TaxTMI 
TaxTMI 
2014 (12) TMI 936
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....wer Generation Machines Ltd. ("PPGM") amalgamated with the petitioner with effect from 1 April 1997. The final accounts of the petitioner for the year ended 31 March 1998 were approved by its Board on 14 May 1999. Similarly, the final accounts of PPGM were also approved by the Board on 11 March 1999. PPGM also made necessary declaration under Section 72A(1) of the Act for availing the benefit of setting off and carrying forward of losses on 31 August 1999; (C) The petitioner filed its return of income in terms of Section 139(1) of the Act on 31 December 1999 and thereafter, on 31 March 2000, a revised return of income under Section 139(5) of the Act. In its return of income, the petitioner made the necessary disclosures for determination of MAT liability in terms of Section 115JA of the Act; (D) Assessing Officer made an assessment order dated 21 March 2002 under Section 143(3) of the Act. In doing so, the Assessing Officer clearly took into consideration the disclosures made by the petitioner in its return of income referred to herein above. On the said basis, the Assessing Officer allowed the claim of the petitioner and set off the loss of PPGM for the financial year 199899....
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....ent. In fact, the circumstances would indicate that there was not only full and true disclosure of all material facts, with regard to its claim for MAT computation after consideration of loss of PPGML. Further such disclosed material facts were specifically taken into consideration by the Assessing Officer in making the Assessment Order dated 21 March 2002 under Section 143(3) of the Act. Similarly with regard to the second issue in the reasons viz. by debiting capital expenditure to the profit and loss account the net profit declared was defaulted, is on the basis of the profit and loss account already filed and considered in the regular proceedings. Therefore, it was urged, that in absence of the fulfillment of such vital jurisdictional parameter, the assumption of jurisdiction by the Commissioner of Income Tax, was clearly ultra vires, null and void; (B) In the alternative, it was submitted that in any case, with regard to the computation of MAT liability under Section 115JA of the Act, the Assessing Officer has considered the claim while passing the assessment order dated 21 March 2002 under Section 143 (3) in regular assessment proceedings. Therefore, it is a clear case of ....
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....nary jurisdiction in the matter. Further, learned counsel pointed out that the mere absence of statement in the impugned notice that there was no failure on the part of the petitioner to disclose full and truly all material facts, was by no means fatal to the assumption of jurisdiction under Sections 147 and 148 of the Act, particularly since a holistic reading of the impugned notice, made out a primafacie case of failure to disclose. For these reasons, learned counsel submitted that the petition as filed, is liable to be dismissed. 6] In order to evaluate the rival contentions, it is necessary to advert to the relevant statutory provisions contained in Section 147(1) of the Act and the first proviso thereto : "147. If the [Assessing] Officer [has reason to believe) that any income may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in ....
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....t year 1997-98. According to assessee's own statement the accounts of the loss making company was being published separately even after its amalgamation. According to the MAT provisions the amount of profit of a sick industrial company for the assessment year commencing from the assessment year relevant to the previous year in which the company has become a sick industrial company and ending with the assessment year during which the entire net worth of such company has become equal to or exceeds the accumulated losses can only be claimed as deduction for computing the book loss. The net profit for this purpose is to be adopted from the certified profit and loss account and then deduct the business loss or deprecation which ever is less and as such the assessee has reduced the book profit by Rs. 5,30,52,654/instead of Rs. 1,60,00,000/. Further it is observed that there was no book loss to be adjusted from the net profit as per the certified accounts of the assessee company. Hence the deduction of loss of the sick industrial unit from the profit of the assessee company was not in order as the assessee company was not a sick company. By doing so, the assessee has under stated its ....
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.... failure to disclose is made out, then certainly the assumption of jurisdiction under Sections 147 and 148 of the Act would be ultra vires, being in excess of the jurisdictional restraints imposed by the first proviso to Section 147 of the Act. 11] Further, as has been held by this Court in the case of Hindustan Lever Ltd. vs. R. B. Wadkar, Assistant Commissioner of Income Tax & Ors. (No. 1) 268 ITR 332, it is necessary whilst supplying the reasons for the issuance of notices under Sections 147 and 148 of the Act to communicate as to which fact or material was not disclosed by the Assessee fully and truly, that has resulted in the income escaping assessment. It is for the Assessing Officer to disclose and open his mind through the reasons recorded by him. The reasons so recorded must be clear and unambiguous and not suffer from any vagueness. Reasons recorded should be self explanatory and should not keep the Assessee guessing as to the facts or materials , which he may not have fully or truly disclosed for the purposes of assessment of his income. In fact the record of reasons and their disclosure is a vital safeguard against arbitrary reopening of concluded assessment. The rea....
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....he part of the petitioner to disclose fully and truly all the material facts in relation to the determination of MAT liability under Section115JA of the Act, but further such disclosed material facts were duly considered by the Assessing Officer in making the Assessment Order dated 21 March 2002 under Section 143(3) of the Act. The jurisdictional parameter imposed by the proviso to Section 147 in matter of reopening of assessment was, thus, clearly not fulfilled. The issuance of impugned notice and the consequent assessment order is therefore in excess of jurisdictional restraint imposed upon the Assessing Officer by the proviso to Section 147 of the Act. The impugned notice dated 29 March 2006 and the second reassessment order dated 26 December 2006 are therefore liable to be quashed on this ground alone. 14] There is no necessity to adjudicate upon the other grounds urged by Mr. Dastur, primarily because this petition can be disposed of on the ground that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment for the relevant assessment year. This is applicable to both the grounds mentioned in the reasons furn....