9911796707
TMI Blog2012 (2) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... section 147. The assessee objected to the re-opening of the assessment, but without any success. The Assessing Officer completed the assessment under section 143(3) r/w 148 on 7th March 2005, inter-alia, making addition on account of provisions for depreciation in value of investments and loss on account of SWAP cost. 3. The assessee carried the matter in appeal, wherein the first appellate authority rejected the contentions of the assessee that the re-opening was bad-in-law. 4. On the issue of addition on account of provisions for depreciation in value of investment, the first appellate authority followed the decision of Hon'ble Jurisdictional High Court in CIT v/s Bank of Baroda, 264 ITR 344 (Bom.) 5. On the second issue i.e., disallowance of loss on account of SWAP cost, the Commissioner (Appeals) decided the issue against the assessee. Aggrieved, the assessee is in appeal on the following grounds:- 1. The learned CIT(A) erred in confirming the action of the Assessing Officer in re-opening the assessment under section 147 of the Act. He erred in observing on Page-4 of the appellate order that the details available to the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt proceedings. 8. On swap cost, he submitted that the issue is covered in his favour by the judgment of Hon'ble Delhi High Court in CIT v/s Industrial Finance Corp. of India Ltd., 31 DTR (Del.) 114. He also relied on the decision of Mumbai Special Bench in DCIT (IT) v/s Bank of Behrain Kuwait, (2010) 31 SOT 290 (Mum.) (SB). 9. The learned Departmental Representative, Mr. Jitendra Yadav, representing the Revenue, opposed the contentions of the assessee and submitted that there was no real examination of provisions for depreciation in value of investments. He referred to the questions and answers in the original assessment proceedings and submitted that the crux of the matter has not been explained and there was no mention of this issue in the assessment order. The assessee, as per the learned Counsel, has not disclosed the required particulars. He relied on the judgment of Hon'ble Delhi High Court in Dalmia Pvt. Ltd. v/s CIT, 202 Taxman 372 (Del.). He argued that no opinion was formed in the original assessment proceedings and that there was no pointed or clear reply and in such circumstances, it cannot be said that there was disclosure by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been held as follows:- Held If there is no failure on the part of the assessee to disclose fully and truly all material facts, then, under proviso to sec. 147, the assessment cannot be reopened beyond the period of four years. The impugned notice is admittedly beyond the period of limitation prescribed under the proviso to s. 147 and in the absence of any material to show that there was failure on the part of the assessee to disclose fully and truly all materials, such notice must be held to be barred by limitation. The same is, therefore, liable to be quashed and set aside Hindustan Lever Ltd. v/s R.B. Wadkar (2004) 190 CTR (Bom.) 166 : 2004 (3) Mh. L.J. 517 followed. 13. The Hon'ble Jurisdictional High Court in Bhavesh Developers (supra), held as follows:- 7. The admitted position before the Court, on the basis of the material on the record, is that by the notice under Section 148 issued on 30th November 2009, the assessment pertaining to the year 200203 was sought to be reopened after the lapse of four years. Section 147 postulates inter alia that if the Assessing Officer has reason to believe that income chargeable to tax has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ived. In addition to this disclosure, during the course of the assessment proceedings, a letter was addressed on behalf of the assessee, by its Chartered Accountant to the Assessing Officer. The letter inter alia contains an explanation of the other income as reflected in the profit and loss account. The assessee also furnished to the Assessing Officer a statement of sales and other income for each wing and for the flats comprised in the construction as of 31st March 2002. 9. In this background, it would be necessary to scrutinize the basis on which a notice was issued under Section 148 for reopening the assessment. The basis of the notice is to be found in the reasons disclosed to the assessee on 6th November 2009. The reasons postulate that on a verification of the case records, it emerges that the assessee was claiming a deduction under Section 80IB in the amount of ₹ 3.85 crores. However, as per details filed and P L A/c. it was observed that the assessee had during the year, other income of ₹ 50.13 lakhs which mainly comprised of society deposit, stilt parking and sundry credit balances. Since this income did not qualify as income eligible for deducti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore the ITO of the account books or other evidence from which material evidence could with due diligence have been discovered by the ITO will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the ITO to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the ITO with regard to the inference which he should draw from the primary facts. If an ITO draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. A similar view was taken in a subsequent judgment in Ganga Saran Sons (P) Ltd. vs. Income Tax Officer, (1981) 130 ITR 1 where the 9 Supreme Court held thus: It is well settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the ITO can assume jurisdiction to issue notice under s.147(a). First, he must have reason to believe that the income of the assessee has escaped assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2001. The reasons also do not spell out failure on the part of the assessee to disclose fully and truly all material facts. ... We are satisfied on the facts of the present case that reopening is sought on the basis of change of opinion. Further, even in the reasons, there is nothing to indicate that reopening is sought on the ground of the failure on the part of the Petitioner to disclose fully and truly all material facts. 11. For the reasons aforesaid, we are of the view that recourse to the power under Section 147 cannot be sustained on a mere change of opinion, there being no failure of the assessee to disclose fully and truly, all material facts necessary for assessment. The basic condition prescribed by the statute for the exercise of the power has not been fulfilled. The Petition has to be allowed. 12. The rule is accordingly made absolute by quashing the impugned notice dated 30th March 2009 (Exhibit 'J'). There shall be no order as to costs. 14. It is well settled that the validity of a re-opening of assessment is to be tested on the basis of reasons recorded by the Assessing Officer prior to the issue of notice under section 148, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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