TMI Blog2005 (9) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... he AO issued notice under s. 148 on 30th May, 2001. The grievance of the assessee is that the legal issue involved relates to reopening of assessment under first proviso to s. 147, which was completed under s. 143(3) after expiry of 4 years from the end of the relevant assessment year, when there is no failure on the part of the assessee to file the return under s. 139 or in response to notice issued under s. 142(1) or s. 148 or to disclose fully and truly all material facts necessary for the assessment. 4. As per learned Authorised Representative in the present case, there is no failure on the part of the assessee to disclose the facts relating to issue. The confirmation letters of the depositors were on the record of the Department since the filing the return of income itself. These were in fact verified by the AO when the assessment order was originally passed under s. 143(3). The learned Authorised Representative further submitted that reliance may please be made to the decision of Supreme Court in the case of Mahanagar Telephone Nigam Ltd. VS. Chairman, CBDT Anr. (2000) 162 CTR (SC) 554 :(2000) 246 ITR 172 (SC), in which also the Hon'ble apex Court has clearly and catego ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leted under s. 143(3) on 15th Jan., 1992 which has been fully described by AO himself in his order under s. 143(3)/148 and the notice under s. 148, which was issued on 30th May, 200l. 8. The provisions with respect to reopening of assessment is very clear. The first proviso to s. 147 reads as under: "Provided that where an assessment under sub-s. (3) of S. 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 r unless any income chargeable to tax has escaped assessment for such assessment year by reason of failure on the part of the assessee to make a return under S. 139 or in response to a notice issued under sub-s. (1) of S. 142 or S. 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." It is crystal clear from the plain reading of the above provision that reopening can be made after completion of 4 years when the assessment is completed under S. 143(3), only when income chargeable to tax has escaped assessment because of failure of the assessee to file return under S. 139 or in respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank Ltd. VS. K.J. Rao, Dy. CIT Am. (2004) 188 CTR (Bom) 380 held that: "Concluded assessment can be reopened beyond a period of four years only if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment. Having furnished all material facts, even if the assessee erroneously claims higher depreciation, it will not be a case of failure to disclose fully and truly all material facts. Also if the legal inference drawn from the material facts is erroneous, it cannot be said that there is failure on the part of the assessee." 11. The Calcutta High Court in the case of Jay Shree Tea Industries Ltd. Vs. Dy. CIT (2001) 165 CTR (Cal) 193 : (2000) 245 ITR 567 (Cal) observed that the notice issued under s. 148 after expiry of 4 years was bad in law as the Department failed to prove that the assessee did not disclose fully and truly all material facts necessary for the assessment. 12. The decision of Gujarat High Court in the case of Praful Chunnilal Patel Ors. VS. M.J. Makwana, Asstt. CIT (1998) 148 CTR (Guj) 62 : (1999) 236 ITR 832 (Guj) which is relied upon by the CIT(A) is totally irrelevant to the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y be mentioned that provisions of law as contained under s. 147(a) and cases coming within the purview of proviso to s. 147, namely, cases where scrutiny assessments have been completed, are 'pari materia' and, therefore, the principles enunciated by Hon'ble Supreme Court in the case of ITO Ors. VS. Lakhmani Mewal Das 1976 CTR (SC) 220 : (1976) 103 ITR 437 (SC) may be said to be valid in respect of the law on the statute book w.e.f. 1st April, 1989. These principles are summarized as under: (i) "The duty on the assessee is to make a true and full disclosure of the primary facts at the time of the original assessment. (ii) The duty of the assessee did not in any case extend beyond making a true and full disclosure of the primary facts. Once he has done that, his duty ends. (iii) In order to be able to initiate such proceedings under s. 147(a), the ITO, should have reason to believe that income chargeable to tax has escaped assessment for particular year and this escapement has resulted by reason of the omission or failure on the part of the assessee to make a return for the year or to disclose fully and truly all material facts necessary for his assessment for that year. Bot ..... X X X X Extracts X X X X X X X X Extracts X X X X
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