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TMI Blog2018 (1) TMI 1284X X X X Extracts X X X X X X X X Extracts X X X X ..... der the control of Ministry of Petroleum and Natural Gas. For A.Y.2002-03 the assesee filed return of income on 30.10.2002 and the revised return of income on 27.02.2003. The income declared in the revised return was a loss of Rs. 11,41,09,915/-. The assessee declared book profits u/s 115JB of the Income Tax Act, 1961 (Act) of Rs. 8,08,18,867/-. An order of assessment u/s 143(3) of the Income Tax Act, 1961 (Act) was passed by the AO on 28.03.2005. 4. In the computation of income and in arriving at the total income as per the computation of total income the assessee had claimed deduction of a sum of Rs. 6,50,01,073/- under the head "Investments written off". In a notice issued u/s 142 of the Act dated 23.11.2004, the AO called upon the assessee to explain under which provision of the Act "provision for diminishing in value of investment" of Rs. 6.5 crores has been considered as an allowable expenditure. In response to the said query of the AO the assessee filed a detailed note explaining the transactions by which the deduction on account of diminishing in value of investment was claimed by the assessee as an allowable expenditure while computing the income from business. The said n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ear 2003-04. Therefore, I have reason to believe that an income of Rs. 6,50,01,073/- chargeable to tax has escaped assessment for the assessment year 2002-03." 7. It can be seen from the date of issue of notice u/s 148 of the Act namely 09.09.2008 that the assessment was sought to be reopened in the case of the assessee for A.Y.2002-03 and such reopening is beyond the period of four years from the end of the relevant assessment year. We have already seen in the case of the assessee that an order of assessment u/s 143(3) for A.Y.2002-03 has already been completed by order dated 28.03.2005. Proviso to section 147 of the Act reads thus :- "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment 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 sub section (1) of section 142 or section 148 or to disclose fully an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... decision of Hon'ble Gujarat High Court in the case of Gujarat Power Corporation Limited vs ACIT 350 ITR 266 (Guj) and CIT vs Sun Engineering Works Pvt. Ltd. 198 ITR 297 (SC) the CIT(A) held that the initiation of reassessment proceedings was not valid. CIT(A) accordingly annulled the order of assessment. According to CIT(A) the first proviso to section 147 of the Act was applicable and since there was no failure on the part of the assessee to fully and truly disclose all the facts initiation of reassessment proceeding beyond the period of four years is not valid. The following are the relevant observations of CIT(A) :- "After considering the contentions made by the appellant and the assessing officer, I find more force in those made by the appellant. While there was no reference to any audit objection in the reason to believe that income had escaped assessment recorded by the assessing officer, there was also no mention of the escapement being on account of any failure of the appellant in making full and true disclosure of material facts. Rather, the reason is based directly on entry in the P&L a/c which was very much available to the assessing officer at the time of original ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade u/s 143(3) of the Income Tax Act, 1961, during which specific query had been raised on the issue of 'investment written off and after considering the reply no addition had been made. Therefore, the escapement of income from assessment, if any, was not on account of lack of disclosure of material facts on the part of the appellant. Hence, in view of restriction placed by first proviso to section 147 of the Act, the assessment could not be reopened for the reason recorded by the assessing officer. Considering this legal position, I am left with no alternative but to quash the reopening of assessment." 13. The CIT(A) did not go into the merits of the addition made by the AO. Aggrieved by the order CIT(A) the revenue has preferred the present appeal before the Tribunal. 14. We have heard the submissions of the ld. DR and the ld. Counsel for the assessee. The crux of the arguments of the ld. DR was that on almost identical facts the Hon'ble Bombay High Court in the case of Yuvraj vs Union of India and Another 315 ITR 84 (Bom) had upheld the validity of initiation of re-assessment proceedings. We have perused the decision of the Hon'ble Bombay High Court in the case of Yuvraj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original assessment proceedings the AO raised queries on issues which were recorded by the AO in the reasons for initiation of re-assessment proceedings. The AO while completing the original assessment proceedings did not make any reference or give any reasons for accepting the answer of the assessee to the issue but did not make any addition. The question before the Court was whether the re-assessment proceedings were validly initiated. The Hon'ble Gujarat High Court held that in the given circumstances the AO may be held to have applied his mind on this issue and thereafter allowed the claim of the assessee. It cannot therefore be said in the present case that the AO while completing the original assessment did not consider the issue with regard to the allowability of deduction on account of diminishing in value of investments. The arguments of the ld. DR in this regard is therefore not accepted. 15. Arguments were also advanced before us on the validity of reassessment proceedings based on audit objection on a point of law and the validity of initiation of reassessment proceedings on a mere change of opinion. Several decisions were also filed in the form of paper book before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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