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TMI Blog2022 (8) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... rst be discharged by the officer, before he proceeds to avail benefit of the deeming explanations that follow thereafter. The test would thus be as to whether the disclosure made by the petitioner at the time of original assessment was full and complete. There is no dispute in this regard and all material in regard to the computation of tax under the provisions of MAT were available before the Assessing Authority. The reasons proceed on the basis that the methodology for computation is erroneous which premise, as noticed earlier, does not appear to be correct as the financials disclose the availability of depreciation. In such circumstances, the assumption of jurisdiction under Section 147 is held to be bad in law. Also find force in the submission that there is no allegation in the reason itself to the effect that there has been any incomplete disclosure or false statement made at the time of assessment that would justify the assumption of jurisdiction beyond the period of four years. The petitioner also raises the argument that the impugned proceedings are based on an audit objection though none of the documents on record would evidence this position. However, there i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Less: Adjustment of Debit balance of Profit Loss Account of Transferor Company pursuant to Scheme of Amalgamation (Note 28) 505,251,912 Add: Profit/(Loss) during the year (306, 552, 091) 192,811,674 ..................... (113,740,471) 5. Thus and admittedly, the amount of brought forward loss is a sum of Rs.30,65,52,091/- and the amount of brought forward depreciation is a sum of Rs.18,05,97,492/-. There is no dispute with regard to the aforesaid two figures.The petitioner, in computing the income under the provisions of MAT, applied the provisions of Section 115JB of the Act and, interalia, the upward and downward adjustments set out under the Explanations thereunder. 6. As per the methodology of computation prescribed, the lower of either book depreciation or loss of the transferor company, was to be set of against the adjusted book profit. Applying the aforesaid methodology, the adjusted book profit arrived at in the present case was nil . Since the amount of book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ess loss . The assessee offered NIL book profit u/s 115JB after reducing book loss of transferor Company amounting to Rs . 18,05,97,492/- 2.3 . During the scrutiny assessment u/s 143 (3), an addition of Rs. 55,25,821/- was made amounting to Rs.15,14,02,337/ - under normal computation. However, the assessed income has become NIL after setting-off with the brought forward business loss/ unabsorbed depreciation loss. An addition of Rs.22,66,356/- was made to the book profit u/ s 115JB totalling to 18,28,63,848/ - . However, the assessment was completed with NIL book profit after setting - off with the brought forward book loss of the transferor company (M/s. Island Maharaj Limited). 2.4 . It is seen from the ' Post Amalgamation Annual A/Cs for the year ending 31.03.2012 under Schedule ' Reserves of Surplus ' that the assessee company had Rs . 50.00 crores opening balance in the general reserve and Rs. 19.87 crores in Surplus Statement of Profit Loss a / c . thereby totalling to Rs . 69.87 crores , before amalgamation . The loss available in the books of the transferor company was Rs.50.52 crores as on 31.03.2011 (i.e.,) before amalgamation . Thus, it is seen th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... doubt that the Officer has proceeded entirely on the mistaken assumption that the re-assessment was within a period of four years. It is in this context that he refers to explanation 1 to Section 147,that reads as follows: Production before the assessing officer of account books or other evidence from which material evidence could with due diligence have been discovered by the assessing officer will not necessarily amount to disclosure within the meaning of the proviso to Sec.147 of the IT Act. 15. However the proviso to Section 147, which is extracted below is a statutory pre-condition that has to be complied with by the Assessing Officer and places a significant burden upon the Officer that must be discharged, prior to proceeding with the re-assessment beyond the period of four years from the end of the relevant assessment year. The provision and proviso thereunder read as under: Income escaping assessment. 147. If the 73[Assessing] Officer 74[has reason to believe75] that any income chargeable to tax has escaped assessment75 for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess75 such income and also any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... disclose the availability of depreciation. In such circumstances, the assumption of jurisdiction under Section 147 is held to be bad in law. 20. That apart, I also find force in the submission that there is no allegation in the reason itself to the effect that there has been any incomplete disclosure or false statement made at the time of assessment that would justify the assumption of jurisdiction beyond the period of four years. 21. The petitioner also raises the argument that the impugned proceedings are based on an audit objection though none of the documents on record would evidence this position. However, there is an averment in the affidavit to this effect and the counter filed by the respondent does not specifically deny this. 22. Thus even on this score and following the settled position that an audit objection does not satisfy the requirement of the Assessing Officer having an independent reason to believe that income has escaped assessment, that too after the elapse of nearly six years from the end of the relevant assessment year, the impugned proceedings are vitiated. 23. In light of the discussions above, this writ petition is allowed and the impugned pro ..... X X X X Extracts X X X X X X X X Extracts X X X X
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