TaxTMI 
TaxTMI 
2010 (1) TMI 44
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....ccepted by the Assessing Officer. The case of the Petitioner was thereupon selected for scrutiny. Notices were issued under Sections 143(2) and 142(1) of the Act. In response, the Chartered Accountant of the Petitioner submitted representations on 30th November 2004 and 20th December 2004. On 17th January 2005, an assessment order was passed under Section 143(3). In so far as the deduction under Section 80IB(10) was concerned, the Assessing Officer, while allowing the deduction, observed as follows: "During this year the assessee firm has claimed deduction u/s.80IB(10) of Rs.3,85,75,992/which is equal to the hundred per cent of the profits derived in the relevant previous year from the business of construction of housing projects. Audit Report in Form No.10CCB under Rule 10BBB has been filed along with the return of income. After verification the claim is found to be in order. Accordingly deduction u/s.80IB(10) is allowed to the extent of the claim of Rs.3,85,75,992/-." 4. On 30th March 2009, a notice came to be issued to the Petitioner under Section 148 of the Act, proposing to reassess the income for Assessment Year 2002-03 on the ground that its income had escaped assessment w....
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....ear 2002-03 was sought to be reopened after the lapse of four years. Section 147 postulates inter alia that if the Assessing Officer has reason to believe that income chargeable to tax has escaped assessment for any Assessment Year, he may subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment. The proviso to Section 147 stipulates that where an assessment has been made under subsection (3) of Section 143 or Section 147 for the relevant Assessment Year, no action shall be taken after the expiry of four years from the end of the relevant Assessment Year unless certain preconditions are fulfilled. These conditions are that the income chargeable to tax must have escaped assessment for such Assessment Year (i) by reason of the failure on the part of the assessee to make a return in response to a notice issued under Section 147; or (ii) by the failure of the assessee to make a return in response to a notice issued under Section 142(1) or Section 148; or (iii) to disclose fully and truly all material facts necessary for his assessment for that Assessment Year. In the present case, what fall....
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....3 lakhs which mainly comprised of society deposit, stilt parking and sundry credit balances. Since this income did not qualify as income eligible for deduction under Section 80IB, it was stated that there was reason to believe that the income had, to that extent, escaped assessment. Now, exfacie, the reasons which have been disclosed to the assessee would show that the inference that the income has escaped assessment is based on the disclosure made by the assessee itself. The reasons show that the finding is based on the details filed by the assessee and from the profits and loss account. Quite clearly, therefore, it was impossible for the Assessing Officer to even draw the inference that there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for Assessment Year 2002-03. Significantly, the reasons that have been disclosed to the assessee do not contain a finding to the effect that there was a failure to fully and truly disclose all necessary facts, necessary for the purpose of assessment. In these circumstances, the condition precedent to a valid exercise of the power to reopen the assessment, after a lapse of fou....
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....er s.147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and, secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. If either of these conditions is not fulfilled, the notice issued by the ITO would be without jurisdiction. The important words under s. 147(a) are "has reason to believe" and these words are stronger than the words "is satisfied". The belief entertained by the ITO must not be arbitrary or irrational. It must be reasonable or in other words it must be based on reasons which are relevant and material. The Court, of course, cannot investigate into the adequacy or sufficiency of the reasons which have weighed with the ITO in coming to the belief, but the Court can certainly examine whether the reasons are relevant and have a bearing on the matters in regard to which he is required to entertain the belief before he can issue notice under s.147(a). If there is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly ins....