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TMI Blog2016 (5) TMI 624X X X X Extracts X X X X X X X X Extracts X X X X ..... antial compliance of section 151 where notice for reopening was issued after a period of four years from end of the assessment year. Judgment of Vijay Rameshbhai Gupta vs. ACIT – (2013 (5) TMI 157 - GUJARAT HIGH COURT ) is applicable to the facts and circumstances of this case. Moreover, all the three adjustments on account of provision of diminution of value of assets, loss u/s 10B and provision for doubtful debts and advances respectively have been made by invoking the retrospective amendments made to section 115JB which is not permissible as has already been discussed by us in the preceding paras. - Decided in favour of assessee. - ITA No. 1729/Del./2013 - - - Dated:- 22-4-2016 - Shri G. D. Agrawal, Vice President And Shri Kuldip Singh, Judicial Member For the Petitioner : Shri Satyen Sethi, Advocate For the Respondent : Shri R.S. Negi, Senior DR ORDER Per Kuldip Singh, Judicial Member : Appellant, M/s. R. Systems International Ltd. (hereinafter referred to as the assessee ), by filing the present appeal sought to set aside the impugned order dated 01.02.2013 passed by the Commissioner of Income-tax (Appeals)-XVIII, New Delhi qua the assessment year 2004- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r.e.f u/s 115JB of the Act and also erred in charging Interest u/s 234D of the Act; of ₹ 5,59,592/-. The arbitrary action is urged and liable to be cancelled. 5) The appellant craves to be allowed to add any fresh/additional grounds of appeal and/or withdraw, modify any of the grounds of appeal either before or at the time of hearing of appeal. 2. Briefly stated the facts of the case are : assessment of the assessee was completed for the assessment year 2004-05 declaring net loss of ₹ 47,53,665/- under section 143 (3) of the Income-tax Act, 1961 (for short the Act ) in December 2006 and thereafter notice u/s 148 of the Act along with reasons for reopening of assessment was served upon the assessee on 30.03.2011 and consequently, Shri Narender Nath, CA put appearance and pleaded that the return originally filed by the assessee may be treated as compliance to the notice u/s 148 of the Act. 3. The AO observed that as per the record, the assessee has tax liability u/s 115JB of the Act on the book profit of ₹ 1,36,64,830/- which has earlier been charged to tax. However, the assessee challenged the same on the ground that clause (i) to Explanation 1 to s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ide notice dated 30.03.2011 u/s 148 of the Act i.e. after a period of four years from the end of the assessment year. It is also not disputed that reassessment has been made vide impugned order on the basis of retrospective amendment of section 115JB. 8. The first question arises for determination is as to whether there has been any failure on the part of the assessee to disclose full and true material facts at the time of filing the return for the assessment year under consideration ? 9. The AO recorded reasons for reason to believe that income has escaped assessment as under :- the assessment of M/s R Systems International Ltd. for the assessment year 2004-05 was completed after scrutiny in December 2006 determining a loss of ₹ 47,53,665/-. On verifying the records, it is seen that the assessee had tax liability under section 115JB on the book profit of ₹ 1,36,64,830/-, however, the tax under the said provision was not charged .. Thus, the assessee has failed to disclose all material facts truly and fully that were necessary for assessment In view of the above facts, I have reason to believe that income chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase of the assessee at the time of completion of original assessment. When the assessee has placed on record profit loss account, books of account, audited balance sheet, on the basis of which assessment u/s 143(3) has been completed, he cannot be faulted merely by recording that, the assessee has not disclosed full and true material facts . 12. Hon ble Jurisdictional High Court in judgment cited as Atma Ram Properties Pvt. Ltd. vs. DCIT - 343 ITR 141 and Swarovski India (P.) Ltd. vs. DCIT - (2014) 368 ITR 601 (Del.) held that mere recording of reason for reopening that the assessee has failed to disclose full and true facts, is not sufficient for reopening the assessment in a case covered by First Proviso to section 147 of the Act unless AO explains as to why and how the assessee had failed to make full and true disclosure of the material facts. In the instant case, the AO has not specifically indicated as to how and what material facts has not been disclosed by the assessee. More so, undisputedly when the assessee has placed on record profit loss account, books of account, audited balance sheet, tax audit report and certificate in Form 29B during scrutiny of its assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 115JB on book profit to fRs.1,36,64,830/-, however, tax under the said provision was not charged .. The omission resulted in short levy of ₹ 10.71 lakh. 17. Hon ble jurisdictional High Court in judgment cited as CIT vs. Sil Investments Ltd. (2011) 339 ITR 166 has also dealt with identical issue as to whether assessment can be reopened on the basis of retrospective amendment after the expiry of four years and answered in the negative by making following observations :- Section 147/148 read with section 80HHC of the Income-tax Act, 1961 - Income escaping assessment - Non-disclosure of primary facts - Assessment years 2001-02 and 2002-03 - In course of assessment proceedings, assessee's claim for deduction under section 80HHC was allowed - After expiry of four years from end of relevant assessment year an amendment to section 80HHC was brought about by way of Taxation Laws (Amendment) Act, 2005 with retrospective effect from 1.4.1998 - In terms of said amendment, certain conditions were to be fulfilled for allowability of deduction under section 80HHC in respect of Duty Entitlement Pass Book Scheme where turnover of assessee was more than ₹ 10 crores. - It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Supreme Court in Rajesh Jhaveri (supra) would also appear to be self-defeating, because if an intimation is not an assessment then it can never be subjected to Section 147 proceedings, for, that section covers only an assessment and we wonder if the revenue would be prepared to concede that position. It is nobody's case that an intimation cannot be subjected to Section 147 proceedings; all that is contended by the assessee, and quite rightly, is that if the revenue wants to invoke Section 147 it should play by the rules of that section and cannot bog down. In other words, the expression reason to believe cannot have two different standards or sets of meaning, one applicable where the assessment was earlier made under Section 143(3) and another applicable where an intimation was earlier issued under Section 143(1). It follows that it is open to the assessee to contend that notwithstanding that the argument of change of opinion is not available to him, it would still be open to him to contest the reopening on the ground that there was either no reason to believe or that the alleged reason to believe is not relevant for the formation of the belief that income char ..... X X X X Extracts X X X X X X X X Extracts X X X X
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