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Income Tax Appellate Tribunal, DELHI BENCH “A”: NEW DELHI
Before: SHRI BHAVNESH SAINI & SHRI PRASHANT MAHARISHI
O R D E R PER PRASHANT MAHARISHI, A. M. 1. This is an appeal filed by the revenue against the order of the ld CIT (A)-3, New Delhi dated 18.03.2016 for the Assessment Year 2003-04. 2. The revenue has raised the following grounds of appeal:- “1. On the facts and in the circumstances of the case and in law the order passed by the ld CIT(A) is erroneous and the CIT(A) has erred in quashing the notice issued u/s 148 without appreciating that the case was covered by the Explanation 1 below section 147, particularly as the assessee itself had made on incorrect claim in respect of the allowability of the VRS expenditure.”
3. Brief fact shows that assessee filed its return of income on 25/11/20 03 declaring loss of INR 7 596177420/– which was assessed u/s 143 (3) on 18/1/2006 at a loss of INR 3 352087581/–.
4. The learned assessing officer issued notice u/s 148 of the act on 30/6/2008 for the same assessment year recording the following reasons:- “the original return of income in this case was filed on 25/11/2003 showing loss of INR 7596177420/– against which the assessment was completed at the nil income after adjusting brought forward losses of INR 3 352087581/–. (2) during the relevant previous year corresponding to the assessment year under consideration the assessee is derived Page | 1 income from the manufacturing and selling of fertilizers and other allied products and mining and selling of the gypsum. (3) the assessee claimed an expenditure of Rs. 557970906 (1/5 of total VRS compensation of INR 2 789854531/–) u/s 35DDA on account of VRS compensation but as per notes on accounts VRS compensation in respect of 364 employees amounting to INR 226,709,000 was not paid during the year and was included in the current liabilities. Therefore 1/5 of INR 226,709,000 amounting to INR 45,342,000 was required to be added back by the assessee while disclosing its income for the corresponding previous year. However, the assessee omitted to do so. The omission to do so resulted in incorrect allowance and carry forward loss of Rs. 453,42,000. I therefore have reason to believe that the income of Rs. 45342000/– has escaped assessment within the meaning of section 147 of the income tax act, 1961 due to omission on the part of the assessee to include this sum into its income for the relevant previous year.”
5. Thus, after reopening of the assessment and considering the reply filed by the assessee on 14/11/2008 the learned assessing officer disallowed the sum of Rs. 45342000/– and added that to the los already determined u/s 143 (3) as per order dated 18/1/2006 of INR 3 352087581/– and net loss was assessed at INR 3 306745581/– as per order dated 18/12/2008 passed u/s 147 read with section 143 (3) of the income tax act.
6. The assessee aggrieved with the order of the learned assessing officer preferred an appeal before the learned CIT – A challenging the same on the aspect of reopening as well as on the merits. The learned CIT – A relying upon the decision of the honourable Delhi High Court in 31 taxmann.com 184 in CIT vs Maruti Suzuki India Ltd holding that the assessing officer has examined the complete account of the assessee during the original assessment proceedings and complete details of the expenses were contained in the notes to the accounts and it to the financial accounts. The same is disturbed by the learned assessing officer by initiating the reassessment proceedings after the expiry of 4 years where the assessee has made the primary facts available before the assessing officer and therefore it cannot be held that assessee has failed to disclose fully and truly all the material facts. Thus, the reopening of the assessment was quashed holding that it is a mere change of opinion. The learned CIT – A did not decide the issue on the merits of the claim of the assessee.
The learned assessing officer aggrieved with the order of the learned CIT – capital has preferred this appeal. The learned departmental representative vehemently stated that the reopening of the assessment has been made by the learned assessing officer on the valid reasons. He referred to the reasons recorded by the learned CIT – A and stated that the claim of the assessee is incorrect. Therefore reopening of the assessment is valid.
The learned authorised representative reiterated the submissions made before the learned CIT – A and his order and stated that there is an absence of tangible material, the reopening has been made on the appreciation of the same facts which were available before the assessing officer at the time of original assessment, there is no failure on the part of the assessee to disclose fully and truly all material facts before the assessing officer, therefore, the reopening has been rightly quashed by the learned CIT – A.
We have carefully considered the rival contention and perused the orders of the lower authorities. In the present case the reopening has been made after the expiry of 4 years from the end of the relevant Assessment year by issuing notice u/s 147 of the income tax act on 30/6/2008 whereas the original assessment has been completed u/s 143 (3) on 18/1/2006 for assessment year 2003 – 04. Admittedly, thus the assessment is reopened beyond the 4 years of the relevant assessment year. According to the provisions of section 147 of the income tax act there is a specific condition which gives an assessing officer power to reopen the case beyond the 4 years from the end of the assessment year unless income chargeable to tax has escaped assessment 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. Admittedly, in the present case the assessment was passed u/s 143 (3) of the income tax act. In the reasons recorded by the learned assessing officer there is no mention that what information or material facts were not shown by the assessee fully and truly to the