TaxTMI 
TaxTMI 
2016 (4) TMI 299
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....the AO, in gross violation of settled position of law that once registration U/s 12A of the Act was granted to the assessee, it was thereafter not open to the AO to make any enquiry regarding the exemption U/s 11 of the Act. 4. That the CIT(A) has erred in confirming the action of the assessing officer in invoking the provisions of section 13(1)(c) of the Act, although there is no evidence or even allegation that amount of purchase of software from Washington Software Ltd has reached to the assessee trust or any of trustee. 5. That the CIT(A) has erred in law by upholding the contention of the ACIT, Circle III, Jalandhar, in holding that the appellant has violated the provisions of 13 of the Income Tax Act, 1961. 6. That the CIT(A) has erred in law by upholding the contention of the ACIT, Circle III, Jalandhar in assessing the income as business income instead of assessing the same u/s 11 to 13 of the Income Tax Act, 1961. 7. Without prejudice and in the alternative, the AO/CIT(A) has wrongly held that the whole income is taxable and not restricting the taxability to the amount which is allegedly covered u/s 13(1)(c) of the Act. 8. That the depreciation on computer software ha....
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....oration India (P) Ltd.", 139 TTJ 40 (Del) v) "Haryana Acrylic Manufacturing vs. CIT", 308 ITR 38 (Del.) 5. It has further been contended that the validity of notice u/s 148 of the Act has to be tested on the basis of the reasons recorded for initiating reopening of the assessment, to which reasons, nothing can be added or subtracted therefrom; that the reasons are to be read as they are; and that there is no scope for drawing any inference therefrom. Reliance has been placed on "Hindustan Liver Ltd. vs. R.B. Badkar", 268 ITR 332 (Bom.). It has next been contended that in the case of "Dulichand Singhania" (supra), the Hon'ble Jurisdictional High Court has held that in order to assume jurisdiction by issuing a notice u/s 148 beyond four years from the end of the assessment year concerned, where the earlier assessment stands completed u/s 143(3), the AO has to record in the reasons that there is failure on the part of the assessee to furnish all documents relevant to the assessment and that in the absence of such allegation in the reasons recorded, the AO has no jurisdiction to issue any notice u/s 148 of the Act. 6. In response to the above contention of the ld. counsel for ....
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.... 30 days from the service of that notice. On receipt of a copy of the reasons recorded, the assessee filed his objections vide letter dt. 24th Jan., 2003. It was contended that in the absence of any allegation of failure on his part to disclose fully and truly all material facts necessary for the assessment, no action under s. 147 of the Act could be taken after the expiry of four years from the end of the assessment year in view of the proviso to s. 147 of the Act. It was also contended that the only ground on which the proceedings under s. 147 of the Act had been initiated was that deduction under s. 80-0 of the Act was admissible at the rate of 50 per cent of the net receipts and not the gross receipts, as claimed by the assessee. The case of the assessee was that the ciaim for deduction had duly been examined while making the assessment under s. 143(3) of the Act. Thus, the reassessment proceedings were being initiated merely on a change of opinion on the same facts, which is not permissible under the Act after the expiry of four years from the end of the relevant assessment year. It was in the context of the above facts that the Hon'ble High Court had dismissed the appea....
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.... crores Since this was a mega discovery of garguantum levels and which fact had never been revealed by the assessee before, it clearly constituted that there had been massive failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the relevant assessment years. In fact, theassessee had furnished false and inaccurate particulars of income; for which initiation of proceedings under section 147 were imperative for bringing to tax the income which had not been assessed. In view of above submissions, it is hoped that the assessee's placing reliance on the judgment of the Hon'ble Punjab & Haryana High Court is simply ill-conceived. It is further pertinent to highlight that at para 11 of its order the Hon'ble High Court had held that where the proceedings under section 147 had been initiated on the basis of subsequent information, the proviso to section 147 was not violated. Para of the High Court's order reads as under: 11. We may also briefly refer to the authorities cited by the Revenue. The judgment of the Supreme Court in the case of Ess Ess Kay Engineering Co. (P) Ltd. (supra) is clearly distinguishable.....
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....s. 1995-96 to 1999-2000. At the same time, it has also been claiming deduction under s. 80HHC in respect of export sales of the said unit resulting into double relief under ss. 10B and 80HHC on the same export sales. This double relief (exemption under s. 10B and deduction under s. 80HHC) is not allowable under the provisions of the Act to a 100 per cent EOU. This issue has been discussed in detail in the assessment order under s. 143(3) dt. 30th March, 2001, for the asst. yr. 1998-99. After taking into consideration, the assessee's reply and arguments on the said issue, it has been held that the assessee is not entitled to claim deduction under s. 80HHC on export sales of a 100 per cent EOU, in respect of income of which, exemption has been claimed under s. 10B of the Act. It is in the light of the above facts that the Hon'ble High Court held that the assessee disclosed all material facts and as such invocation of the provisions of section 147 was not warranted. In view of the above, it is clear that this judgment is also not applicable to the facts of the case. It may be mentioned that the reasons for reopening of the assessment had come to the knowledge of the departmen....
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....ding employed in the first proviso to section 147 is amply clear and self explanatory. As per this proviso, action u/s 147 can be taken after the expiry of four years from the end of the relevant assessment year, only in case there is failure on the part of the assessee, inter-alia, as relevant to the facts of the present case, to disclose fully and truly all material facts necessary for assessment for that assessment year. 10. Now, as per section 148(1), before making reassessment u/s 147, the AO shall serve on the assessee, a notice, as required thereunder. According to the main provision of section 147, reassessment can be done only if the AO has reason to believe escapement of income. Where a period of four years from the end of the relevant assessment has expired, the income having escaped assessment needs must, in keeping with the first proviso to section 147, have so escaped assessment by reason of the failure on the part of the assessee, inter-alia, to disclose fully and truly all material facts necessary for his assessment, for that assessment year. 11. From the above analysis of the relevant provisions, it is evident that section 148 envisages issuance of a notice where....
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....the assessee on 27.10.2006 for the Asstt. Year 2006-07. Assessment u/s 143(3) was made on 29.12.2008 at 'Nil' income. As per information available in this office, the assessee had obtained accommodation entries from M/s Washington Software Ltd. Pune in the financial year 2005-06 relevant to Asstt. Year 2006-07 as per following details:- Sr. No. Date of Invoice Amount (Rs.) 1. 07.09.2005 30,00,000/- 2. 27.09.2005 30,00,000/- 3. 28.09.2005 30,00,000/- 4. 29.09.2005 30,00,000/- 5. 11.10.2005 20,00,000/- 6. 15.10.2005 30,00,000/- 7. 18.10.2005 30,00,000/- 8. 20,10.2005 20,00,000/- 9. 24.10.2005 30,00,000/- Total 2,50,00,000/ - A statement of Sh. San jay D Sonawani, Director of M/s Washington Software Ltd. Pune was recorded by the DDIT (Inv.) Unit 1(1) Pune on 16.03,2011 u/s 131 of the Income Tax Act 1961 and his statement was again recorded on 12.05.2011 by DDIT(Inv.) Unit VII(4) Mumbai. In these statements, Sh. Sanjay D. Sonawani stated that his company M/s Washington Software Ltd., only issued sale bills and no actual sales took place and he accepted the fact that his company was providing accommodation....
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....to disclose fully and truly all material facts necessary for his assessment for that purpose, where action u/s 147 is sought to be taken after the expiry of four years from the end of the relevant assessment year, the assessment having been made u/s 143(3). 15. The Department has sought to make out much from the difference between the facts in "Dulichand Singhania" (supra) and the assessee's case. However, in this endeavour, it has been lost sight of that no two cases can be identical and they can only be similar. While it is true that the applicability of a decision needs to be considered, keeping in mind the facts thereof, it is the ratio decidendi of the case, which has to be applied. Herein, as to how the above ratio of "Dulichand Singhania" (supra) does not cover the case of the assessee, has not been shown. It remains undisputed that in the reasons recorded by the AO, there is no allegation, much less any specific one, regarding any alleged failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. 16. In "Dulichand Singhania" (supra), 'Ess Ess Kay Engineering Co. Pvt. Ltd.', 137 ITR 446 (P&H) was referred to....
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.... it has been observed that the AO "accordingly" issued a notice u/s 148 of the Act to the assessee. 18. From the above, it is quite evident that even in 'Ess Ess Kay Engineering Co. Pvt. Ltd.',(supra), the assessee was made aware by the notice u/s 148 of the Act, of the alleged failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It would be appropriate, for clarity, to reproduce this relevant portion [page 448 of the report, i.e. 137 ITR 446 (P&H)] of the judgment in 'Ess Ess Kay Engineering Co. Pvt. Ltd.' (supra): "The claim was accepted and the assessee was allowed deduction by the ITO, vide assessment order dated September 28,1968. Later on, while examining the assessee's accounts for the next subsequent yea, the ITO on the basis of the following material formed the opinion that the sole selling agency firm did not render any service to the assessee and hence the income to the extent of Rs. 1,27,313/- paid to the said firm by the assessee in the shape of commission had escaped assessment on account of the failure on the part of the assessee to disclose fully and truly all material facts necessary ....