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TMI Blog2016 (9) TMI 1644X X X X Extracts X X X X X X X X Extracts X X X X ..... (3)/147 holding the same as bad in law and allow the Cross Objection filed by the assessee. X X X X Extracts X X X X X X X X Extracts X X X X ..... it is observed that there is prima facie material and reasons to reopen the case. Hence, the reopening of the case by the AO is held valid and thus the other issues are being decided on merits hereunder". 4. The ld. CIT(Appeals), however, find merit in the submissions made by the assessee challenging both the additions made by the Assessing Officer in the assessment completed under section 143(3)/147 on account of disallowance of assessee's claim for provision towards warranty expenses and set off of brought forward losses of amalgamating company and the said additions accordingly were deleted by him. Aggrieved by the order of the ld. CIT(Appeals), the revenue has preferred this appeal before the Tribunal, while the assessee has filed its Cross Objection on the following grounds:- Grounds of Revenue's appeal: (i) That under the facts and circumstances of the case, the ld. CIT(A) has erred in law as well as in facts in holding that the entire provision of warranty expenses amounting to Rs.17,66,700/- as an allowable expenses and deleting the entire addition. Whereas only the part of such provision which got crystallized during the relevant previous year, i.e. the amount of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ew fact or new material had come to the possession of the Assessing Officer after completing the assessment originally under section 143(3), which formed the basis of reopening and thus the reopening of assessment by the Assessing Officer was clearly based on a mere change of opinion. As regards the observation made by the ld. CIT(Appeals) in his impugned order while upholding the validity of reopening that the relevant issues raised by the Assessing Officer in the reasons recorded were not examined by the Assessing Officer in the original assessment, the ld. counsel for the assessee invited our attention to the letter dated 17.11.2006 submitted by the assessee before the Assessing Officer during the course of original assessment proceedings, whereby the copies of audited accounts of the amalgamating company for the relevant three years were filed as per the requirement of the Assessing Officer. He also submitted that the regular books of account maintained by the assessee were produced for the verification of the Assessing Officer during the course of original assessment proceedings along with other supporting documents and it, therefore, cannot be said that the issues raised by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntended that the reasons recorded by the Assessing Officer as a whole are required to be taken into consideration to ascertain and understand such failure. 8. We have considered the rival submissions and also perused the relevant material available on record. In order to appreciate the contention raised by the ld. counsel for the assessee in support of the assessee's case on the preliminary issue raised in this case regarding the validity of reopening of assessment, it is relevant to refer to the reasons recorded by the Assessing Officer for reopening the assessment, which are as under:- "The return of income declaring a total income of Rs.2,03,14,010/- was filed on 28/10/2004. The assessment u/s. 143(3) of the I.T. Act was completed on 28/12/2006 at a total income of Rs.2,12,08,683/-. On scrutiny of records, it appears that the assessee debited the Profit & Loss Account by a sum of Rs.45,89,826/- towards 'Warranty Expenses' and the same was allowed at the time of assessment. In the Notes to the Profit & Loss Account, it was mentioned that it was a provision - 'Provision for Warrant Cost is made as a percentage of sales and is based on past experience / technical est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inion on the same and the question of change of opinion would not arise. However, as pointed out by the ld. counsel for the assessee, the relevant details relating to the amalgamating company were furnished by the assessee during the course of original assessment proceedings under letter dated 17.11.2006 as per the requirement of the Assessing Officer and the fact that these relevant details were specifically called by the Assessing Officer is sufficient to show that the issue relating to the assessee's claim for set off of brought forward losses of the amalgamating company was considered and examined by the Assessing Officer during the course of original assessment proceedings. Moreover, as submitted by the ld. counsel for the assessee, books of account regularly maintained by the assessee along with the supporting documents were produced for verification of the Assessing Officer during the course of original assessment proceedings and it, therefore, cannot be said that the relevant issues relating to assessee's claim for deduction on account of provision towards warranty and set off of brought forward losses of amalgamating company were not examined by the Assessing Officer. 10. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year, inter alia, 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. In the present case, notice under section 148 was issued in the month of March, 2011, i.e. after the expiry of a period of four years from the end of the assessment year under consideration, i.e. A.Y. 2004-05. A perusal of the reasons recorded by the Assessing Officer, however, shows that no failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment has been pointed out by the Assessing Officer, which resulted in escapement of any income of the assessee chargeable to tax from assessment as contemplated in the first proviso to section 147. In the case of General Motors India Pvt. Ltd. (supra) cited by the ld. counsel for the assessee, there was not even a whisper in the reasons recorded by the Assessing officer to the effect that income had escaped assessment on account of any failure on the part of the assessee to disclose fully and truly all material ..... X X X X Extracts X X X X X X X X Extracts X X X X
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