TaxTMI 
TaxTMI 
2004 (9) TMI 26
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.... per cent, amounting to Rs. 1,36,00,682 on plant and machinery valued at Rs. 5,44,02,729. The return of income was processed on May 31, 1999, under section 143(1)(a) of the Act. Various notices were issued and queries were raised during the course of assessment proceedings. According to the petitioner all the material facts necessary for assessment were disclosed fully and truly. All the queries were answered and necessary information called for was furnished for the purpose of determining the total income. According to the petitioner after making necessary queries, which were answered for computation of true and correct income, the Assessing Officer made an order under section 143(3) of the Act, after application of mind and determined the total income of the assessee at Rs. 99,83,740 vide his assessment order dated March 29, 2000. It is contended by the petitioner that the Assessing Officer issued notice under section 148 of the Act on May 10, 2001 on the basis of a purported audit objection. The petitioner was called upon to file its return of income. The notice was issued on the ground that the Assessing Officer had reason to believe that the income of the petitioner company h....
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....tion and the use of plant and machinery for number of days was placed before the Assessing Officer. Under the head "Block A. it is specifically pointed out which plant and machinery was used for less than 180 days and which, for more than 180 days. In the footnote, it was pointed out that the plant and machinery includes use of trucks valued Rs. 16,94,880 purchased by the head office and used by the branch in India for business purpose. The value of the trucks has not been capitalised in the books of the assessee maintained for the office in India. However, since the asset was used in India, the depreciation was claimed in the tax return. Thus plant and machinery included the trucks and one OB van. It was pointed out to the Assessing Officer vide letter dated September 9, 1999 that the company was carrying on its operations in India an during the year the company was engaged in the business of producing television programmes primarily relating to sports activities. Hire purchase agreement dated April 17, 1996 for OB van equipment was also produce before the Assessing Officer. The same was executed between the assessee and Champion TV Ltd. (CTV), England. In the agreement the deliv....
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....ome comes to Rs. 1,80,447,467. Before the Assessing Officer, sample bill for post production expenses was also produced. The said bill has been issued by Indebo Travels Pvt Ltd. to the assessee to show the transactions till July 28, 1996 only for the events completed. The rest were not included. This refer to 7 matches at Calcutta. There is another bill referring to Calcutta Football (Match). There are other bills covering the period. According to the assessee when all these materials were taken into consideration by the Assessing Officer while making an order of assessment, it was clear in the mind of the Assessing Officer and the depreciation was allowed on the plant and machinery, as claimed. However, as the Assessing Officer was of the opinion that depreciation on trucks of Rs. 4,23,720 is not to be allowed by making specific reference has not allowed the same. On behalf of the Revenue, it was submitted that in view of the provisions contained in section 147 of the Act, despite the fact that the assessee has disclosed fully and truly all material facts necessary for assessment, still it is open to make the assessment under section 147/148 of the Act. It was submitted by learne....
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.... Eastern Newspaper Society v. CIT [1979] 119 ITR 996 had an occasion to consider the question of basing a notice on an audit report. For the purpose of imposing a check over the arithmetical accuracy of the computation of income and the determination of tax, internal audit organisation was set up. From 1960 onwards the audit was entrusted to the Comptroller and Auditor General of India. The nature and scope of receipt audit are defined by section 16 of the Comptroller and Auditor General's (Duties, Powers and Conditions of Service) Act, 1971. The audit by the Comptroller and Auditor General, as pointed out by the apex court, is principally intended for the purpose of satisfying him with regard to the sufficiency of the rules and procedures prescribed for the purpose of securing an effective check on the assessment, collection and proper allocation of revenue. Para. 3 of the circular issued by the Board on July 28, 1960 warns that "the audit department should not in any way substitute itself for the revenue authorities in the performance of their statutory duties". Para. 4 of the circular being relevant is reproduced hereunder: "Audit does not consider it any part of its duty to pa....
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....se. It is not relevant for the purposes of the Act that the permission of the Reserve Bank of India came at a subsequent date. In fact, the Assessing Officer being satisfied on the question of actual use allowed the depreciation. If on all the material placed on record the Assessing Officer has allowed the depreciation, as claimed by the assessee, then on the same material how can the assessee be sought to be reassessed. Merely because the permission to establish a branch office was granted on October 18,1996 is no ground to say that the assessee has not actually used the plant and machinery for more than 180 days, in view of the material indicated hereinabove. If on the material placed by the assessee the Assessing Officer had taken a decision vide his assessment order, any different view is to be taken afterwards on the same material, it would amount to change of opinion on the same material already considered. The Revenue contends that it is open to do so, and on that basis to reopen the assessment under section 147(b) of the Act. Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC). This decision was considered by the apex court in the case of Indian an....
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...., add to or colour the significance of such law. The true evaluation of the law in its bearing on the assessment must be made directly and solely by the Income-tax Officer.' After extracting the relevant portion from the apex court decision, this court has referred to the facts in detail. Thereafter, the court went on to deal with the Central Board of Direct Taxes instructions as under: 'Notwithstanding this clear position of law emerging from the decision of the Supreme Court, the instructions of the Board still persisted that as soon as audit objections are raised, prompt remedial action in the nature of reassessment should be taken even if objection is not accepted by the Income-tax Officer. The instructions are being taken for remedial action, viz., remedial action should invariably be initiated as a precautionary measure in respect of audit objections, even if the objection is not accepted by the Income-tax Officer or without the assessing authority applying his mind to such information for reaching his own conclusion. Once the remedial action is initiated, it can be dropped with the approval of the Commissioner of Income-tax if the objection raised is one of facts and the f....
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.... When sufficient material is placed on record and the Assessing Officer had arrived at a conclusion that the assessee is entitled to get depreciation then on the same material a different view cannot be taken. It amounts to change of opinion. It was submitted by learned counsel for the petitioner and rightly so that even if, for the sake of argument, the plant and machinery is used without approval of the Reserve Bank of India, it may amount to breach of the provisions contained in other laws, so far as the factum of use of the plant and machinery is concerned, that stands established. A Full Bench of this court in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 had an occasion to examine a similar aspect. The court also examined the effect of amendment to section 147 and Circular No. 549 dated October 31,1989 and observed: "It is a well settled principle of interpretation of statute that the entire statute should be read as a whole and the same has to be considered thereafter chapter by chapter and then section by section and ultimately word by word. It is not in dispute that the Assessing Officer does not have any jurisdiction to review his own order. His jurisdic....
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....the effect that the impugned order of reassessment cannot be faulted as the same was based on information derived from the tax audit report. The tax audit report had already been submitted by the assessee. It is one thing to say that the Assessing Officer had received information from an audit report which was not before the Income-tax Officer, but it is another thing to say that such information can be derived the material which had been supplied by the assessee himself." It is required to be noted, as pointed out by learned counsel for the assessee, that there was no fresh information supplied to the Assessing Officer by any one including the audit party. In a case like, this, the duty the Assessing Officer is that he himself should examine the material placed on record and should arrive at a prima facie belief in this behalf. He must record a conclusion that there is escapement on account of excessive depreciation allowance and is required to give reasons in this behalf. He has to justify the exercise of reassessment. In the instant case, the Assessing Officer while recording the reasons has not done any exercise. Where an assessment has been made and there is purported excessi....