TaxTMI 
TaxTMI 
2014 (5) TMI 1167
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....iled to disclose fully and truly all material facts necessary for its assessment. In the present case, apart from making a bald assertion that there was a failure on the part of the petitioner to disclose fully and truly all material facts, no details thereof were furnished in the reasons for reopening the assessment and hence, the initiation of re-assessment proceedings was bad-in-law. Secondly, in the present case, after considering all the relevant aspects of the matter, the Assessing Officer (Respondent No. 1) passed the original assessment order on 30th December, 2008 under section 143(3) of the Act. Hence, the purported re-opening of the assessment was based merely on a "change of opinion" which was impermissible in law. 4. The brief facts are as follows. '(a) For the Assessment Year 2005-06, the Petitioner filed its return of income on 31st October 2005 declaring a loss of Rs. 3,855.30 lakhs as per the provisions of the Act and book profits of Rs. 918.02 lakhs as per the provisions of section 115JB, of the Act. The return of income was then revised on 7th November 2006 declaring a loss of Rs. 2,436.78 lakhs. The original return of income was accompanied with the copy o....
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....complete description of R and D set up with infrastructure, area, personnel, nature of activities and areas of R and D should be mentioned. Complete details of all the expenses should also be given with statutory approvals. 11. In respect of patents acquired and pending the details of expenditure to be given with nature of patent." (e) In reply thereto, the Petitioner by its letter dated 13th August 2007 once again at paragraph 11 thereof, informed Respondent No. 1 that the total legal and professional charges incurred for filing of patent applications was Rs. 328.36 lakhs. As per section 35(2AB)F this amount was allowable as revenue expenditure, but the Petitioner had claimed as weighted deduction only on the sum of Rs. 57.39 lakhs because the balance amount of Rs. 270.97 lakhs was paid for filing patent applications outside India. The said letter further stated that the details of these expenses had already been filed with their earlier letter dated 16th July 2007. (f) By a further letter dated 1st September 2008, the Petitioner once again enclosed the details of the legal and professional charges incurred by the Petitioner that was claimed as a deduction. In the said letter,....
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....collaborative study. Since the patent is a capital asset, hence, expenditure incurred towards filing of application and consultancy fee paid should have been treated as capital expenditure. Assessee is acquiring patent to ensure that no other competitor can use the same formula and they have privileges on the researched product. Patent is an innovative product which is exclusive property of assessee and expenditure incurred for the same is having enduring benefit for the assessee. 3. As there is a failure on part of assessee to disclose fully and truly all material facts necessary for its assessment, I have reasons to believe that income chargeable to tax has escaped assessment for this assessment year, coming within the meaning of section 147 of the Income tax Act, 1961. The estimated amount of escaped income is Rs. 2,85/33,925/- in this case. 4. In view of the same, notice u/s 148 is issued after approval of CIT-LTU vide letter No. CIT-LTU)/147 approval/2010-11/2461 dtd. 19/03/2012." (i) By a detailed letter dated 23rd October 2012, the Petitioner filed its objections for re-opening the assessment for the Assessment Year 2005-06. The petitioner inter alia contended that all ....
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....ssee 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." The said proviso clearly stipulates that where an assessment under section 143(3) or 147 has been carried out for the relevant assessment year, no action can be taken under section 147, after the expiry of four years from the end of the relevant assessment year, unless 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 issued under section 142(1) or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. 6. In the present case, admittedly, a scrutiny assessment was done and an assessment order was passed under section 143(3) of the Act for the Assessment Year 2005-06 and the proposed re-assessment is sought to be done after the expiry of four years from the end of the relevant assessment year. In such a situation, the first proviso to section 147 of the Act is attracted. Thus, ....
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....ase, as stated earlier, there are absolutely, no details as to which fact or material was not disclosed by the Petitioner that led to its income escaping assessment. There is merely a bald assertion in the reasons that there was a failure on the part of the petitioner to disclose fully and truly all material facts. In our view, this is, not enough. It is equally important that Respondent No.1 clearly sets out what facts or other material was not disclosed by the Petitioner that had led to the income escaping assessment as contemplated under section 147 of the Act. This is absent in the present case. In our view therefore, on this ground alone, the Petitioner is entitled to succeed in this writ petition. 10. Even otherwise, from the record we find that the Petitioner has disclosed fully and truly all material facts for the Assessment Year 2005-06 and that Respondent No.1 considered the same before making his assessment order under section 143(3) of the Act. This is clear from the return of income filed by the Petitioner for Assessment Year 2005-06 on 31st October 2005, the queries raised and the material sought for by Respondent No.1 by its letters dated 1st June 2007 and 7th Augus....
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.... Assessing Officer therefore accepted the deductions claimed by the Petitioner. He however rejected the Petitioner's claims with respect to some other issues, which do not form the subject matter of the re-assessment proceedings. It is pertinent to note that where Respondent No. 1 disagreed with the Petitioner's contentions, he gave his reasons for doing so but where the contentions were accepted, there was no discussion with reference to the same in the assessment order. All this clearly goes to show that all material facts with reference to the deductions claimed by the Petitioner in respect of the legal expenses and charges, were disclosed by the Petitioner not only during the original assessment proceedings but also during the scrutiny assessment, which culminated in the assessment order dated 30th December 2008. We therefore find that in fact there had been no failure on the part of the Petitioner to disclose fully and truly all material facts as required under the first proviso to section 147 of the Act. 14. We also find force in the submission of Mr. Pardiwala that the initiation of re-assessment proceedings for the Assessment Year 2005-06 is merely based on a "chan....