DCIT CC-2(1), CHENNAI vs. M/S FUSO GLASS INDIA (P) LIMITED, CHENNAI

आदेश /O R D E R

PER MAHAVIR SINGH, VICE PRESIDENT:

facts for completion of assessment for the relevant assessment year. He drew our attention to the finding recorded by CIT(A) which reads as under:- “Respectfully following the above decisions, I am of the considered view that inasmuch as there was no failure on the part of the appellant to disclose fully and truly all facts necessary for assessment, the invocation of section 147 is bad in law and the impugned assessment is therefore annulled. This ground of appeal is allowed.” The ld.Senior DR then took us through the additional grounds raised by Revenue for quashing of reopening of assessment which reads as under:- “2.1. The Ld.CIT(A) erred in holding that the re-assessment proceedings were invalid as there was no failure on the part of the assessee to disclose fully all material facts necessary for making the assessment without appreciating the fact that the Explanation 1 below the proviso to section 147 is applicable to the facts of the case of the assessee.

2.2 The Ld.CIT(A) failed to take into account Explanation 1 of section 147 which makes it clear that production before the Assessing Officer of books of account or other evidence from which material evidence could with due diligence have been discovered by the AO will not necessarily amount to disclosure.” The ld. Senior DR stated that the assessment year involved is AY 2008-09 and notice for reopening u/s.148 of the Act dated 19.03.2013 was issued to the assessee, which is within four years from the end of the relevant assessment year and hence, the proviso to section 147 of the Act i.e., there is failure on the part of the assessee to disclose fully and truly all facts necessary for assessment will not apply, which is the basis of CIT(A) order.

Hence, he requested that order of CIT(A) be reversed and matter be remanded back to the file of the CIT(A) for adjudication on merits.

Approval u/s.151 of the Act defective:

6. The notice u/s. 148 of the Act dated 19.03.2013 is inherently defective and thus void ab-initio. The AO had obtained approval of the Commissioner of Income whereas section 151 of the Act mandates that the said approval was to be obtained only from the Joint Commissioner of Income Tax.

7. The notice u/s.148 of the Act and the consequential reassessment order is illegal and the reopening has been rightly quashed by the ClT(A). No reason to believe:

8. The CIT(A) further erred in upholding the reopening of the assessment as the same had been done by the A0 merely on the receipt of Audit Objection without independent application of mind. Reopening based on borrowed satisfaction without any application of mind is unsustainable in law and the CIT(A) ought to have quashed the same on this count also.

9. The absence of reason to believe on the part of the AO is further evidenced by the facts that: a. There is no communication from the AO accepting the Revenue Audit Objection, and b. In the remand report dated 28.01.2019 the AO has accepted that the disallowance of interest cannot be sustained in full and disallowance of bad debts can only be sustained to the extent of Rs.58,05,327/-.,

6. Both, ld.counsel for the assessee as well as the ld. Senior DR agreed that in any case after setting-aside of CIT(A)’s order, matter has to be remanded back to the file of the CIT(A) for adjudication on the balance two issues of reopening i.e., reason to believe as well as sanction u/s.151 of the Act and also on merits in case reopening is held to be valid. In term of the above, we agree with the plea of both the sides and hence, set-aside the order of CIT(A) and remand the matter back to the file of the CIT(A) for fresh adjudication on merits as well as on reopening on the basis of reason to believe as well as sanction u/s.151 of the Act. In term of the above, appeal of the Revenue is set aside and allowed for statistical purposes.