TaxTMI 
TaxTMI 
2016 (8) TMI 683
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....ssessee under section 115JB of the Income Tax Act. The ld.AO thereafter recorded reasons and issued notice under section 148 of the Income Tax Act. The reasons recorded by the AO are reproduced by the ld.CIT(A) at page nos.3 and 4 of the impugned order. In order to appreciate the controversy in right perspective, it is imperative upon us to take note of these reasons. They read as under: "3.1 The reasons recorded for reopening of this assessment are as follows:- "On verification of case record for assessment year 2005-06 of the assessee company i.e., Sanitex Chemicals Limited, it is noticed that the company has plot area admeasuring at 59,388 sq. mts. It was decided by the company to sell the same by making plots. Out of total area i.e. 59,388 sq. mts., the company has retained with it plot admeasuring 12,043 sq. mts. for factory premises and it has sold 10,461 sq. mts. in the preceding assessment years. Further it has allotted 9357.96 sq. mts. for road and 3012.83 for common area. The break up or the treatment given of/to total plot area admeasuring 59.388 sq. mts. is as under:- Total Plot area. : 59,388 sq. mts. Less : Area retained for factory. : 12....
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....mission paid is to be verified. Further, the assessee is left with land of 1582 sq. mts. and the same has not been reflected in the balance sheet. The value of land Rs. 1,26,560/- (1582 sq. mts. x Rs. 80) is left to be shown in the balance sheet." In view of the above, I have reason to believe that long term capital gain to the extent of Rs. 1,11,76,884/- and cost of land Rs. 1,26,560/- escaped assessment. Necessary approval for issue of notice u7s, 148 may be accorded." 4. The ld.CIT(A) on analysis of the record found that in the original assessment proceedings, the ld.AO has confronted the assessee with this issue. The assessee has filed a reply dated 24.12.2007 and it gave a note on the issue of long term capital gain. The assessee has disclosed all these facts in this note. The ld.CIT(A) has reproduced this note on page no.15 of the impugned order. It reads as under: "Re: Note on Long Term Capital Gain Company have total land admeasuring 59,388 sq. mt. to sell the land, Company have plotted the land with permission of the competent authority, in smaller segment so as to sell the land to various person. Due to plotting of land, Land admeasu....
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....rival submissions and perused the material on record. In our considered view the reopening of the assessment is bad in law. For the sake of convenience we reproduce section 147 and proviso thereto:- 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may subject to the provisions of sections 148 to 153 assess or re-assess 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 recomputed the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the fail....
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....on 148 of the Act was issued after the expiry of four years. The notice under the proviso of section 147 of the Act can be issued after the expiry of four years only in case where income chargeable to tax has escaped assessment by reason of the failure on the par! of the assesses to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. From the perusal of the reason recorded it is apparent that no case has been made out that the assesses had failed to disclose fully and truly all material facts necessary for his assessment and no observation has been made in this regard, On the basis of the same material which was available on record, the assessing authority was of the view that the deduction had been wrongly allowed under section 36(1)(viii) of the Act. The Tribunal observed that the assessee had furnished the requisite details in respect of leasing income and upfront fee as received in the assessment year under consideration and the same was duly disclosed in the audited profit and loss account, as is evident from ....
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....mbay High Court in the case of Bhavesh Developers vs. A.O. & Others (supra) observed as under :- "Held, allowing the petition, that ex facie, the reasons which had been disclosed to the assessee would show that the inference that the income had escaped assessment was based on the disclosure made by the assessee itself. The reasons showed that the finding was based on the details filed by the assessee and from the profits and loss account. Therefore, it was impossible for the Assessing Officer to even draw the inference that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for assessment year 2002-03. Significantly, the reasons that had been disclosed to the assessee did not contain a finding to the effect that there was a failure to fully and truly disclose all necessary facts, necessary for the purpose of assessment. In these circumstances, the condition precedent to a valid exercise of the power to reopen the assessment, after a lapse of four years from the relevant assessment year, was absent in the present case. The notice was not valid and was liable to be quashed." Hon. Supreme Court ....
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.... and now considered as capital would be akin to reviewing his own decision on the subject. Hon. Bombay High Court in the case of ICICI Prudencial Life Insurance Co. Ltd. vs. ACIT (2010) 325 ITR 471 (Bom) also held that when there is no material on record and without there being any allegation of failure of the assessee to disclose such material fact, assessment cannot be reopened after four years. Hon. Gujarat High Court in Inducto Ispat Alloys Ltd. vs. ACIT (2010) 320 ITR 458 (Guj) and Nikhil K. Kotak vs. Mahesh Kumar (2009) 319 ITR 445 (Guj) also held that where the period of four years has expired from the end of relevant Asst. Year the proviso to section 147 would come into play. It stipulates three conditions and one of those conditions is showing omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. When we go through the reasons recorded and as mentioned above we do not find any reference to such failure on the part of the assessee to disclose any material fact necessary for assessment and in fact narration given in the reasons do not show any such failure which could be inferred even if not so mentioned ....