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TMI Blog2015 (6) TMI 530X X X X Extracts X X X X X X X X Extracts X X X X ..... er : Shri Suresh Anantharaman, Advocate For the Respondent : Shri P. Dam Kanunjna, Senior DR ORDER Per George George K., JM : This appeal, at the instance of the department, is directed against the order of the Commissioner of Income-tax (Appeals)-XII, New Delhi dated 15.03.2013. The relevant assessment year is 2002-03. 2. The solitary effective ground reads as follows :- Ld. CIT (A) erred in law and on the facts of the case in quashing the reopening of the assessment under section 148 of the I.T. Act. 3. Briefly stated, the facts of the case are as follows. The assessee company is a public sector undertaking under the Ministry of Textiles. It is engaged in the business of export and domestic sales of handicrafts, handlooms, readymade garments, carpets, jewellery etc. The assessee had filed its return of income on 31.10.2002 declaring an income of ₹ 63,25,117/-. The assessment was taken for scrutiny by issuing of a notice u/s 143(2) of the Act. The scrutiny assessment was completed vide order dated 28.02.2005 by accepting the returned income as declared by the assessee. Subsequently, a notice u/s 148 of the Act was issued and duly served u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital account become irrecoverable, the loss incurred is capital loss. The assessment of above assessee for the assessment year 2002-03 was completed after scrutiny in February 2005, determining an income of ₹ 63,25,120/-. The advances were of capital in nature and should have been added to the income of the assessee. The omission to do so resulted under assessment of income by ₹ 76,91,649/- involving short levy of tax of ₹ 27,45,909/-. The various objections raised by the assessee for reopening the assessment, was rejected by the Assessing Officer and reassessment u/s 147 read with section 143 (3) of the Act was completed by an order dated 30.12.2009, computing the total income at ₹ 1,24,24,380/-. 4. The assessee being aggrieved by the reassessment filed an appeal to the CIT (A). The CIT (A) quashed the reassessment for the reason that proviso to section 147 is applicable and there is no failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment. 5. The revenue, being aggrieved, is in the appeal before us. 6. The ld. DR supported the order of assessment and submitted that on account of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of payment under voluntary retirement scheme ... It is evident that reasons recorded are based on the balance sheet of the assessee which were furnished with the return of income. Further it is self evident that the information was available in course of original assessment and all the material information necessary for framing an assessment. It is also seen that no new facts or material had been brought on record which provides reasons to believe that the income of the appellant has escaped assessment. In view of the above facts this is not a fit case for reopening of assessment. My attention was further drawn to the proviso to section 147: Provided that where an assessment under subsection (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 OM the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose ful ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in Explanation 1 to section 147 of the Income-tax Act, 1961 refers to primary facts. The term primary facts or material facts are those facts which are material and relevant for the decision of the question before the Assessing Officer and non-disclosure of which would have a material bearing on the question of escapement of income from assessment. Whether or not primary facts have been disclosed is normally a question of fact and depends upon the facts and circumstances of each case. The requirement of Explanation 1 is that there should be full and true disclosure of the primary or material facts and not beyond that. It is the obligation of the assessee to disclose fully and truly the primary facts. It is not the obligation of the assessee-to indicate and state what legal inference can be drawn from the primary facts. The assessee had claimed special deduction for the assessment year 2000-01 under section 80HHC. The deduction was reduced by the Assessing Officer. The original return of income was accompanied by audited accounts and auditor's report required to be submitted in terms of section 80HHC (4) of the Act. Similarly, the assessee had claimed deduction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion available on record when reasons to reopen were recorded, to show that the assessee had concealed or had not disclosed fully and truly all material facts. In the original assessment proceedings the Assessing Officer had considered and examined whether or not the non-compete fee payment was of capital or revenue nature. The Assessing Officer accepted the stand of the assessee and treated the non-compete fee as a revenue expenditure. The reassessment proceedings could not, therefore, be initiated on the ground that the Assessing Officer was legally wrong and had misapplied and wrongly understood the law/legal position. Further reliance is also placed in the case of CIT vs USHA International Ltd. In ITA No. 2026/2010 dated September 21, 2012 where in the court reiterated that onus is on AO to prove that there is failure on the part of the assessee to disclose truly and fully of all particulars of income which resulted into an escaped assessment. In case of the non-observation of the same, the entire proceedings in pursuant of the same are void and bad in law. The Assessing Officer was not correct in his action to assume jurisdiction over the appellant for the year und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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