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TMI Blog2011 (3) TMI 361X X X X Extracts X X X X X X X X Extracts X X X X ..... th, CIT(DR), for the Respondent ORDER A.D. Jain: These are assessee's appeals for AYs 1997-98 and 98-99. Since common issues are involved in both these appeals, they are being disposed of by this common order. For the sake of convenience, the facts are being taken from I.T.A. No.1833. 2. The first issue is the assessee's challenge to the action of the CIT(A) in upholding the reopening of the completed assessment of the assessee for both the years. The assessee contends that the CIT(A) has erred in upholding the issuance of re-assessment notice after the expiry of four years from the end of the relevant assessment year, even though there was no failure on the part of the assessee company to disclose fully and truly all material facts necessary for the assessment, rendering the notices defective and void ab initio. 3. It has been contended on behalf of the assessee that the assessee company has submitted its return of income for AY 1997-98 on 26.11.97, declaring income of Rs.756.48 crores; that the assessment was completed u/s 143(3) of the I.T. Act on 7.2.2000, at an income of Rs.793.72 crores; that the CIT(A) vide order dated 29.03.2000 granted partial relief to the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as is clear from the satisfaction note recorded by the AO, the deduction u/s 80-O of the Act was claimed by the assessee on gross receipts of Rs.630.92 crores without deducting the proportionate expenses incurred to earn such income; that as on the dates of the filing of the return of income for these years, the law was that deduction u/s 80-O of the Act, was to be on the net receipts and not on gross receipts; that then, as available from the satisfaction note, the assessee had credited simple interest on credits extended to APSEB, concerning supplies made to Vijayawada TPS despite the fact that the memorandum of understanding required compound interest to be charged; that this itself was reason good enough to reopen the completed assessment. It has thus been contended that there being no merit in the appeal of the assessee, the same be dismissed. 5. We have heard the parties on this issue and have perused the material available on record. Undisputedly, the reopening of the completed assessment for both the concerned years came after the expiry of four years from the end of the relevant assessment years. The issue up for consideration is as to whether such reopening of complete ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee's paper book (APB) for assessment year 1997-98. These run as follows: Satisfaciton Note M/S Bharat Heavy Electricals Ltd. A.Y. 1997-98 The Return of Income was filed on 26.11.97 at an income of Rs.7,56,47,81,570. Scrutiny u/s 143(3) was completed on 7.2.2000 at an income of Rs.7,93,72,43,769. It is noted that the deduction u/s 80-O was claimed by the assessee on gross receipts of Rs.630.92 lakh without deducting the proportionate expenses incurred to earn such income. The assessee had credited simple interest in the accounts, on credits extended to Andhra Pradesh State Electricity Board (APSEB) in respect of supplies made to Vijayawada TPS, although the Memorandum of Understanding provided for charging compound interest. As the assessee was following mercantile system of accounting, interest accrued to the extent of difference between simple interest and compound interest is required to be brought to tax. In view of above, I have reason to believe that the true income of the assessee has escaped assessment, thus, proceedings u/s 147/148 are taken up hereby subject to approve. Submitted. Sd/- Dy. Commissioner of Income Tax Circle 2(1), New Delhi. In both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e said proviso carries a mandate when it emplogs the word "shall" in requiring that no completed assessment shall be reopened unless income chargeable has escaped assessment for the reason of the failure of the assessment to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year. Non-compliance with the first proviso to section 147, therefore, renders the reopening of a completed assessment in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the relevant assessment year, void ab initio. Moreover, in the present case, as discussed hereinabove, not even an allegation of such failure has been made against the assessee company by the AO for either of the assessment years involved. Reliance by the assessee on Indian Farmers Fertilizers Coop. Ltd. (supra) is apt. Therein, it has been held that where in the reasons recorded in reopening, there was no allegation that the assessee had failed to disclose fully or truly all material facts necessary for its assessment, the AO was unjustified in taking action u/s 147/148 after the expiry of four years from the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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