TaxTMI 
TaxTMI 
2016 (1) TMI 398
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....ugust 1997 and the first year of assessment was AY 1998-99. During the Financial Year 2005-06, the name of the assessee company was changed to SMCC Construction India Pvt. Ltd. The assessee company is incorporated in India and is engaged in the business of providing engineering services, undertakes turnkey construction and renovation works of industrial undertakings, etc. 3.1 The return of income for the year under consideration was filed on 30.10.2005 declaring taxable income of Rs. 2,96,99,382. Assessment proceedings under section 143(2) of the Act were initiated and the same were completed vide order under section 143(3) of the Act dated 11.12.2008 at an income of Rs. 3,04,47,740/-. A notice u/s 148 of the Act was issued on 23.03.2012 after recording the reasons. In response to notice u/s 148, the assessee filed reply dated 20.04.2012 stating that the original return of income filed for the relevant year i.e. 2005-06 be treated as return filed in compliance to notice issued u/s 148 of the Act and requested for copy of reasons recorded for reopening the assessment. The AO provided the same to the assessee on 15.10.2012. Subsequently, notice u/s 143 (2) was issued to the assess....
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....Rs. 6,30,60,110/- which is due to the failure on the part of the assessee to truly and fully disclose all the material facts necessary for the assessment." It has been observed that during the assessment proceedings u/s 143(3) of the Income Tax Act, 1961, the AO has issued detailed questionnaire to the appellant seeking information relating to contract and sub-contract works, supervision fee, legal & professional Services etc and TDS compliance thereon. The appellant has duly complied with the above notice by submitting complete information and any further information sought by the learned AO thereon. Copies of the questionnaire dated 27 October, 2008 seeking such information Vide question no. 19 and submissions was filed by the appellant on 26 November, 2008 and 03 December, 2008 have also been examined from where it can be observed that the appellant has not failed to disclose any material fact to the AO. It is apparent that the appellant has truly and completely disclosed all material facts relating to all the expenses at the time of scrutiny assessment proceedings itself. The AO, after scrutinizing the details furnished by the appellant in the course of scruti....
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....acts necessary for his assessment, for that assessment year." 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 'G' in ITA No. 5666/Dell2011 vide 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/s 147 has been initiated after recording the reasons. Under these circumstances we find that the ld. CIT(A) has rightly accepted the objection of the assessee that initiation of reopening proceedings u/s 147 of the Act in the present case after the expiry of 4 years from the end of the relevant assessment year was not valid as per the proviso to section 147 of the....
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....t would give arbitrary powers to the AO to reopen the past assessments on mere change of opinion and this is not permissible even as per legislative intent. " The Bombay High Court in the case of OHM Stock Brokers (P) Ltd. Vs Commissioner of Income Tax & Anr. in writ petn. Nos.79 to 82 of 2013 vide order dated 20th February, 2013 wherein it is held that:- "Though the power of the AO to reopen as assessment within a period of four years is indisputably wider than when an assessment is sought to be reopened beyond four years, the power is nonetheless not unbridled. After the amendment which was brought in by the Direct Tax Laws (Amendment) Act, 1987 w.e.f 1st April 1989, the AO must have reason to believe that income has escaped the assessment. At the same time, the AO is not conferred with the power to review an assessment and he cannot reopen as assessment only because of a mere change in the opinion. The AO must, in other words, have tangible material to come to the conclusion that there is an escapement of income. The mere fact that the order of assessment did not specifically deal with the issue as to whether the payment fell within the purview of s. 36(1)(ii) ....
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....under s. 147 for assessment years 2007-08 and 2008-09 is contrary to law. The notices issued under s. 148 for the aforesaid years are quashed and set aside - CIT Vs Kelvinator of India Ltd. (2010) 228 CTR (SC) 488: (2010) 34DTR (SC) 49: (2010) 320 ITR 561 (SC) In the case of Commissioner of Income-tax Vs Purolator India Ltd. [2012] 343 ITR 155 (Delhi High Court) it is held that:- "... One of the jurisdictional pre-conditions for reopening of an assessment after four years is that there should be failure on the part of the assessee to disclose material facts necessary for assessment. The expression "material facts" in Explanation J to section 147 of the Income-tax Act, 1961 refers to primary facts. The term "primary facts" or "material facts" are those facts which are material and relevant for the decision of the question before the Assessing Officer and non-disclosure of which would have a material bearing on the question of escapement of income from assessment. Whether or not "primary facts" have been disclosed is normally a question of fact and depends upon the facts and circumstances of each case. The requirement of Explanation 1 is that there should be full an....
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.... to the assessee. The requirement is that the assessee should have failed or omitted to make full and true disclosure of material facts. The assessee is not required to disclose, state or explain the law ... " BLB Limited Vs Assistant Commissioner of Income-tax [2012]343 ITR 129 (Del) " ... Held, allowing the petition, that the assessee had disclosed fully and truly all material facts relevant for the assessment. The reasons recorded did not disclose or state that there was failure or omission to disclose fully and truly all material facts. There was no indication and it was not alleged that there was some material or information available on record when reasons to reopen were recorded, to show that the assessee had concealed or had not disclosed fully and truly all material facts. In the original assessment proceedings the Assessing Officer had considered and examined whether or not the non-compete fee payment was of capital or revenue nature. The Assessing Officer accepted the stand of the assessee and treated the noncompete fee as a revenue expenditure. The reassessment proceedings could not, therefore, be initiated on the ground that the Assessing Officer was ....
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....to Section 147 and, consequently, the same could only be initiated if any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice under Section 142(1) or Section 148 or "to disclose fully and truly all material facts necessary for his assessment" for that assessment year. We take note that during the original scrutiny assessment proceedings u/s 143(3), the AO had issued detailed questionnaire to the assessee seeking information relating to contract and sub-contract works, supervision fee, legal & professional Services etc and TDS compliance thereon; and the assessee has duly replied the questionnaire and complied with the said notice by submitting information regarding the same and further information sought by the AO thereupon has been found to have been complied with. We further take note that questionnaire of AO dated 27.10.2008 sought information pertaining to the impugned reopening vide question no. 19 and the assessee in response to it had filed reply to it on 26.11.2008 and 03.12.2008 which have also been before the AO during the original assessment. So, it cannot be sa....