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TMI Blog2016 (2) TMI 1372X X X X Extracts X X X X X X X X Extracts X X X X ..... bulated as under: Assessment Year Dt. of filing of original return Dt. of issue of notice u/s. 148 Assessed income u/s. 143 (3) r. w. s. 147(Rs. ) 1997-98 28. 11. 1997 25. 03. 2004 16, 99, 27, 000/- 1998-99 30. 11. 1998 25. 03. 2004 15, 14, 47 , 000/- 1999-2000 30. 12. 1999 10. 03. 2004 19, 99, 00, 000/- 2000-01 30. 11. 2000 10. 03. 2004 20, 52, 36, 000/- First we would take the appeals filed by the AO. s. for the AY. s. 1997-98 and 1998-99. The AO had issued notices u/s. 148 of the Act. He observed that the assessee had claimed deduction of lease rent of assets which were basically in the nature of financing transaction, that it had claimed deduction of 1131. 31 lakhs, that the lease transactions were not genuine, that the assessee was entitled to claim the interest paid on financial transaction, that it had claimed the repayment of principal amount along with the interest as the deductible expenses in respect of lease rent paid, that the assessee had claimed excess deduction on account of payment of principal amount. He issued a notice u/s. 148 of the Act. The assessee objected the reopening. After considering the available material, the AO held that only the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sser in all circumstances gets buck the money advanced and nothing more. Such an arrangement cannot be treated as a genuine lease agreement but a financing transaction. In such situation only the interest paid on loan taken is an allowable deduction and not the repayment of the principal amount". " A cursory glance at the reasons reveal that though the assessment was reopened after a period of four years, the AO. s. had not mentioned as to how failure of the assessee had resulted in the escapement of income. We are of the opinion that if the AO wants to invoke the provisions of section147 after a period of four years, he has to compulsorily elaborate that there was failure on part of the assessee to disclose truly and fully the relevant facts to decide the taxability of that particular year. The courts are of the view that not only the fact of failure of the assessee has to be mentioned it has to be explained as to how assessee had failed and his failure ended in under assessment/escapement of income. Here, we would like to reproduce a portion of judgment of Hindustan Lever Ltd. (supra)and same reads as under: "Where an assessment under sub-section (3) of section 143 of the Inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bed without solid reasons. We hold that the Proviso casts onus on the AO to prove failure of the assessee and that if the AO fails to do so, then assessment passed by him in pursuance of re-opening notice, looses legal validity and sanctity. At this juncture, we would like to consider the matter of Tecumseh Products India Pvt. Ltd. (361 ITR 429)of the Hon'ble AP High Court which deals with issue of the re-opening of assessment after expiry of period of four years. The Hon'ble Court has held as under: "Before any notice is issued after the expiry of four years, the officer concerned must be satisfied that there had been an escapement in assessment of income, which is chargeable to tax and that this is because of the failure on the part of the assessee to make a return under section 139 of the Income-tax Act, 1961, or in response to a notice issued under sub-section (1) of section 142 or section 148 for not disclosing the material facts. These conditions must be reflected in the notice itself. In the absence of the conditions, exercise of jurisdiction in issuance of the notice under the provision is patently illegal. " Similarly, in the case of General Motors India Pvt. Ltd. (360 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... So, the appeals filed by the assessee for the AY. s. 1997-98 and 1998-99 are not being adjudicated treating the same of academic nature. ITA/3251 & 3252/Mum/2006-AY. s. 1999-00, 2000-01 Assessee's Appeal: ITA/3643 &3644/Mum/2006-AY. s 1999-00, 2000-01 Department's Appeal: 7. While deciding the appeals for the AY. s. 1999-00and 2000-01, the FAA upheld the reopening of the assessments for those years. He held that the AO had initiated the reassessment proceedings within a period of four4 yrs from the end of the relevant AY, that the proviso to section 147 of the Act was not applicable, that the AO had validly issued notices u/s. 148 of the Act. He further held that assessee was entitled for deduction of the whole lease rent , that it was entitled for relief for both the AY. s under consideration. 6. Before us, the AR argued that while re-opening the assessments the AO had mentioned the same reasons that were recorded for the earlier years, that it was a case of change of opinion, that while issuing the notice for the AY. 1999-2000 the AO had mentioned the lease rental figure of 1997-98, that the assessee had disclosed all the relevant material, that it had given break up of leas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and deliberation before the Assessing officer during the original proceedings leading to the order dated 29th April, 2003. In these circumstances, it is an undisputed position that the Assessing Officer did have occasion to apply his mind to the deduction claimed by the respondent-Assessee before allowing the same. The objection of the revenue that there was no opinion formed during the original assessment proceeding as the order dated 29th April, 2003 did not deal with the same is unsustainable. The mere fact that the assessment order does not discuss the issue of deduction under Section 80IA (4) of the Act would not lead to the conclusion that the Assessing officer had made no opinion with regard to the issue. The Tribunal has reached a finding of fact that question with regard to claim for deduction under Section 80IA of the Act was raised by the Assessing Officer and responded too by the respondent-Assessee. This position is also not disputed by the revenue. Merely because the issue is not discussed in the assessment order would not lead to a conclusion that no opinion was formed as to subject of the query. " Considering the above, we are of the opinion that the re-openin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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