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TMI Blog2014 (12) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... ount’ - it cannot be said that there is failure on the part of assessee in disclosing fully and truly all material facts for his assessment which could have enabled the AO to reopen assessment after expiry of four years from the end of the relevant AYs - in the reasons recorded also, AO has neither made any allegation that there is failure on the part of assessee in making full and true disclosure of material facts for his assessment nor he has specifically pointed out the issues/subjects on which according to AO, assessee has not made full and true disclosures – the reopening of assessment beyond four years from the end of relevant AY is in violation of provision contained u/s 147 read with first proviso - For this reason alone, initiation of proceeding at least for the AYs 2002-03 and 2003-04 is without jurisdiction and consequently assessment order passed is void ab-initio – Decided in favour of assessee. - ITA Nos. 1728, 1729, 1730 & 1731/Hyd/2011 - - - Dated:- 26-11-2014 - Shri P. M. Jagtap And Shri Saktijit Dey,JJ. For the Petitioner : Shri A. V. Raghuram For the Respondent : Shri Ramakrishna Bandi ORDER Per Saktijit Dey, J. M. These four appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... res towards interest payment to the P L A/c, which included an amount of ₹ 59.30 lakhs being the amount attributed from the reserve i.e. interest suspense account . After complying to the notice issued u/s 148, assessee during the reassessment proceeding, offered its explanation to the query raised by AO as to why the amount of ₹ 59.30 lakh cannot be considered as income of assessee. AO, however, having not found merit in the submissions of assessee, completed the assessment u/s 143(3) read with section 147 of the Act vide order dated 30/09/2009 holding that it is a liability on capital account and not on revenue account. He further observed that even if it is considered as a revenue liability, the same is not allowable u/s 43B(d) as no payment has been made to Financial Institutions during the year. Accordingly, he added an amount of ₹ 59,29,333 to the income of assessee. Being aggrieved of assessment order so passed, assessee preferred appeal before the learned CIT(A). 6. Challenging the validity of the proceeding initiated u/s 147, assessee submitted before the CIT(A) that as the assessee has made full and true disclosure and all informations were available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ofit Loss Account over the tenure of the Term Loans. From such note, it cannot be said that the appellant has made full and true disclosure of all material facts in the return of income filed by it earlier. Further, in the Audit Report in Form No. 3CD, including the annexure to the said report, there is no disclosure of any amount with regard to such claim towards interest suspense account. Even in the statement of total income filed with the return, the appellant has not furnished any factual information / clarification with regard to such claim. Further, after going through the assessment records, I find that the appellant has not furnished any factual information / clarification with reference to such claim. Having regard to such facts and in the absence of any clarification from the appellant during the appellate proceedings, it clearly shows that there was failure on the part of the appellant to disclose fully and truly all material facts necessary for this assessment year 2002-03. Under the circumstances and having regard to the reasons recorded by the AO before issuance of notice u/s 148 of the Act, reopening of the assessment u/s 147 of the Act, in my view, is justified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the notice of AO restructuring proposal of IDBI and IFCI. Thus, AO making enquiry and applying his mind to the materials on record completed assessment. In AY 2004-05 also not only in computation of income, P L account and annual report, assessee has disclosed full particulars of interest debited to interest suspense account, but, in reply dt. 26/08/2006 submitted in course of original assessment proceeding, assessee has brought to the notice of AO entire details relating to restructuring package granted by IDBI and IFCI. Ld. AR submitted, same was also the case in AY 2005-06 as assessee disclosed full particulars relating to interest debited to interest suspense account in computation of income and annual report. Thus, when the assessee is following the same accounting policy in so far as debiting interest to interest suspense account in respect of loan granted by IDBI and IFCI for all these years and when different AOs after making enquiry and applying their mind to the issue and facts and materials on record have completed assessments, only because in AY 2006-07 the AO has taken a different view in respect of interest debited to interest suspense account, reopening of assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 comes into play as the reopening of assessment in case of assessee has been made after expiry of four years from the end of the relevant assessment years. That being the case, it is necessary to examine whether the other pre condition of the proviso to section 147 i.e. failure on the part of assessee to disclose fully and truly all material facts, applies to the present case. Therefore, to decide this issue, it is necessary to look into the reasons recorded by AO while reopening assessment. The reasons recorded, which is common for all the assessment years, is reproduced herein for convenience: It is seen at item No. .7 (Interest suspense Account) of significant accounting policies of schedule K forming part of your printed Annual Report for the AY 2006-07, the interest suspense account representing the net present value of differential interest on IDBI and IFCI Ltd. term loans due to reduction of rate of interest on account of restructuring is being charged to the P L account over the tenure of the term loans . As per the IDBI letter dated 22-12-2000 submitted by you, there has been a reduction of rate of interest to a uniform rate of 16.5% per annum w.e.f.01-10-2000. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wable u/s 43B(d) as no payment has been made to financial institutions during the year. 12. From the reasons recorded, as aforesaid, it is patent and obvious that there is no allegation made by AO that alleged escapement of income is attributable to failure on the part of assessee to disclose fully and truly all material facts required for his assessment for the AYs under consideration. Further, on a reference to the final accounts of assessee and notes appended thereto for the AYs 2002-03 to 2006-07, it appears that assessee is consistently following the same accounting policy so far as debiting the differential amount of interest payable to IDBI and IFCI to the interest suspense account . These annual reports containing final accounts as well as notes attached thereto have been submitted along with the returns of income filed by assessee and also the computation of income for the relevant AY clearly indicate that assessee has made full and true disclosure of all material facts relating to the reduction of interest and transferring it to the interest suspense account . Therefore, it cannot be said that there is failure on the part of assessee in disclosing fully and truly all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest in respect of loan advanced by IDBI and IFCI. Similarly, reply dt. 26/08/2006 filed before AO during assessment proceeding for AY 2004-05 indicate that informations relating to debiting interest to interest suspense account was brought to the notice of AO. In AY 2005-06 also the annual report disclosed information relating to debiting of interest to interest suspense account. Therefore, undeniable facts emerging from materials on record clearly suggest that not only assessee has made full and true disclosure of material facts and submitted all informations relating to restructuring of interest payment but the AOs also in course of assessment proceeding have examined the issue and applied their mind to the facts and materials on record. In other words, concerned AOs while completing original assessments for AYs 2002-03 to 2005-06 were conscious of accounting policy adopted by assessee while debiting interest to interest suspense account, though, the issue may not have been discussed in the respective assessment orders. It is also clear from the annual reports, the same accounting policy in respect of restructuring of interest payment is permeating through the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e examined individually. Some matters may require examination of the assessment order or queries raised by the Assessing Officer and answers given by the assessee but in others cases, a deeper scrutiny or examination may be necessary. The stand of the Revenue and the assessee would be relevant. Several aspects including papers filed and submitted with the return and during the original proceedings are relevant and material. Sometimes application of mind and formation of opinion can be ascertained and gathered even when no specific question or query in writing had been raised by the Assessing Officer. The aspects and questions examined during the course of assessment proceedings itself may indicate that the Assessing Officer must have applied his mind on the entry, claim or deduction etc. It may be apparent and obvious to hold that the Assessing Officer would not have gone into the said question or applied his mind. However, this would depend upon the facts and circumstances of each case. 17. Applying the tests laid down in case of CIT Vs. Usha International Ltd. to the facts of the present case, it can be seen that assessee in all these assessment years has disclosed full parti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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