2018 (12) TMI 1445

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....ing Officer (AO) under s.143(3) r.w.s. 147 of the Income Tax Act, 1961 (the Act)concerning AY 2005-06. 2. The assessee has also filed cross objection in the aforesaid Revenue's appeal. 3. In the captioned appeal, The Revenue has raised following grounds of appeal: "1. The Ld. CIT(A) has erred in law and on fact in quashing the reopening of the assessment u/s147 of the I.T.Act, 1961. 2. The CIT(A) has not appreciated the fact that the AO after verification of the case records noticed that the assessee has debited an amount of Rs. 13,00,00,000/- as diminution in the value of investment and the same is due to the decline in the value of investment in two of its overseas subsidiary and the addition has been made after considering various ....

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....enjoins that the amounts set aside as provision for diminution in the value of any asset in the statement of profit and loss is required to be excluded for the purposes of determination of 'book profits' for the purposes of Section 115JB of the Act. The amendment is thus made applicable to the AY 2004-05 in consideration also and consequently the book profit is under-assessed in terms of Section 115JB of the Act with respect to diminution in value of investments debited in the profit and loss account of the assessee. The book profit was thus inter alia increased to the extent of Rs. 13 Crore and re-determined at Rs. 39,03,13,803/- in the proceedings under s.143(3) r.w.s. 147 of the Act. 6. In the first appeal, the CIT(A) reversed the actio....

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.... Act cannot be invoked where there is no resultant change in tax liability as the assessee has already paid much higher tax even if the purported escapement as alleged is taken into account for the purposes of determination of book profits. 10. At the outset, we notice that in the instant case, the assessment was earlier framed under s.143(3) of the Act and the notice has been issued under s.147 of the Act proposing re-assessment after the expiry of four years from the end of the AY 2005-06 in question. The first proviso to Section 147 of the Act, in such a situation, imposes additional fetters on the AO in addition to the conditions stipulated in the main provision thereof. The first proviso necessitates that action under s.147 of the Act....

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....viso to Section 147 of the Act are not fulfilled in the instant case. 11. Seen from a different perspective, the expression 'disclose' in first proviso postulates a pre-existing knowledge. A person can possibly disclose something, he is privy to. A retrospective amendment of law cannot be visualized by an assessee which may lead to any kind of failure to disclose. Therefore, the conditions prescribed in the first proviso cannot be said to be fulfilled and thus the action of the AO under s.147 of the Act after the expiry of four years from the end of the assessment year in question is clearly time barred and therefore, vitiated in law. 12. The AO initiated proceedings under s.147 of the Act read with proviso thereof solely on the grounds o....