TaxTMI 
TaxTMI 
TaxTMI 
2015 (6) TMI 530
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....he assessment was taken for scrutiny by issuing of a notice u/s 143(2) of the Act. The scrutiny assessment was completed vide order dated 28.02.2005 by accepting the returned income as declared by the assessee. Subsequently, a notice u/s 148 of the Act was issued and duly served upon the assessee on 31.03.2009 by recording the following reasons :- "1. In this case scrutiny assessment was completed on 28th February, 2005 for the assessee year 2002-03 at an income of Rs. 63,25,120/-. The assessee was allowed deduction u/s 80HHC amounting to Rs. 2,38,91,769/- which includes "Income from other sources" amounting to Rs. 1,18,06,275/-. As deduction u/s 80HHC was allowable only against business income, the Act of the assessing officer is not correct. The mistake resulted in under assessment of income by Rs. 54,81,158/- (as per annexure enclosed) with the consequent short levy of tax of Rs. 19,56,773/-. 2. Section 35DDA of the Income-tax Act, 1961, provides that where an assessee increases any expenditure in any previous year by way of payment of any sum to an employee at the time of his voluntary retirement, one fifth of the amount so paid shall be deducted in computing the profit an....
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....close all material facts necessary for the assessment. 5. The revenue, being aggrieved, is in the appeal before us. 6. The ld. DR supported the order of assessment and submitted that on account of under-assessment, reopening of assessment is justified and the CIT (A) has erred in quashing the reassessment proceedings. 7. On the other hand, the ld. AR reiterated the submissions made before the income-tax authorities and also relied on the recent judgment of Hon'ble jurisdictional High Court in the case of Madhukar Khosla vs. ACIT reported in 367 ITR 165. The ld. Counsel submitted that without any new material coming into the possession of the Assessing Officer that indicate escapement of income, the reassessment is bad in law. 8. We have heard the rival submissions and perused the material on record. The CIT (A) had quashed the reassessment proceedings for the reason that the reopening has been done after four years and Proviso to section 147 of the Act is applicable to the instant case. According to the CIT (A), the Assessing Officer having not recorded in the notice u/s 148 that there has been a failure on the part of the assessee "to disclose fully and truly all material fact....
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.... reason of the failure OM the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. " As the Assessing Officer has no where stated in the reasons recorded that the assessee has failed to disclose fully and truly all material facts necessary for assessment. This case is squarely covered by my order in the case of JCIT(OSD), Circle 9(1), New Delhi Vs SMS Demang Pvt. Ltd. the ITAT Delhi Bench '0' in ITA No. 5666/Del/2011vide order dated 08/02/2013 has upheld the similar issue and has stated that:- " ... In the present case before us as discussed above the Assessing Officer during original assessment proceedings had raised a question on the issue of the claimed bad debt and on the provision of warranty and current liabilities vide query no.12 of the questionnaire and being convinced with the submission of the assessee made in this regard he had accepted the claim. The tax Audit Report filed by the assessee was already there on record on the basis of which reopening of assessment u/....
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....nied by audited accounts and auditor's report required to be submitted in terms of section 80HHC (4) of the Act. Similarly, the assessee had claimed deduction under section 80-IB of the Act, which was specifically mentioned in the audited accounts and the auditor's report. The special deductions were allowed. Subsequently, in March, 2006, reassessment proceedings were initiated by the Assessing Officer after recording that the computation of deduction under section 80HHC was allowed without reducing the deduction claimed and allowed under section 80-IB as required by section 80-IA (9), which is also applicable to section 80-IB. The tribunal held that the reassessment proceedings were not valid. On appeal to the High Court: Held, dismissing the appeal, that there was no indication that the assessee had failed or admitted to disclose the material or primary facts. These were available on record. The Assessing Officer had failed to draw correct legal inferences at the time of original assessment from the primary facts. This was not an error or omission on the part of the assessee. It was not alleged that the assessee had suppressed, misrepresented or falsified the record/fa....
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....e same are void and bad in law. The Assessing Officer was not correct in his action to assume jurisdiction over the appellant for the year under consideration in view of the proviso to section 147 of the Act. Additionally reasons recorded are based on balance sheet furnished with return of income and accepted in original assessment. It is a case of change of opinion i.e. reappraisal of same facts. On which earlier Assessing Officer had taken a view on which the new Assessing Officer differs. In view of the above, it is submitted that, proceedings initiated u/s 147 of the Act and completion of assessment u/s 147/143(3) of the Act is illegal and is quashed." The CIT (A) has considered the precedent on the subject and held that the reopening is bad in law since the Assessing Officer has not mentioned in the reasons recorded that 'the income has escaped assessment' on account of the failure of the assessee to fully and truly disclose material facts necessary for assessment. Moreover, in the recent judgment of the Hon'ble jurisdictional High Court in the case of Madhukar Khosla vs. ACIT (supra), the Hon'ble Court has held that 'if there is no "reason to believe" that the income has....