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TMI Blog2022 (10) TMI 722X X X X Extracts X X X X X X X X Extracts X X X X ..... e treatment of the relevant heads impermissible; and as such, completed the assessment as per the audited accounts. The fact that a superior officer deemed such treatment unacceptable in respect of a subsequent assessment year, may make the earlier assessment orders fallible and liable to be reopened; though not on the ground that there was no full or true disclosure of material facts by the assessee, but by reason of the methodology adopted for the assessment. However, the freedom to reopen concluded orders of assessment that Section 147 permits in its primary provision is circumscribed by the additional conditions spelt out in its proviso in respect of assessment orders pertaining to the assessment years after the expiry of four years from the end thereof. Even in respect of concluded assessment orders of assessment years falling within the four-year period, there may be perfectly good answers for not reopening the same. But that would pertain to the merits of the matter that ought not to be considered in this extraordinary jurisdiction under Article 226 of the Constitution. The orders passed under Section 147 of the Act in respect of assessment years 2012-13 and 2013-14 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been made for the relevant 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 and truly all material facts necessary for his assessment, for that assessment year. 5. The matter requires a bit of facts to be stated. The petitioning assessee is a public sector undertaking functioning under the Ministry of Power. The petitioner distributes power to the States in the North-East or to the State Electricity Boards. The petitioner asserts that the petitioner does not indulge in retail distribution or sale or distribution of electricity to private parties. The matter pertains to the interest and delayed payment surcharge on account of the failure of the buyers of electricity from the petitioner to pay the principal dues in time. There is no dispute that the rates of tariff and the delayed payment surcharge, including intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o quote the entirety of the reasons indicated for reopening or reassessment under Section 147 of the Act except the table that appears at paragraph 1.2 thereof which may not be relevant in the context of the discussion: Reason(s) for Reopening/Reassessment u/s 147 of the IT Act 1961, where income has escaped assessment: 1.1. Pursuant to order passed u/s 263 by the Ld PCIT for the AY 2014-15 regarding the assessee accounting for interest on debtors on cash basis instead of accrual basis, the audited accounts of the assessee were perused off the official website www.neepco.co.in/reports/annual-reports . It is observed that the same issue persists from before AY 2012-13 up to the current AY. However, since the Act restricts reopening of cases beyond six years, focus is placed on cases for the AYs after 2011-12, i.e. from AY 2012-13 to AY 17-18. 1.2. ... 1.3. In view of the discrepancies noticed on the basis of the issue raised by the Ld PCIT vide his order dated 12.12.2018 for the AY 2014-15, it is confirmed that the assessee has accounted for the interest income on cash basis (as disclosed in its notes to the audited accounts), instead of accrual basis. 1.4. Theref ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the office of the Auditor and Accountant General, no less, there cannot be any allegation of the accounts being fudged or payments being received without being reflected in the accounts. 12. The petitioner relies on the proviso to Section 147 of the Act to submit that though the considerations for assessing or reassessing income in any assessment year may be different if the notice under Section 148 has been issued within four years of the relevant assessment year, by virtue of the proviso to Section 147 of the Act, if a reassessment is attempted in respect of the income for any assessment year after the expiry of four years from the end of the relevant assessment year, the applicable condition in this case that the Department would require to meet would be that income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee ... to disclose fully and truly all material facts necessary for his assessment, for that assessment year: 13. The parties are in agreement that the two other conditions in the relevant proviso do not apply in this case. 14. Thus, though an assessing officer may have reasons to believe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147 of the Act that any material fact had been suppressed or not disclosed by the assessee. Indeed, what may have happened is that at the time of passing the assessment orders in respect of assessment years 2012-13 and 2013-14, the relevant assessing officer(s) must have noticed the special treatment in the accounts of the delayed payment surcharge and the interest and, upon perceiving the treatment appropriate since the incomes on such counts had only notionally accrued but had not been realised, did not deem the accounts to be inappropriate or the treatment of the relevant heads impermissible; and as such, completed the assessment as per the audited accounts. The fact that a superior officer deemed such treatment unacceptable in respect of a subsequent assessment year, may make the earlier assessment orders fallible and liable to be reopened; though not on the ground that there was no full or true disclosure of material facts by the assessee, but by reason of the methodology adopted for the assessment. However, the freedom to reopen concluded orders of assessment that Section 147 of the Act permits in its primary provision is circumscribed by the additional conditions spelt out i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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