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TMI Blog2021 (10) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn of income declaring total income of Rs. 61,36,560/-. Under scrutiny, the Assessing Officer accepted the same and passed an order u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') to that effect vide order dated 24.12.2010. Thereafter, the AO in order to reopen the said assessment recorded reasons on 11.06.2014 and upon getting sanction from CIT, issued notice u/s. 148 of the Act on 23.06.2014. The assessee participated in the said re-assessment proceedings with protest and the AO added an amount of Rs. 45,05,47,554/- treating the same as capital gain on the transfer of goodwill to the retiring partners vide order dated 03.03.2016 u/s. 143(3) r.w.s. 147 of the Act. Having not satisfied with the re-assessment order, the assessee preferred an appeal before the CIT(A). Upon considering the submissions on reopening in terms of the first proviso to section 147 of the Act, the CIT(A) held there was no failure on the part of the assessee in disclosing fully and truly all the material facts during the course of original assessment proceedings and quashed the re-assessment as bad in law. 4. Before us, learned DR Shri Deepak Garg submits the AO reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. 5. The ld. AR Shri Nikhil Pathak submits that the finding of AO against the assessee in not disclosing the relevant facts truly and fully is incorrect and referred to page No. 31 of the paper book and submitted that the assessee given full information regarding the names of new partners vide column No. (7a). Further details are given as per Annexure-1 regarding the change in partners or members or in their profit sharing ratio. He argued that the CIT(A) rightly held that the assessee disclosed all the relevant details truly and fully during the course of assessment proceedings itself. He further argued that having disclosed fully and truly all the relevant information, notice u/s. 148 of the Act is bad under law in view of the first proviso to section 147 of the Act as the notice issued after the expiry of four years from the end of relevant assessment year. Further, he referred to page Nos. 39, 41, 49 and 51 and argued all the relevant information regarding the admission of new partners and retirement of partners were disclosed in the tax audit report which was filed along with return of income. The ld. AR did not advance any arguments on the decision of Hon'ble Supreme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... truth. Therefore, we hold that all the relevant information regarding the admission of new partners, retirement of old partners and payment of goodwill were disclosed along with return of income which were on record before the AO in the original assessment proceedings. 8. The other issue is as to whether the CIT(A) justified in holding the reassessment as bad in law. In this regard, we may have to refer to section 147 of the Act concerning the relevant assessment as under: "147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO issued notice u/s. 148 of the Act on the basis of subsequent verification of facts initiated u/s. 263 of the Act in the case of Smt. Shakuntala Sanghavi by recording reasons that Shri S.C. Jain, Smt. V.P. Sanghavi and Smt. S.S. Sanghavi retired from M/s. Deepak Foods (assessee) on 17-03-2008 and received goodwill to an extent of Rs. 45,05,47,554/- paid by the assessee to the above said three retiring partners. In pursuance of such recording the AO issued notice u/s. 148 of the Act on 23-04-2014. No doubt that if the AO has reason to believe that any income chargeable to tax has escaped assessment for any assessment year assess or reassess such income which has escaped assessment and which comes to his notice subsequently, but the proviso to section 147 of the Act limits such power by explaining, no action shall be taken under this section after expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment by reason of failure to disclose fully and truly all material facts by the assessee for that assessment year. The normal function of a proviso attached to main provision is to limit the scope of main provision ..... 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