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TaxTMI 
TaxTMI 
TaxTMI 
2023 (8) TMI 727
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.... the Audited Balance Sheet, the Profit and Loss Account and Tax Audit Report under Section 44AB in Form No. 3 CD of the Act. The Report dated 25th November 2014, under Section 115JB of the Act, in Form No. 29B, was uploaded on the Income Tax website. 3. The Assistant Commissioner of Income Tax-2(3)(1), who was then the Assessing Officer of the Petitioner, initiated scrutiny assessment and issued various notices/questionnaires to the Petitioner. The Assessing Officer issued a Notice dated 28th August 2015, under Section 143(2) of the Act, to the Petitioner. 4. The Petitioner e-filed its revised Return of Income for the Assessment Year 2014-15 on 29th March 2016, once again declaring NIL Income. 5. Further notices and questionnaires were also issued to the Petitioner. A Notice dated 4th July 2016 under Section 142(1) of the Act, along with a questionnaire, was issued to the Petitioner. In the questionnaire, details regarding computation of MAT liability, Bad Debts Written Off and the provisions made in the account and deduction claimed under Section 14A of the Act, with detailed computation, were called for by the Assessing Officer. 6. By its letter dated 27th July 2016, the Peti....
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....he Assessing Officer, the Petitioner had submitted the details of Bad Debts Written Off by its letters dated 27th July 2016 and 11th August 2016. These details of Bad Debts Written Off were examined and allowed by the Assessing Officer. Further, during the assessment proceedings under Section 143(3) of the Act, the Petitioner has submitted the details of MAT computation along with various deductions claimed under the MAT provisions. As requested by the Assessing Officer, the Petitioner had made specific submission regarding deduction of unabsorbed depreciation by its letter dated 11th August 2016. The details of the Petitioner's claim of unabsorbed depreciation, along with the working of the same, were examined and allowed by the Assessing Officer. Further, the Petitioner stated that, during the assessment proceedings under Section 143 (3), as requested by the Assessing Officer, the Petitioner had submitted a reply dated 27th July 2016 in response to the specific query raised by the Assessing Officer regarding justifying allowability of Section 14A of the Act in the case of the Petitioner. As requested by the Assessing Officer, the Petitioner had submitted details of Section 14A di....
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....t. 14. The present Writ Petition was lodged on 12th February 2022. By an Order dated 21st February 2022, this Court granted ad-interim relief staying the operation and implementation of the said Notice dated 24th March 2021 issued under Section 148 of the Act and the said Order dated 13th January 2022. 15. Mr. Mody, the learned Counsel for the Petitioner, reiterated the submissions made by the Petitioner in its aforesaid letters dated 18th August 2021 and 9th September 2021 and submitted that, for the reasons stated in the said letters, the Assessment of the Petitioner could not be reopened under the provisions of Section 148 of the Act. On the other hand, Mr. Suresh Kumar, the learned Counsel for the Respondents, supported the said Order dated 13th January 2022 and submitted that, for all the reasons given in the said Order, the reopening of assessment had been initiated on valid grounds and the Assessment Officer had sufficient reasons to believe that the Petitioner had not disclosed fully and truly the material facts necessary for Assessment in its case. 16. In the present case, it is an admitted position that the said Notice dated 24th March 2021 had been issued after the ex....
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....s the tangible material to come to the conclusion that there is an escapement of income from assessment and that there has been a failure to fully and truly disclose material fact. After a period of four years even if the Assessing Officer has some tangible material to come to the conclusion that there is an escapement of income from assessment, he cannot exercise the power to reopen unless he discloses what was the material fact which was not truly and fully disclosed by the assessee. If we consider the reasons for reopening, except stating in paragraph 3 that a sum of Rs. 7,66,66,663/- which was chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary, there is nothing else in the reasons. In an unreported judgment of this Court in First Source Solutions Limited V/s. Asst. CIT[WP No. 2762 of 2019, dated 31-8-2021], relied upon by Mr. Pardiwalla, the Court held that a general statement that the escapement of income is by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment is not enough. The Assessing Officer should indi....
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....ns, no case of failure to disclose is made out, then certainly the assumption of jurisdiction under Section 147 and 148 of the Act would be ultra vires, being in excess of the jurisdictional restraints imposed by the first proviso to Section 147 of the Act"." 19. In our view, a perusal of the reasons for reopening set out in the said letter dated 23rd July 2021 show that there is no such failure on the part of the Petitioner to disclose fully and truly any material fact necessary for the Assessment. The first reason given in the said letter dated 23rd July 2021 for reopening the Assessment is in respect of the Bad Debts Written Off to the tune of Rs. 1,24,96,27,594/- claimed as deduction. The said reasons are found in paragraph 2.1 of the said letter which read as under:- "2.1 On verification of records it is observed that the assessee claimed and was allowed a deduction of Rs. 1249627594 towards bad debts written off. In its justification, the assessee had submitted the details. It was seen from the details submitted that there was a technical write off of Rs. 124,96,27,594/- by the assessee which was treated by it as provision for bad debts. Against this provision, there were....
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....t was noticed that the Authority for Advance Rulings (AAR) had vide 155 Taxman 60 [2006] had clearly disapproved of the method adopted by the assessee in similar case. Similarly, the Circular No. 495 dated 22.9.1987 of the CBDT had clearly specified with example as to how the losses were to be adjusted in cases of MAT. Thus, the submission of the assessee was factually incorrect. Factually incorrect submission on part of assessee led the Department to believe the submission of the assessee. It was seen from the records that the figure for book depreciation or book loss was Nil for the assessee for the current year. Incorrect application of provisions of the Act by the Department resulted in underassessment of income of Rs. 50,99,00,000 with a consequent short levy of tax of Rs. 10,68,77,590." 22. Again a perusal of the said reasons given clearly show that there is no failure on the part of the Petitioner to disclose any material fact. In fact, in paragraph 2.2 itself, Respondent No. 1 records that the "incorrect application of provisions of the Act by the Department resulted in under assessment of income of Rs. 50,99,00,000/- with a consequent short levy of tax of Rs. 10,68,77....
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....he part of the Petitioner to disclose any material fact in respect of the disallowance under Section 14A of the Act. Further, in paragraph 25 of its letter dated 27th July 2016, and in paragraph 1 of its letter dated 18th November 2016, the Petitioner has given the facts and the reasons as to why no disallowance can be made under Section 14A of the Act, except dissallowance of 1% of exempt income considered by the Petitioner as an administrative expenditure relating to exempt income. Thus, the said Assessment Order and the said letters once again clearly show that there is no failure on the part of the Petitioner to disclose any material fact even in respect of the issue of disallowance under Section 14A of the Act. 25. In the impugned Order dated 13th January 2022, Respondent No. 1 has only held that the Assessment of the Petitioner could be reopened as there was tangible material on record to believe that income chargeable to tax had escaped assessment. Respondent No. 1 has not given any reason in the said Order as to why, according to him, as required by the first proviso to Section 147 of the Act, the Petitioner had failed to disclose any material fact. The said Order dated 13....