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TMI Blog2016 (8) TMI 360X X X X Extracts X X X X X X X X Extracts X X X X ..... ome Tax (Appeals) to show as to how this fact was fully and truly disclosed before the assessing authority and that there was not failure on the part of assessee. Hence, the Commissioner of Income Tax (Appeals) wrongly cancelled the assessment order. It is fully covered by the provisions of Explanation 1 to Section 147 of the Income Tax Act It is possible that with due diligence the Assessing Officer would have ascertained this fat at the time of original assessment also, but in view of the Explanation (1) it does not mean that there was no default on the part of the assessee. Hence, reopening u/s.147 is held to be valid. - Decided against assessee. - I.T.A.No.1740/Mds/2015 - - - Dated:- 27-6-2016 - Shri Chandra Poojari, Accountant Member and Shri Duvvuru RL Reddy, Judicial Member For The Appellant : Shri Pathlavath Peerya, CIT For The Respondent : Shri R. Vijayaraghavan, Advocate ORDER PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the Revenue is directed against the order of the ld. Commissioner of Income Tax (Appeals) 1, Coimbatore, dated 26.05.2015 relevant to the assessment year 2007-08. The grievance of the Revenue in this appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Maheshwara Sugars Ltd. by the assessee company. It was only carried forward loss of Maheswara Sugars Ltd. amounting to ₹.23,08,24,830/- has been set off against profits of the assessee. Whether the said loss was taken over in the accounts of the assessment year 2006-07 for amalgamation purpose has not been discussed. In the assessment completed under section 143(3) r.w.s. 147 on 31.03.2014 in the case of Maheswara Sugars Ltd. for the assessment year 2006-07 the depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/- out of total brought forward losses amounting to ₹.23,73,98,026/- that was brought forward for set off against the assessment year 2006-07 was disallowed for the following reasons: a. The assessee themselves conceded that the company was not in operation for the previous three years prior to AY 2005-06 and the machinery, hence, was not put to use. By this itself, the assessee is not eligible for depreciation for these years. b. The issue of notice under section 148 was valid as it was issued after obtaining necessary approval of the CIT. Also, the view that reopening is only a review cannot be taken as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing through the reassessment order of Maheswara Sugars Ltd. for the assessment year 2006-07, it came to know that depreciation pertaining to the assessment years 2002-03 to 2004-05 amounting to ₹.6,98,05,670/-, out of total brought forward losses amounting to ₹.23,73,98,026/- that was brought forward for set off against assessment year 2006-07 was disallowed and accordingly, reopening was valid. 8. Contrary to this, the ld. AR has relied on the judgement of the Hon ble Karnataka High Court in the case of CIT v. Intel Technology India (P) Ltd. 232 Taxman 279, wherein, it was held that the assessment proceedings initiated against a non-existing company even after amalgamation of assessee-company with other company shall be invalid. Further, he submitted that since the Assessing Officer made use of the material in the form of the assessment order of Maheswara Sugars Limited for the assessment year 2006-07 to reopen the assessment and it cannot be used since that assessment order is bad in law. The ld. AR has further relied on the decision of the Hon ble Delhi High Court in the case of SPIC Infotainment Ltd. v. CIT 247 CTR 500. According to the ld. AR, the reopening of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g opinion of escapement of income is only relevant. Hence, this plea of the ld.AR is not tenable in the eyes of law. It is true that u/s 147, the Assessing Officer can either assess or re-assess but for taking action thereunder, he has to record reasons that income chargeable to tax has escaped assessment . It is also mandated by section 148(2) to record reasons in writing. The reassessment proceedings u/s 147 are further subject to sections 148,149,150,151,152 and 153. But in the present case, we are required to decide the limited issue regarding the validity of proceedings undertaken after four years of the assessment year in question. The Assessing Officer is required to see if the conditions laid in Explanation 2(c) because in this case the assessment was completed u/s 143(3) are satisfied or not. In case, (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low rate; or(iii) such income has been made the subjective of excess relief under this Act; or (iv)excessive loss or depreciation allowance or any other allowance under this Act has been computed, the Assessing Officer would have valid cognizance u/s 147 of the Act. The reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal issue under appeal. We have to see as to what failure of the assessee to disclose fully and truly all material facts signify. The expression failure to disclose material facts has been explained in the Taxman s Direct Taxes Manual Volume 3. It is true that every disclosure is not and cannot be treated to be a true and full disclosure. A disclosure can be even false or true. It may be a full disclosure or it may not be a full one. A part disclosure many a times may be misleading one. What is required under the law is a full and true disclosure of all material facts necessary for making assessment for that year. This law was laid down by the Hon'ble Supreme Court in the case of Sri Krishna Pvt. Ltd etc vs ITO Others, 221 ITR 538. The words omission or failure to disclose fully and truly all material facts necessary for assessment for that year postulates a failure of the assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material and necessary for assessment will differ from case to case. The material should not only be full but also be true. If some material found in the evidence produced before the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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