbed depreciation allowed to be carried forward was Rs. 2,55,70,854 which resulted in excess set off of absorbed depreciation of Rs. 24,21,082 thereby leading to underassessment of the income and short levy of tax ; it was submitted that the same can be a subject-matter of rectification and not a ground for reopening of assessment. It was submitted that reopening of assessment has serious consequences and that in no case revenue reopens assessment to give effect to carry forward unabsorbed depreciation and, hence, the second ground for reopening of assessment is also not a valid ground. Reliance was placed upon the decision of the Bombay High Court in the case of Hindustan Unilever Ltd. v. Deputy CIT [2010] 325 ITR 102 (Bom) for the proposition that reopening of an assessment has s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....had reason to believe that income has escaped assessment. As regards the decision of the Supreme Court in the case of CIT v. Karnataka Power Corporation [2001] 247 ITR 268 (SC) on which reliance has been placed on behalf of the petitioner, it was submitted that it was on an analysis of the facts as to whether the building fits into the definition of plant that it was held that the building in question could be treated as a plant for the purpose of investment allowance. It was submitted that, in the facts of the present case, there is no application of mind on the part of the Assessing Officer as to whether, in the facts of the present case, the coal fire boiler building fits into the definition of plant. It was further submitted that the said decision was rendered prior to 2004 and that the post 2004 sub-section (3) of section 43 has been amended whereby buildings or furniture and fittings have been specifically excluded from the definition of plant. It was submitted that, in the circumstances, the said decision would have no relevance to the facts of the present case. Referring to the assessment order, it was pointed out that the only ground which has been discussed in the assessm....
X X X X Extracts X X X X
X X X X Extracts X X X X
....roposition that it is the statutory duty of the Assessing Officer to record reasons for issuing notice under section 148 of the Act and reasons recorded cannot further be supplemented or explained by a subsequent order so as to give an entirely different complexion to the case. Since the reasons recorded for reopening assessment as required under section 148(2) of the Act form the foundation for exercise of powers under section 147 of the Act, before adverting to the facts of the case, it may be pertinent to refer to the reasons recorded by the Assessing Officer for the purpose of reopening the assessment for the assessment year 2006-07. As per the reasons recorded the Assessing Officer upon a perusal of the submissions made by the assessee during the course of assessment proceedings for the assessment year 2006-07, found that the assessee had capitalised Rs.5,15,27,926 on account of coal fire boiler and claimed depreciation of Rs.4,12,22,341 on it at the rate of 80 per cent. applicable to energy saving devices. The assessee had given a detailed statement of capital expenditure incurred on the coal fire boiler in the relevant financial year (with asset-wise break-up) on page 8 (....
X X X X Extracts X X X X
X X X X Extracts X X X X
....order dated July 25, 2008, of the Commissioner of Income-tax (Appeals) appeal effect order dated September 25, 2008, came to be passed in relation to the assessment year 2005-06 whereby the unabsorbed depreciation allowed to be carried forward was Rs. 2,55,70,854 which resulted into excess set-off of unabsorbed depreciation of Rs. 24,21,082 leading to underassessment of income and short levy of tax. In so far as the first ground is concerned, the reopening is assailed mainly on the ground that all relevant materials were placed before the Assessing Officer and that the fact that the claim has been allowed indicates that the Assessing Officer has applied his mind to the same. It is the case of the petitioner that merely because there is no discussion in respect of the claim of depreciation in respect of coal fire boiler building in the assessment order, it does not mean that the Assessing Officer has not formed an opinion in respect thereto. In this regard it may be pertinent to refer to certain facts. A perusal of the assessment order framed under section 143(3) of the Act indicates that the Assessing Officer had issued a detailed questionnaire on October 3, 2008, which came ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....14A of the Act. In the circumstances, in so far as the assessment order is concerned, it does not reflect any application of mind by the Assessing Officer to the claim of depreciation on coal fire boiler building while framing the assessment. However, according to the petitioner, in the light of the questionnaire issued by the Assessing Officer and the reply filed by it along with the statement of fixed assets all the relevant facts were before the Assessing Officer, which leads to the conclusion that he has applied his mind to the same. In this regard, it may be pertinent to refer to certain decisions of the apex court. 13.1 In Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC), the court held that the duty of disclosing all the primary facts relevant to the decision in question before the assessing authority lies on the assessee. The court held that the omission of the assessee to bring to the assessing authority's attention those particular items in the account books, or to particular portions of the documents which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment". Nor will he be able to contend successf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....uly and fully all material facts necessary for the purpose of assessment. Admittedly, the price realised at the sale in excess of the written down value of the assets sold, had not been included as profits in the return submitted by the assessee. It had also not shown the same in section "D" of Part I of the return. It may also be noted that the assessee had not shown either in its return or in any of the documents submitted to the Income-tax Officer, the written down value of the assets sold. Hence, not only the Income-tax Officer was not told that the assessee had earned any profits under section 10(2)(vii) nor even the essential fact, viz., the written down value of the assets sold was supplied to him so as to enable him to find out the price in excess of the written down value realised by the assessee. It is true that if the Income-tax Officer had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realised by the assessee. It can be said that the Incom....
X X X X Extracts X X X X
X X X X Extracts X X X X
....icular items in the account books, or to particular portions of the documents which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment. Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. In IndoAden Salt Mfg. and Trading Co. P. Ltd. v. CIT [1986] 159 ITR 624 (SC) on which reliance has been placed by the learned counsel for the respondent, the Supreme Court held that mere production of evidence before the Income-tax Officer is not enough. There may be a failure to make a true and full disclosure, 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 assessee to bring it to the notice of the assessing authority. The assessee knows all the material and relevant facts-the assessing authority might not. Testing the facts of the present case in the light of the aforesaid principles, as noted hereinabove, the Assessing Offi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....boiler, does not mean that the Assessing Officer has applied his mind to the same. The coal fire boiler building being in the nature of building, it was for the petitioner to bring to the notice of the Assessing Officer that it was claiming depreciation in respect thereof as under the heading "plant and machinery" and not as building. The petitioner having failed to do so cannot now contend that the assessment is sought to be reopened on a mere change of opinion. When no opinion has been expressed in the assessment order and no details or explanation in relation to the claim of depreciation in respect of coal fire building has been called for by the Assessing Officer, it is not possible to accept the contention of the petitioner that the Assessing Officer has applied his mind to the said aspect. As regards the contention, that in the light of the decision of the Supreme Court in the case of CIT v. Karnataka Power Corporation [2001] 247 ITR 268 (SC) the issue stands concluded in favour of the petitioner is concerned, as pointed out by the learned counsel for the respondent subsequent to the said decision sub-section (3) of section 43 of the Act which defines "plant" has been amen....