TaxTMI 
TaxTMI 
2020 (1) TMI 685
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....he total income of the assessee at Rs.53,02,64,479/-. Thereafter the assessment was re-opened u/s 147 of the Act and an assessment order was passed u/s 147 r.w.s. 143(3) of the Act on 21.01.2014 determining the total income of the assessee at Rs.54,69,61,226/-. The assessee had carried the matter in appeal and was granted part relief. 4. The AO re-opened assessment u/s 147 of the Act for the second time by recording following reasons: "The assessment was completed u/s.143(3) of the I.T. Act, 1961 on 12.05.2010 at a total income of Rs. 53,02,64,480/-. Subsequently information has been received from the I.T.O., Ward-2(1), Ghaziabad vide a letter dated 21.04.2014 that the company M/s. V2 Retail Limited had taken accommodation entries in form of bogus purchases for Rs. 25,65,05,225/- F.Y. 2007-08 (pertaining to A.Y.2008-09) from various persons namely Shri Nirbhay Shankar Gupta, Shri Shyam Shankar Gupta, Shri Rajeev Kumar Gupta and Shri Madan Gupta of Delhi. Therefore, I have reason to believe that income to the extent of Rs. 25,65,05,225/ - has escaped assessment." 5. The issue is whether the re-opening can be held to be in accordance with law under the facts a....
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....nder 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 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: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment." 9. This Bench of the Tribunal has on similar issue in the case of M/s. Beekay Steel Industri....
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....ovisions of section 147. If a case were to fall within the proviso, whether or not it was covered under the main provisions of section 147 of the said Act would not be material. Once the exception carved out by the proviso came into play, the case would fall outside the ambit of section 147. 27. Examining the proviso [set out above], we find that no action can be taken under section 147 after the expiry of four years from the end of the relevant assessment year if the following conditions are satisfied: (a) an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year; and (b) unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee: (i) 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 (ii) to disclose fully and truly all material facts necessary for his assessment for that assessment year. Condition (a) is admittedly satisfied inasmuch as the original assessment was completed under section 143(3) of the said Act. Condition (b) deals with a special ki....
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.... truly all material facts necessary for his assessment, any action taken by the Assessing officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our view-point, we hold that the notice dated 29.03.2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 02.03.2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above." 4.8. Applying the propositions laid down in the above case law to the facts to this case, we have to necessarily hold that the re-opening of the assessment proceedings is not valid that there is not even a whisper in the reasons recorded for the reopening of the assessment that there is a failure on the part of the assessee to disclose fully and truly all the necessary material facts required for assessment in view of the 1st proviso to Section 147 of the Act. In this case no tangible materials have come to the possession of the Assessing Officer subsequent to the Assessment Order u/s 143(3). Re-opening is done based on the same material and record and hence it is bad....
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....t there was failure or improper disclosure on the part of the assessee However, the Assessing Officer sought to reopen the assessments as there was incorrect interpretation of account by the Assessing Officer. The recorded reasons did not speak of any omission or failure on the part of the assessee. Thus, admittedly there was no failure on the part of the assessee to disclose fully and truly all material facts in the assessment. Incorrect interpretation of accounts by the Assessing Officer could not confer jurisdiction on the Assessing Officer to issue notices under section 148 for reopening the assessments as sought to be made in the instant case. If there is no failure on the part of the assessee to disclosure fully and truly the material facts, wrong interpretation of accounts by the Assessing Officer leading to excessive relief cannot be a ground for reopening and thus cannot confer jurisdiction on the Assessing Officer. Explanation 2 cannot be read in isolation of section 147. It should be read in conjunction with the provisions in the section. The words for the purpose of this section appearing in Explanation 2 show that the conditions precedent for reopening assessm....