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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 ..... there was full disclosure of material facts on record. - It was held that the impugned notice under s. 148 was issued within a period of four years from the end of the relevant assessment year Section 72A - 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 - AO reduced the net profit accordingly - he language of s. 72A(1) and of cl. (iii) of Explanation to s. 115JA(1), as reproduced above, are unambiguous and leave no scope for doubt. The accounts prepared under the Companies Act must be modified, wherever necessary, to comply with the provisions of s. 115JA of the Act, for the computation of minimum alternative tax. This is precisely what the AO did in this case.Accordingly the appeal is dismissed - IT APPEAL NO. 737 (MAD.) OF 2007 - - - Dated:- 27-3-2009 - Member(s) : U. B. S. BEDI., AHMAD FAREED. ORDER-AHMAD FAREED, A.M.: This appeal by the assessee is directed against the order of CIT(A), dt. 3rd Jan., 2007 for asst. yr. 2000-01. 2. 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 ..... was not based on any change of opinion. - that the impugned notice issued by the AO under s. 148 was based on change of opinion and therefore, it deserved to be quashed. - that reliance was placed on the decision of Madras High Court in the case of CIT vs. Annamalai Finance Ltd. (2005) 197 CTR (Mad) 86 : (2005) 275 ITR 451 (Mad). 7. Shri Shaji P. Jacob, the learned Departmental Representative supported the orders of the AO and CIT(A). The submissions made by him are summarized below: - that this was a case where notice under s. 148 was issued within a period of less than four years from the end of the assessment year. - that there was no material on record to show that the AO had formed an opinion on the issue involved in this case in the first instance. - that he placed reliance on the decision of Madras High Court in the case of Asstt. CIT vs. Apollo Hospitals Enterprises Ltd. (2008) 215 CTR (Mad) 460 : (2008) 4 DTR (Mad) 274 : (2008) 300 ITR 167 (Mad). - that the notice under s. 148 was validly issued by the AO. 8. We have considered the rival submissions in the light of material on record and the precedents cited. It is seen that the provisions of ss. 147 to 151 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to saying that he has 'reason to believe' that such income has 'escaped assessment'. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. At the s1 age where he finds a cause or justification to believe that such income has escaped assessment, the AO is not required to base his belief on any final adjudication of the matter. The 'reasons' should, no doubt, have a rational connection with the formation of the 'belief'. 9. The learned Authorised Representative placed heavy reliance on the decision of the Madras High Court in the case of CIT vs. Annamalai Finance Ltd. (2005) 197 CTR (Mad) 86 : (2005) 275 ITR 451 (Mad). In that case the Court held as under: "Held, (i) that the notice for the two asst. yrs. 1992-93 and 1993-94 was issued after the expiry of the period of four years from the end of respective assessment years, violating the proviso to s. 147. The notices were not valid. (ii) That s. 147 of the Act does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion. The AO proposed to reopen the assessment for the year 1994-95 purely based on the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Laboratory vs. P.N. Prasad, Jt. CIT Ors. (2002) 172 CTR (Bom) 696 : (2001) 252 TTR 673 (Bom). The Court held as under: "........... After the amendment, the only restriction put in the section is 'reason to believe'. That reason has to be a reason of a prudent person. That reason should be fair and not necessarily due to failure of the assessee to disclose fully or partially some material facts relevant for assessment. That, if any item has escaped from assessment which was otherwise includible within the assessment and the AO notices it subsequently by his own investigation or by reason of some information received by him, one cannot say that it constitutes change of opinion." 12. In the present case the provisions of cl. (iii) of the Explanation to s. 115JA were not correctly applied by the AO in the first assessment order passed under s. 143(3), which resulted in escapement of income within the meaning of s. 147 of the Act. The AO has brought out this point very clearly in para 4.0 of his impugned order. The impugned notice under s. 148 was issued within a period of four years from the end of the relevant assessment year. 13. In view of the facts and circumstances and t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ----------------------------------- Gross total income (as per order dt. 6,53,46,641 9-5-2002) --------------------------------------------------------------- Less: --------------------------------------------------------------- Relief granted by CIT(A) vide order dt. 22-3-2005 as VRS payments 31,45,997 --------------------------------------------------------------- Revised gross total income 6,22,00,644 --------------------------------------------------------------- Less: --------------------------------------------------------------- (i) Deduction under s. 80HHC-as per CIT(A)'s order 30,40,867 --------------------------------------------------------------- (ii) Deduction under s. 80G 39,45,513 69,86,380 --------------------------------------------------------------- Total income-normal computation 5,52,14,264 --------------------------------------------------------------- --------------------------------------------------------------- Particulars Amount Amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th 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 accordingly." 18. The AO, while computing the 'book profit' of the assessee-company under s. 115JA(1) applied the provisions of cl. (iii) of Explanation to this section. It reads as under: "Explanation: For the purpose of this section, 'book profit', means the net profit as shown in the P L a/c for the relevant previous year prepared under sub-s. (2), as increased by- ........ If any amount referred to in cls. (a) to (f) is debited to the P L a/c, and as reduced by,- ........ (iii) the amount of loss brought forward or unabsorbed depreciation, whichever is less as per books of account. ........" 19. Since the loss was of Rs. 1,55,13,974 and the unabsorbed depreciation was of Rs. 2,52,32,324, the AO reduc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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