TaxTMI 
TaxTMI 
2018 (9) TMI 861
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....T(A)) erred in upholding the action of the Assistant Commissioner of Income-tax, Central Circle 40. Mumbai (hereinafter referred to as the Assessing Officer) in reopening the assessment and recording the reasons tinder section 148 which are vague, insufficient and erroneous in law. The appellants contend that on the facts and circumstances of the case and in law, the issue of notice under section 148 is bad in law and hence, the impugned assessment requires to be quashed." 3. Brief facts relating to this case are that the assessee is engaged in trading in shares and securities. The return of income for AY 2003-04 in this case was filed by the assessee under section 139(1) of the Act on 01.1.2003 declaring total loss of Rs. 14.15,94,890/-. Original assessment in this case was completed under section 143(3) of the Act Vide order dated 17.02.2006. The return of income in this case was filed by the assessee under section 139(1) of the Act on 01.1.2003 declaring total loss of Rs. 14.15,94,890/-. The business loss was allowed to be carried forward at Rs. 11,53,44,311/-. Subsequently, the case was reopened by issuing notice under section 148 of the Act dated 29.01.2010. The reasons f....
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....n portion of Rs. 19,27,71,401/- was included and shown as part of the total o/s loan amount of Rs. 128,09,30,539/- which indicates that the above interest was not paid during the previous year 2002-03 relevant to AY 2003-04. Since the interest was not paid to the bank and it was just a provision made. it should have been disallowed u/s 438 of I.T. Act. Failure to do so has resulted in underassessment of business income of Rs. 7,74,44,069/-, as the business loss of Rs. (-) 11,53,44,311/- as assessed u/s 143(3) after adjusting the interest disallowance would result in positive business income as stated above. The tax on above works out to Rs. 2,84,60,695/-(i.e. 2,71,05,424/-(tax) + Rs. 13,55,271(S.C.). In the view of above I believe that there is an under assessment of income to the tune of Rs. 15,63,90,209/- (Rs. 7,89.46,140/- + Rs. 7,74,44,069/-) within the meaning of section 147." 4. From the above reasons recorded by the AO, we find that the reopening was mainly on the following reasons: - 1. Prior period of adjustment on account of refund of brokerages escaped assessment to the Tune of Rs. 7,51,86,892/-. 2. The provision of interest debited to profit and loss ....
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....nsel for the assessee also stated that the details of interest claimed of Rs. 19,27,88,380/- relating to three parties and the same was filed before the AO during the original assessment proceedings vide letter dated 14.02.2006 and the relevant details were as under :- "Details of Interest Claimed Sr. Particulars Amount 1. Global Trust Bank Ltd. 104,377,146 2. Madhavpura Mecantile Co-Op Bank 88,394,255 3. M/s Phulchand Sons Inv Pvt Ltd 16,979 Total 192,788,380." 8. Further details were filed at pages 42-45. The learned Counsel for the assessee took us through the original assessment order and stated that the AO has considered this aspect of claim of interest vide Para 4.1 of the assessment order and allowed the claim of the assessee. Similarly, the AO also allowed the claim of refund of brokerage for prior periods and the details were filed before the Assessing Officer. In view of the above, the learned Counsel for the assessee argued that the original assessment was completed under section 143(3) of the Act and the AO has raised the queries regarding both the issues and replies were filed and even the AO has considered the same. According to the le....
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....y issuing notice under section 148 of the Act is beyond four years. Here, it is to mention that this issue is squarely covered in favour of assessee and against Revenue by the decision of Hon'ble Supreme Court in the case of CIT vs. Foramer France (2003) 264 ITR 566 (SC). 11. In the similar circumstances, Hon'ble Supreme Court in the case Foramer France (Supra) has taken the view that the first proviso to section 147 of the Act lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevant assessment year. Once the exception carved out by proviso to s. 147 of the Act comes into play, the case would fall outside the ambit of s. 147 of the Act. As per proviso to s. 147 of the Act, no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. In case, there being no whisper in the reasons supplied to assessee that income escaped assessment by r....
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....ent year 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 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." This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147. 10. In Rakesh Aggarwal v. Asstt. CIT[1997] 225 ITR 4961, the Delhi High Court held that in view of the proviso to section 147 notice for reassessment under section 147/148 should only be issued in accordance with the new section 147, and where the original assessment had been made under section 143(3), then in view of the proviso to section 147 the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO[2000] 242 ITR 612. In our opinion, we have to see the law prevailing on the date of issue of the notice under section 148, i.e., 20-11-1998. Admi....
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....ppeal relating to the petitioner. The eligibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in the case of Boudier Christian. Moreover, the Tribunal in the appeal relating to the assessment of the petitioner's own case, vide Dy. CIT v. O.N.G.C. As agent of Foramer France[1999] 70 ITD 468 (Delhi), has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and, hence, when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under section 147/148 would obviously be on the basis of a mere change of opinion by the income-tax authorities, which would not be valid as held by the Supreme Court in Indian & Eastern Newspaper Society v. CIT[1979] 119 ITR 996 1 ;Gemini Leather Stores v. ITO[1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Dy. CIT[1998] 234 ITR 1702(Delhi), etc. 12. In the decision of the Tribunal in the assessee's own case O.N.G.C.'s (supra), it has been held that the income from the contra....