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TMI Blog2009 (3) TMI 594X X X X Extracts X X X X X X X X Extracts X X X X ..... pril, 2004. In the assessment order passed under s. 147 on 8th Feb., 2006, the total income was assessed at Rs. 5,52,14,264 and the book profit under s. 115JA was computed at Rs. 7,03,89,722. 4. The CIT(A) allowed part relief and his order has been challenged by the assessee in the present appeal. Ground Nos. 1 and 2 "1. The learned CIT(A) ought to have held that the jurisdiction assumed, without any fresh materials, under s. 147, is unsustainable, on the basis of the materials already available on record and duly considered during the assessment proceedings, in the facts and the circumstances of the case and in law. 2. The learned CIT(A) has clearly erred in holding, without any basis, that no opinion was formed earlier, and therefore, there cannot be any change of opinion on the issue of determining the book profit under s. 115JA, and upholding the validity of the reassessment proceedings, in the facts and the circumstances of the case and in law." 5. In these grounds the assessee has challenged the initiation of proceedings under s. 147 of the Act vide notice under s. 148, dt. 30th April, 2004. 6. Shri R. Vijayaraghavan, the learned Authorised Representative reiterated the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding under s. 147 takes place after the expiry of four years from the end of the relevant assessment year, the proviso to s. 147 is attracted and no action can be taken under s. 147 unless such income has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts for his assessment for the assessment year. 8.2 Where, however, the said period of four years has not expired, the conduct of the assessee regarding disclosure of material facts need not be the basis for initiating the proceedings and they can be commenced if the AO has 'reason to believe' that the income has escaped assessment notwithstanding that there was full disclosure of material facts on record. The assessee in such cases cannot defend the initiation of action on the ground that the facts were already placed on record and that the AO must have or ought to have considered them. The power to make assessment or reassessment, where the initiation has been made within four years of the end of the relevant assessment year, would be attracted even in cases where there has been a complete disclosure of all relevant facts upon which a correct assessment might ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not, at a later stage, have a second thought and change his opinion with regard to that interpretation and proceed to assume jurisdiction under s. 147. This aspect was clarified by the Gujarat High Court in the case of Praful Chunilal Patel vs. M.J. Makwana, Asstt. CIT (1998) 148 CTR (Guj) 62 : (1999) 236 ITR 832 (Guj). The Court held as under: "........In cases where the AO had overlooked something at the first assessment, there can, in our opinion, be no question of any change of opinion when the income which was chargeable to tax is actually taxed as it ought to have been under the law but was not, due to an error committed at the first assessment." "........When at the first assessment all the relevant aspects are considered and there is proper applicability of mind for ascertainment of the amount of taxable income and of the tax payable thereon, then in the absence of any error or mistake being discovered or found, the AO later on cannot merely for the sake of giving a different opinion, change the earlier opinion. However, in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4,07,46,298 of the amalgamating company is deemed to be that of the amalgamated company under s. 72A, and therefore, it cannot be equated with and distinguished from the amount of loss brought forward or unabsorbed depreciation, as per the books of the appellant company, as stated under Expln. (iii) of s. 115JA(1), in the facts and circumstances of the case and in law. 5. The learned CIT(A) has grossly erred in rejecting the submissions of the appellant, contrary to Expln. (iii) under sub-s. (1) of s. 115JA, on his view that in no company's books, such bifurcation is made and therefore, denying the proper deduction correctly claimed by the appellant, and allowed in the assessment, based on a mere change of opinion, in the reassessment, in the facts and the circumstances of the case and in law. 6. The quantum of book profit, as computed in the reassessment proceedings, as confirmed by the CIT(A), under s. 115JA, in the impugned order, is highly excessive and unsustainable, in the facts and the circumstances of the case and in law." 14. The assessee-company was engaged in the business of manufacturing textile machinery. The return for asst. yr. 2000-01 was filed on 29th Nov., 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; 5,52,14,264 --------------------------------------------------------------- --------------------------------------------------------------- Particulars Amount Amount (Rs.) (Rs.) --------------------------------------------------------------- Profit under s. 115JA as per order dt. 19,38,99,509 29-1-2001 --------------------------------------------------------------- Add: --------------------------------------------------------------- Deduction under s. 80HHC-as claimed 1, 85,41,436 -------------------------- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4.1 of his order that a company M/s IPBM having accumulated loss of Rs. 1,55,13,974 and unabsorbed depreciation of Rs. 2,52,32,324, amalgamated with the assessee-company on 1st April, 1999. 17. The sub-s. (1) of s. 72A, as amended by the Finance Act, 2000 w.e.f. 1st April, 2000, says that in the case of amalgamation of a company owning an industrial undertaking, with another company, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss/depreciation of the amalgamated company for the previous year in which the amalgamation takes place. It reads as under: "(1) Where there has been an amalgamation of a company owning an industrial undertaking or a ship with another company, then, notwithstanding anything contained in any other provision of this Act, the accumulated loss and the unabsorbed depreciation of the amalgamating company shall be deemed to be the loss or, as the case may be, allowance for depreciation of the amalgamated company for the previous year in which the amalgamation was effected, and other provisions of this Act relating to set off and carry forward of loss and allowance for depreciation shall apply accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s brought forward as well as unabsorbed depreciation and therefore, applicability of cl. (iii) of the said Explanation cannot be avoided. This issue is squarely covered against the assessee by the ruling of the Authority for Advance Rulings in the case of Rashtriya Ispat Nigam Ltd., In re (2006) 204 CTR (AAR) 153 : (2006) 285 ITR 1 (AAR). In that case the authority ruled as under: "(iv) That, since the applicant had disclosed the aggregate loss comprising loss brought forward and unabsorbed depreciation as a consolidated figure in its P&L a/c, the applicant was required to bifurcate such consolidated loss into loss brought forward and unabsorbed depreciation for the purpose of calculating the book profit under s. 115JB. The applicant could not avail of the benefit of reduction envisaged under s. 115JB in a manner different from the one prescribed under the Act so as to be more beneficial to the applicant. (v) ........Sub-cl. (iii) of both s. 115JA and s. 115JB left no room for doubt that the expression 'loss brought forward' does not include depreciation and the net profit of the current year is to be reduced by the lesser of the two........." 21. In the case of Rashtriya Ispat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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