2014 (5) TMI 668

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....sessed to tax regularly. For the said assessment year, petitioner filed its return of income in due course declaring total income of Rs.2.76 crores (rounded off). Such return was accepted under section 143(1) of Act without any scrutiny. It is this return the Assessing Officer desired to reopen for which the impugned notice came to be issued. 2.2. At the request of the petitioner, he supplied the reasons recorded for issuing such notice. Such reasons are rather elaborate. We may however, note the concluding portion of the reasons which is the gist of Assessing Officer's belief that the income chargeable to tax has escaped assessment. Such conclusions read as under: "It can be seen that as per Schedule 19 of notes annexed and forming part ....

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....has claimed depreciation on the term liability incurred in the foreign currency for the acquisition of the fixed assets at the year end exchange rate and the foreign exchange fluctuation amounting to Rs.100.66 lacs has been added to the actual cost to the assets as per the note 5(c) of the schedule 19 i.e. Notes annexed to & forming part of the accounts for the year ended 31st March, 1999. The depreciation on the account of the addition such amount to the fixed assets in the earlier AY i.e. 1998,1999 has to be calculated and accordingly disallowed." 4. We are conscious that in the present case the original assessment was not after scrutiny. In view of the decision of the Supreme Court in case of Assistant Commissioner of Incometax v. Rajes....

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..... A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment." 5. In this context, we may note that supplementary reasons were recorded on 31.3.2003 and, therefore, well after issuance of the notice. It is well settled that validity of notice for reopening must be judged on the basis of reasons recorded. Such reasons in terms of section 148(2) of the Act have to be recorded before issuance of the notice. The Assessing Officer therefore, would not be in a position to support the notice of reopening on the basis of any reasons recorded subsequent to notice itself. 6. In this light, we need to judge the validity of the Assessing Officer's belief t....

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....ollowed and reiterated in case of Oil and Natural Gas Corporation Ltd. (supra) by the Supreme Court as can be seen from the following discussion: "Opining that the amendment of Section 43A of the Act by the Finance Act, 2002 with effect from 1st April, 2003 is amendatory and not clarificatory and would thus, apply prospectively, the Court explained that under the unamended Section 43A, adjustment to the actual cost takes place on the happening of change in the rate of exchange, whereas under the amended Section 43A, the adjustment in the actual cost is made on cash basis. In other words, under the unamended Section 43A, "actual payment" was not a condition precedent for making necessary adjustment in the carrying cost of the fixed asset ac....