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TMI Blog2018 (6) TMI 1176X X X X Extracts X X X X X X X X Extracts X X X X ..... preliminary issue while disposing of the appeal of the revenue, the cross-objection filed by the assessee raising the issues relating to the additions made by the AO in the assessment under section 143(3)/147 on merit have become infructuous. The same is accordingly dismissed. X X X X Extracts X X X X X X X X Extracts X X X X ..... lapsed. These conditions are 1) That, there is a failure on the part of the assessee of failing to file a return of income u/s 139. 2) That, there is a failure on the part of the assessee in responding to a notice issued under sub-section (1) of section L42 or section 148. 3) That, there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment Year. Now the factual position of this case is that 1) The assessee filed its return of income on 27-09-2009 (thus, it shows that there is no failure on the part of the assessee to file return of income for AY 2009-l0 in time). 2) From the original assessment order in this case for AY 2009-10 which was passed/processed under section 143(1), it is clear that no further notice for scrutiny assessment was issued to the assessee by the Assessing Officer. 3) It is clear that the assessee had clearly disclosed its share capital/share premium. All necessary information required in ITR -6 was given by the assessee to the department. Here in this case, the processing was completed under section 143(1) of the Income Tax Act, 1961. The AR has brought on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an 'assessment', then it can never be subjected to section 147 proceedings, for that section covers only an 'assessment'. The court held that the expression 'reason to believe' cannot have two different standards or sets or 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). [Para 17]" Now the question is in case there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year, in that case can the assessment be reopened u/s 147 or for that matter is the reopening of the assessment u/s 147 is valid. During the appellate proceedings the AR has brought on record many case laws on this issue. The Hon'ble Bombay High Court in the case sound Casting Pvt. Ltd vs DCIT 2012 (250) CTR 119 has held that validity of reopening of assessment framed after scrutiny beyond a period of four years from the end of the relevant AY - AO purported to reopen assessment on ground that melting loss of 7.75% claimed by assessee is higher than what is found in a similar line of business - AY 2005-06 - H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y, that its transport subsidy reserve was, as on March 31, 1996, ₹ 3500330/- and that by March 31, 1997, this amount had risen to ₹ 5970889/-. The Revenue could not say that the assessee did not disclose all such material facts, which were necessary for making a valid and effective assessment of income for the purpose of realization of tax. The reason assigned by the Assessing Officer showed that the information regarding transport subsidy was available in the audited accounts and statements furnished by the assessee to the Assessing Officer along with the assessee's return. These details being available before the Assessing Officer, the Assessing Officer could not say that there was omission or failure on the part of the assessee to make the 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 and truly" all material facts necessary for its assessment, for that assessment year". Respectfully following the above two decisions of Hon'ble Delhi High Court, we hold that the reopening of assessment beyond the period of four years from the end of the relevant assessment year was not justifi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case, the question of making of a return is not in issue and the only question is with regard to the second portion of the proviso, which relates to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. In so far as this precondition is concerned, there is not a whisper of it in the reasons recorded by the Assessing Officer. In fact, as indicated above, the Assessing Officer could not have made this a ground because the Assessing Officer had required the petitioner to furnish details with regard to loss occasioned by foreign exchange fluctuation which the petitioner did by virtue of the reply dt,05-02-2002. Since the petitioner had fully and truly disclosed all the material facts necessary for the assessment, the precondition for invoking proviso to section 147 of the said Act had not been satisfied". I have considered the ratio decided by the Hon'ble Delhi High Court in the case of Pr.CIT-4, Delhi vs G & G Pharma India Ltd in ITA No.545/2015 dt.08-10-2015 in which the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r that year, income chargeable to tax has escaped assessment for that year or alternatively notwithstanding that there has been no omission or failure as mentioned above on the part of the assessee, the ITO has in consequence of information in his possession reason to believe that income chargeable to tax has escaped assessment for any assessment year. Unless the requirements of clause (a) or clause (b) of section 147 are satisfied, the ITO has no jurisdiction to issue a notice under section 148". The Supreme Court concluded that it was not satisfied that the ITO had any material before him which could satisfy the requirements under section 147 and therefore could not have issued notice under section 148. During the appellate proceedings the AR has also brought on record case law decided by the Jurisdictional Kolkata bench of ITAT in the case of DCIT, Circle-6, Kolkata vs Great Wall Marketing Pvt. Ltd Kolkata in ITA No.660/Kol/2011 dated 03-02-2016. The ratio decided in this case is squarely applicable in this case. In its order The Hon'ble Kolkata bench of ITAT has held as under: The submissions of the learned counsel for the assessee before us was that the reasons recorded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble Delhi High Court in the case of CIT vs Insecticides (India) Ltd (supra) has taken a view that the reasons recorded were vague and uncertain and cannot be construed as satisfaction on the basis of the relevant material on the basis of which a reasonable person can form a belief that income has escaped assessment. The Hon'ble Delhi High Court has also come to the conclusion that the reasons recorded did not disclose the AO's mind regarding escapement of income. The Hon'ble Delhi High Court ultimately held that initiation of proceedings u/s 148 of the Act was not valid and ITA No.660/Kol/2011 Great Wall Marketing (P)Ltd. was quashed. The facts and circumstances in the present case are identical to the case decided by the Hon'ble Delhi High Court. Following the said decision we hold that initiation of re-assessment proceedings is not valid. On this ground, the assessment is liable to be annulled." I have considered the notice of the A.O given/issued u/s 148 to the assessee. I have also considered reasons recorded by the A.O for issuance of the notice. I think this case is squarely covered by the ratio decided by the Jurisdictional Bench of ITAT in the case of DC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e case on merit of addition, without examining the facts of the case and without applying the correct law on the facts of the case and hence order of CIT(A) deserves to be set aside." 6. I have heard the arguments of both the sides and also perused the relevant material available on record. In the ground specifically raised in this appeal, the revenue has challenged the impugned order of the Ld. CIT(A) holding the reopening of assessment by the AO after the expiry of a period of 4 years from the end of the relevant assessment year without pointing out that there was escapement of income as a result of the failure of the assessee to furnish truly and fully of necessary facts for the purpose of assessment as barred by limitation as per the first proviso to section 147. In this regard, the learned DR has contended that the said proviso is applicable only in the case where assessment was originally completed under section 143(3) and since the return of income filed by the assessee in the present case was processed by the AO under section 143(1) without there being any assessment under section 143(3), the first proviso to section 147 is not applicable in the present case. He has conten ..... X X X X Extracts X X X X X X X X Extracts X X X X
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