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TMI Blog2013 (5) TMI 642X X X X Extracts X X X X X X X X Extracts X X X X ..... 1961 although the AO has not disposed off the assessee's objections to the reopening under section 147 by a speaking order." 5. The relevant facts are that assessee is carrying on contract business of building of roads, bridges, tunnels, etc. For the assessment year under consideration, assessee filed return of income on 27.11.2003 declaring total income of Rs.13,98,43,639/-. The Assessing Officer completed the assessment under section 143(3) of the Act on 22.3.2006 assessing the income at Rs.14,12,36,240/-. Thereafter, AO initiated reassessment proceedings after recording reasons that he has reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. The reasons recorded by the AO prior to issue of notice u/s.148 of the Act are as under:- "It is noticed that total anticipated loss of Rs.9, 73,01,399/- is claimed by the assessee company in the year under consideration in respect of the four projects viz.DMRK-2, DMRC-1, Goa Bridge and Rani Lanco. The assessee company is following percentage completion method in respect of the various projects. According to the percentage of completion of the relevant projects as on 31.03.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . That this was considered by the A.O. while fully allowing the estimated loss of Rs.9.73 crores from above four projects. However, later on 3 1.03.2010, the A.O. was of the view that the assessee was entitled to allowable loss of Rs.8. 18 crores ( this figure appears to be incorrect and correct figure stated in the reasons recorded in para 2 of assessment order is Rs.8.14 crores) on the basis of percentage completion method. That assessee had disclosed fully and truly all material facts relating to the loss of Rs.9.73 crores form the above four construction projects. Hence, the reopening of the assessment u/s. 147 beyond four years from the end of A.Y. 2003-04 was barred by limitation as per first proviso to the sec. 147 of the Act. 8. Ld CIT(A) after considering submissions of assessee has stated, inter alia, that it is true that assessee had made disclosure in the notes to the accounts, however, it could not be said that the disclosure was full and true or the AO considered such disclosure in the original assessment proceedings. Accordingly, ld CIT(A) rejected the contention of the assessee and justified the action of AO to initiate reassessment proceedings. Hence, assessee is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l while making the original assessment order; he could not take advantage of his own wrong and reopen the assessment under section 147 of the Act. Ld A.R. submitted that there were nothing new facts which came to the notice of the AO to initiate reassessment proceedings. He submitted that in view of above decision of Hon'ble Bombay High Court (supra), notice u/s.148 is liable to be quashed. Ld A.R. further referred the decision of Hon'ble Apex Court in the case of CIT vs. Kelvinator of India Ltd., 320 ITR 561(SC) and submitted that there must be tangible material before the AO to come to the conclusion that there was escapement of income from assessment and the said tangible material must have a link with the formation of the belief in the reasons recorded and if the said link is missing, initiation of reassessment proceedings is not valid. Ld A.R. also referred to the decision of Hon'ble apex Court in the case of ACIT vs. ICICI Securities Primary Dealership Ltd., 348 ITR 299(SC) and submitted that if the assessee had furnished accounts and thereafter the assessment was completed u/s.143(3) of the Act and on a mere re-look, the Officer has come to the conclusion that the income has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... substantial expenditure in its profit and loss account to claim deduction against interest income, which was not incidental to earning of interest income, action of the AO to initiate reassessment proceedings was held to be justified. Ld A.R. also referred the decision of Hon'ble Allahabad High Court in the case of ENIA India Ltd vs. ACIT, 30 DTR 82(All) and submitted that when there was non consideration of certain issues by the AO in the original assessment order, initiation of reassessment proceedings on the ground that certain items of income which were not at all discussed in the original assessment proceedings and it escaped the notice of the AO as a result of which, the income chargeable to tax had escaped assessment and on those facts, it was held that it cannot be said that it would amount to review/change of opinion. That Hon'ble Allahabad High Court upheld the action of AO on the ground that mere production of the account books before the AO would not amount to disclosure within the meaning of Explanation 1 to section 147 of the Act since the same could not be discovered by the AO only with due diligence. Ld D.R. also referred the decision of Hon'ble Delhi High Court in ..... 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(3) of section 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, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under seb-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year:" ------------ ------------ ------------ 148(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provision of this Act shall, so far as may be, appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt projects, the loss allowable amounts to Rs.8,40,23,891 and thus, the excessive claim of loss to the extent of Rs.1,58,76,508 in respect of above four projects have been claimed and allowed to the assessee. We observe from para 2 of the assessment order that the AO has himself mentioned that reassessment proceedings is initiated by issuing notice u/s.148 of the Act on 31.3.2010 to verify the correct claim of loss by the assessee. We observe that AO though has mentioned in the reasons recorded that said excessive claim of loss has been allowed by reasons of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment but nowhere mentioned in the reasons recorded and/or in the assessment order, as to what material facts, assessee failed to disclose fully and truly due to which the income chargeable to tax has escaped assessment. As mentioned hereinabove, Their Lordships of Hon'ble Bombay High Court in the case of Hindustan lever Ltd (supra) has mentioned that AO must disclose in the reasons as to which facts or material was not disclosed by the assessee fully and truly, which was necessary for assessment of that assessment year to esta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 147 cannot be used to review the order when nothing new has happened and no new material has come on record, no new information has been received between the date of order of assessment sought to be reopened and the date of formation of information by the AO. It is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reasons. Their Lordships have held that it would amount to reopening of assessment merely because of change of opinion which is not permissible. Therefore, notice u/s.148 of the Act was held to be not valid. 17. We are of the considered view that above decision of Hon'ble Jurisdictional High Court as well as the decision of Hon'ble Delhi High Court in the case of Kelvinator of India Ltd (supra) squarely apply to the facts of the case before us as the AO in the case before us, has initiated reassessment proceedings on the same facts which were available before him at the time of making assessment u/s.143(3) of the Act and no new material has come on the basis of which it could be said that he has reason to believe that income chargeable to tax has escaped assessment on account of failure on the part of the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X
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