TaxTMI 
TaxTMI 
2022 (9) TMI 765
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....reciate and ought to have held: (a) The appellant had made full and true disclosure of all material facts; (b) The assessment of the appellant was completed after thorough examination of records, after making detailed enquiries and after taking into account the primary facts and material as disclosed in the return as well as in the course of assessment proceedings; (c) While resorting to section 147, it is necessary that the Assessing Officer must have reason to believe that the income has escaped assessment; (d) While framing the original assessment the project expenses written were allowed under section 37 of the Act; (e) This being so, there was no reason to reopen the assessment and it amounts to nothing but a change of opinion; (f) The appellant company had debited the project expenses written off of Rs.84,97,952/- to profit and loss account and had claimed under section 37 of the Act; (g) Reopening U/s 147 of the Act in absence of fresh tangible material is bad-in-law and void; (h) Reopening based on mere change of opinion is bad in law and void and (i) In absence of formation of belief that '....
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....ent. Therefore, I have reason to believe that income chargeable to tax of Rs.84,97,952/- escaped assessment within the meaning of sec.147 of the I.T.Act, 1961." 5. In response to the notice issued u/s. 148, the assessee filed its return of income on 20.06.2014 declaring loss of Rs.3,56,28,560/-. During the course of assessment proceedings, the assessee objected to the reopening of the assessment by relying on various case laws and relying on the proviso to section 147. So far as the merit of the case is concerned, the assessee submitted that details of project expenses were submitted during the course of original assessment proceedings, which were verified and formed the part of the record. It was submitted that the company was incorporated in February, 2006 and the operation of the company was completed ready to start business on 01st March, 2008. The various expenses incurred during this period were broadly divided in two categories as under:- 1. Expenses related to equipment selection, procurement, installation commissioning and training for operation of equipment. 2. Expenses of revenue nature, no directly or indirectly related to capital assets. Such as: S....
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....early stated in the Assessment Order itself, which is reproduced in Para 6.1 above, that the reasons for reopening were sought for and the same were duly furnished to the appellant vide letter dated 23.06.2014, subsequent to which, the assessee's AR attended and furnished the information called for. I, therefore, find that the procedure for reopening has been correctly followed by the A.O., and the grounds related thereto are DISMISSED. As for the grounds taken by the assessee's AR that, since assessment in this case was already completed u/s. 143(3), the case could not have been reopened to re-examine the same issue, the AO has made a categorical observation in Para 3.3 of the Assessment Order that "The claim of the assessee that the details of project expenses was submitted during the course of original assessment proceedings was verified and from the record, it was found that no such information was filed." As per Explanation 1 to Sec.147, "production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure....
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....ted that out of the total expenditure during construction period of Rs.2,82,21,191/- assessee has reduced interest income of Rs.79,185/-, project expenses written off at Rs.84,97,952/- and preliminary expenses written off at Rs.27,655/- and the balance amount of Rs.1,96,16,399/- was allocated to capital assets. He submitted that the AO after verifying all these details has disallowed depreciation to the tune of Rs.37,25,018/- in the original assessment order. Referring to page 44 of the paper book, he drew the attention of the Bench to the profit and loss account for the period ended 31.03.2008 wherein the project expenses written off at Rs.84,97,952/- is clearly mentioned. Referring to the tax audit report, copy of which is placed at page 57 to 78 of the paper book, the ld. Counsel for the assessee drew the attention of the Bench to clause 17(a)at page 61 of the paper book where the auditors have categorically mentioned that amounts debited to the P&L account being expenditure of capital in nature at 'nil'. He submitted that absolutely there is no omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessme....
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.... Pending application(s), if any, shall stand disposed of." 12. Referring to the following decisions, he submitted that no notice u/s. 147 can be issued after the expire of four years from the end of the assessment year unless there is a failure on the part of the assessee to disclose fully and truly all material necessary for the assessment. i. ACITv.Rajesh Jhaveri Stock Brokers(P.) Ltd.[2007] 291 ITR 500 (SC) ii. CITv.Foramer Finance (264 ITR 566) (SC) iii. Prashant Joshi vs. ITO (189 taxman 1) iv. RPG Transmission (359 ITR 673) (Mad HC) v.Kotarki Constructions(P.) Ltd. vs ACIT(89 taxmann.com 265)(Kar.HC) vi. Bombay Presidency Golf Club Ltd. vs. ITO (332 ITR 226) (Bom.) vii.CIT vs. Hewlett-Packard Globalsoft(P.) Ltd. (380 ITR 386 (Karn.HC) viii. Viren Sureshchandra Shah v. ACIT (63 taxmann.com 104) (Guj.HC) ix. Titanor Components Ltd. vs. ACIT(343 ITR 183) (Bom.) x. Voltas Ltd. v ACIT (2012) 349 ITR 656( Bom.) 13. Referring to the following decisions, he submitted that reopening u/s. 147 of the I.T.Act in absence of fresh tangible material / failure on the part of the assessee to disclo....
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....expenditure u/s. 37 of the I.T.Act. For the above proposition, he relied on the following decisions:- i.ACIT vs.L.S.Cable(P) Ltd. 88 taxmann.com 616 (Del.HC) ii.Reliance Gems & Jewels Ltd. vs. DCIT3(3), Mumbai (ITA No.3855/Mum/2013) dated 28.10.2015(ITAT,Mumbai) iii.CIT vs. E-Funds International India(2007) 162 Taxman 01(del.) iv. CIT vs. ESPN Software India Pvt.Ltd. (301 ITR 368) (Del.HC) v. CITvs. Aspentech India(P.) [2010] 187 taxman 25(Delhi) vi. Bombay Steam Navigaiton co.Pvt Ltd. (56 ITR 52) (SC) vii. Empire Jute Co.Ltd. vs. CIT (124 ITR 1) (SC) 17. The ld. DR on the other hand heavily relied on the orders of the AO and CIT(A). So far as the validity of reassessment is concerned, he submitted that the AO in the original assessment order has neither discussed nor there was an opinion with respect to issue related to prior period expenditure as project expenses written off during the relevant assessment year and therefore the reassessment proceedings initiated in respect of this issue is not mere change of opinion and therefore, such reopening of assessment being in accordance with law has to be upheld. He also r....
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....re on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment is not sufficient in absence of any tangible material before the AO to substantiate or to show as to which part of the income or which facts necessary for completion of the assessment were not disclosed by the assessee. Therefore, according to the ld. AR, the reassessment proceedings initiated by the AO are not in accordance with law and has to be quashed. 21. We find sufficient force in the above arguments advanced by the ld. Counsel for the assessee. A perusal of the profit and loss account, copy of which is placed at page 44 of the paper book clearly shows that the assessee has claimed project expenses written off at Rs.84,97,952/- as expenditure. Similarly, perusal of Schedule-D forming the part of balance sheet, copy of which is placed at page 47 of the paper book, shows that the assessee, after deducting the project expenses written off at Rs.84,97,952/- has allocated the amount of Rs.1,9616,399/- to various capital assets. Thus, a perusal of the above details in the audited accounts filed along with the return of income clearly shows that assessee has d....
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....of Income-tax ("'Appeals) as well as the Tribunal would show that the Assessing officer had actually before him all the relevant materials at the time of the original assessment itself and, therefore, the finding of fact recorded by the Commissioner of Income-tax ("'Appeals) as well as the Tribunal docs not call for any interference and we find that the reassessment was merely a relook of the earlier assessment with a change of opinion and, therefore, the reasons by which the ""Assessing Officer reopens the assessment are actually vague and fanciful. We also find that the Commissioner of Income-tax (Appeals) while dealing with the appeals arising out of the assessment had considered at length the Assessing officer's finding and came to a conclusion that the reasoning assigned by the Assessing Officer arc not sufficient and, hence, the reopening of the assessment was bereft of materials to come to a conclusion that there were reasons to believe that the income has escaped assessment. Therefore, the order of the Commissioner of Income-tax (Appeals) overturning the order of Assessing Officer is, in our opinion, correct. We have also given our anxious consideration to the order....