AI Drafter 
TaxTMI 
TaxTMI 
2013 (10) TMI 1034
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....tioner also selected another company, M/s. Residency Foods and Beverages Ltd., as a strategic investor and it is stated that the said company had acquired the management and control of the petitioner company with 67.93 percent shareholding in the petitioner company. In respect of the assessment year 2007-08, the petitioner filed return of income on October 30, 2007, showing a business loss of Rs. 4,28,00,960. In response to the notice issued under section 143(2) of the Income-tax Act, the petitioner submitted exhibit P-1 written statement dated December 8, 2009, explaining the facts and figures. After considering the same, the assessment was finalised under section 143(3) of the Income tax Act as borne by exhibit P-2 assessment order dated December 31, 2009. 3. According to the petitioner, there were some mistakes in exhibit P-2 order and in the said circumstance, an application was preferred before the third respondent under section 154 of the Income-tax Act to rectify the mistakes, which was considered and exhibit P-3 order came to be passed on April 9, 2010. But, since some vital aspects were not considered, the petitioner filed an appeal on the issue of non-consideration of ....
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.... out that all the vital aspects which are now sought to be relied on for proceeding under section 147 of the Act were dealt with by the petitioner, as pointed out in exhibit P-1 written statement. These aspects were considered by the assessing authority earlier and some aspects were found as not acceptable, some were accepted and some were left out. Having taken such a conscious decision, it is not a matter which is liable to be reworked by resorting to the course and proceedings under section 147 and, hence, the challenge. The learned counsel also submits that the very purpose of passing a speaking order when reassessment is proposed under section 147, in the light of the ruling rendered by the apex court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) is to enable the assessee to substantiate the position to the effect that there is no tenable "reason to believe" that income was escaped so as to reopen the assessment and if it goes wrong, to have it challenged by way of article 226 of the Constitution of India instead of undergoing the ordeal of reassessment and the necessity to pursue the statutory remedy therefrom. 5. The learned counsel also submits that there....
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.... reasons, vide exhibit P-7, the same was supplied as per exhibit P-8, which reads as follows : "As per the records it is verified that the prior period depreciation Rs.28,86,370 debited to the current profit and loss account has not been disallowed and thus resulted in underassessment. The 'prepayment premium on IDFC term loan' amounting to Rs. 15,00,000 debited to the profit and loss account, being an expenditure directly in relation to the capital base of the company, is a capital expenditure but has not been disallowed in computing the total income. The depreciation on plant and machinery was allowed in excess by Rs. 8,75,240. Excess depreciation amounting to Rs. 25,41,250 was allowed on the intangible asset 'brand name' by wrongly adopting the written down value as on the first day of the year of amalgamation of the company instead of adopting the written down value as on the last day of the year of amalgamation. Hence, I have reason to believe that the assessee's income has escaped assessment within the meaning of section 147 of the Income-tax Act 1961." 8. It was in response to the said proceedings, that the p....
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....nbsp; 4. Assessing Officer is not authorised to review orders in the pretext of reassessment." 12. The scope of reassessment under section 147 of the Income-tax Act, as it exists now, has to be considered in the backdrop of what it was earlier before the amendment in 1989 and what does it stand for, after the amendment. Section 147 as it stood earlier reads as follows : "147. Income escaping assessment.-If, (a) the Assessing Officer has reason to believe that, by reason of the omission or failure on the part of an assessee to make a return under section 139 for any assessment year to the Assessing Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has in consequence of information in his possession reason to believe that 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 ....
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.... before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (c) where an assessment has been made, but (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief unde....
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....e reason to believe that income, profits or gains chargeable to income-tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under section 148 read with section 147(a). But under the substituted section 147 existence of only the first condition suffices. In other words if the Assessing Officer for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however to be noted that both the conditions must be fulfilled if the case falls within the ambit of the proviso to section 147. The case at hand is covered by the main provision and not the proviso." The issue came to be considered by a Division Bench of this court as well in CIT v. Popular Vehicles and Services Ltd. [2010] 191 Taxman 333 (Ker) holding that the only requirement to be satisfied is whether existence of....