TaxTMI 
TaxTMI 
2022 (2) TMI 1038
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....006 - 2007, the petitioner filed the return of income on 25th October, 2016. It came to be revised on 28th March, 2008. In the revised return of income the petitioner disclosed total income of Rs.Nil under the normal provisions of the Act, 1961 and "book profits" of Rs. 406,11,46,046/- under Section 115JB of the Act, 1961. During the assessment proceedings, respondent no.1 had initially issued a notice under Section 142(1) of the Act, 1961 on 10th September, 2017. The petitioner furnished the requisite explanation and documents in support thereof to the aforesaid notice as well as the subsequent clarification sought by respondent no.1. Eventually, respondent no.1 passed an assessment order on 18th December, 2008 under Section 143(3) of the Act, 1961, whereby respondent no.1 determined total income of the petitioner at Rs. Nil under the normal provisions of the Act, 1961 and the book profit at Rs. 806,91,33,098/- under Section 115JB of the Act, 1961. (b) Post assessment, the petitioner was served with an audit query dated 30th July, 2009 in which objections were noted as regards the debit of Rs. 1,26,33,095/- towards "leased assets repurchase expenses" and Rs. 1,78,05,149/- toward....
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....e impugned notice under Section 148 and the consequent action deserve to be quashed and set aside. 5. An affidavit-in-reply is filed on behalf of respondent no.1. An endeavour is made to support the impugned action by relying upon the very reasoning which permeates the reasons recorded by respondent no.1. 6. We, therefore, deem it appropriate to extract the reasons which weighed with the Assessing Officer to reopen the assessment. The relevant part of the reasons recorded by the Assessing Officer reads as under: "On perusal of the records for the Assessment Year 2006 - 2007, it is found that the assessee company has debited an amount of Rs. 3,04,38,244/- under the head "miscellaneous expenses" to the P&L Account. Said amount is consist of leased assets purchase expenses amounting to Rs. 1,26,33,095/- and assets written off (irregular spares) amounting to Rs. 1,78,05,149/-. Said expenses have been claimed by the assessee company as revenue expenses, although they are capital in nature. As the cost incurred are capital in nature, the same requires to be disallowed. In view of the said discussion, I have reason to belief that income amounting to Rs. 3,04,38,244/- has escaped asses....
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....t on the count that, in fact, the petitioner had made a full and true disclosure of the material, which forms the basis of the alleged reasons to believe escapement of income, and there was also a conscious consideration of the said material by the Assessing Officer during the course of scrutiny assessment under Section 143(3) of the Act, 1961, also appears to be borne out by the material on record. 11. As regards the escapement of income on the score that the expenses towards leased assets repurchase amounting to Rs. 1,26,33,095/- were incorrectly debited as revenue expenses, from the perusal of the communication dated 5th November 2008 addressed by the Assessing Officer it becomes evident that the petitioner was called upon to submit, inter alia, the details of miscellaneous expenses of Rs. 5,95,12,84,632/- (Para 3(f)) and the petitioner did furnish details of those expenses along with the communication dated 14th November, 2008, wherein the particulars of the leased assets repurchase expenses at Rs. 1,26,33,095/- were specifically shown. In addition to this, in reply to the audit query communicated vide letter dated 30th July, 2009 the petitioner had made further disclosure as ....
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....to insist that the assessment order must record all the questions raised and the satisfaction in respect thereof of the Assessing Officer. The only requirement is that the Assessing Officer ought to have considered the objection now raised in the grounds for issuing notice under Section 148 of the Act, during the original assessment proceedings. ........" 15. Once it becomes evident that the Assessing Officer had raised the query and reply thereto was furnished by the assessee, the endeavour on the part of the revenue to reopen the assessment is fraught with two infirmities. One, it cannot be said that the income escaped assessment on account of failure to make a true and full disclosure of the material facts (in cases where the proviso operates). Two, the exercise would then fall in the realm of mere change of opinion on the basis of the very same material, which is legally impermissible. Further, it cannot be said that there is a "tangible material" which would justify recourse to the provisions contained in Section 147 of the Act, 1961. 16. The third count of challenge to the impugned action that, it suffers from the vice of non-application of mind is equally well-merited. T....