TWENTY FIRST CENTURY MANAGEMENT SERVICES LTD.,CHENNAI vs. ACIT, CHENNAI

आदेश / O R D E R

PER D.S.SUNDER SINGH, ACCOUNTANT MEMBER:

This is an appeal filed by the assessee against the Order dated

17.03.2016 of Commissioner of Income Tax (Appeals)-11, Chennai, in ITA

No.646/2013-14/CIT(A)-11 for the AY 2005-06 and raised the following

grounds:

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2.0 All the grounds of the appeal are related to the issue of notice

u/s.147 of Income Tax Act. The assesse filed return of income on

31.03.2006 declaring total income of Rs.361.33 lakhs and the assessment

was completed u/s.143(3) by an order dated 27.12.2007. Later on, the

assessment was re-opened u/s.147 to determine the total income

u/s.115JB of Income tax act and completed the reassessment u/s.143(3)

r.w.s.147 and determined the total income u/s.115JB at Rs.3,48,77,000/-.

Again the AO has issued notice u/s.147 on 29.03.2012 and completed the

assessment by an order u/s.143(3) r.w.s.147 on total income u/s.115JB at

Rs.6,26,78,000/-. As per Explanation-1 (iii) of Sec.115JB unabsorbed

depreciation or the amount of brought forward loss whichever is less is

allowed to be adjusted. In the re-assessment (third round) made

u/s.143(3) on 28.03.2013, the AO made the adjustment relating to

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brought forward losses of earlier years and determined the total income

u/s.115JB at Rs.6,26,78,000/-.

3.0 Aggrieved by the order of the AO, the assesse went on appeal

before the Ld.CIT(A) and challenged the validity of re-opening of

assessment. The Ld.CIT(A) confirmed the re-opening of assessment and

allowed the assessee’s appeal partly. Against the order of the Ld.CIT(A),

the assesse is on appeal before us and argued that the assessment was

re-opened beyond four years from the end of the relevant assessment

years and the reasons recorded for re-opening of assessment was the

computation of book profits u/s.115JB which was examined in the original

Assessment Order dated 27.12.2007 as well as in the subsequent Assessment Order. In fact, in 2nd round, the assessment was re-opened

by issue of notice u/s.147 for the purpose of examining the correctness of

computation of book profits u/s.115JB of Income Tax Act and accordingly

completed the assessment u/s.143(3) r.w.s.147 on 31.12.2010 after

considering all the materials available with the A.O. Again re-opening of

assessment on the same issue is nothing but difference of opinion and is

not permissible in law since no fresh material is available with the A.O.

On the other hand, Ld.DR relied on the lower authorities Orders.

4.0 We heard the rival submissions and perused the material placed on

record.

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The assessee has filed the return of income which was scrutinized

u/s.143(3) and passed an order u/s.143(3) on 27.12.2007.

Subsequently, for verification of computation of book profits u/s.115JB,

the AO re-opened the assessment by issue of notice u/s.147 and

completed the reassessment u/s.143(3) r.w.s.147 on 13.12.2010. In the

third round, the AO re-opened the assessment by issue of notice u/s.147

on 29.03.2012 recording following reasons:

“In the case of the assessee M/s.Twenty First Century Management Services Limited, during the Asst. Year 2005-06, it is seen from the records that the assessee, while computing the book profit u/s.115JB, the adjustments on account of Explanation (I)(iii,) to that section i.e. the amount of loss brought forward or unabsorbed depreciation whichever is less as per books of account, has claimed excess relief resulting in under assessment of income”.

5.0 In the instant case, the assessment was related to the AY 2005-06

and the assessment was re-opened beyond four years. For re-opening the

assessment beyond four years, there should be failure on the part of the

assessee as per Sec.147 of IT Act and we extract the relevant provisions

of IT Act as under:

30[Income escaping assessment. 31 147. If the 32[Assessing] Officer 33[has reason to believe34] that any income chargeable to tax has escaped assessment34 for any assessment year, he 34may, subject to the provisions of sections 148 to 153, assess or reassess34 such34 income 34and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings34 under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has 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 year35, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure35 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 facts35necessary for his assessment, for that assessment year:

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36[Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:]

37[Provided 38[also] that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.]

Explanation 1.—Production39 before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily39amount to disclosure within the meaning of the foregoing proviso.

Explanation 2.—For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :—

(a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ;

(b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ;

40[(ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;]

(c) where an assessment has been made, but—

(i) income chargeable to tax has been underassessed ; or

such income has been assessed at too low a rate41 ; or (ii)

(iii) such income has been made the subject of excessive relief under this Act ; or

(iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed;]

41a[(ca) where a return of income has not been furnished by the assessee or a return of income has been furnished by him and on the basis of information or document received from the prescribed income-tax authority, under sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return;]

42[(d) where a person is found to have any asset (including financial interest in any entity) located outside India.]

43[Explanation 3.—For the purpose of assessment or reassessment41 under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148.]

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44[Explanation 4.—For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012.]

6.0 From the above, it is clear that the reasons recorded for re-opening

of the assessment was already examined by the AO in the assessment

made u/s.143(3) r.w.s.147 of Income Tax Act on 30.12.2010 and the

Ld.AR submitted that no fresh material is available to the AO to re-open

the assessment. The Revenue could not establish that the income has

escaped assessment due to the failure on the part of the assesse.

Therefore, we hold that the notice issued u/s.148 lacks jurisdiction and

the same is quashed.

7.0 In the result, the appeal of the assessee is allowed.

Order pronounced in the Open Court on 9th March, 2017, at Chennai.

Sd/- Sd/- (एन.आर.एस. गणेशन) (�ड.एस. सु�दर �संह) (N.R.S. GANESAN) (D.S.SUNDER SINGH) �या�यक सद�य/JUDICIAL MEMBER लेखा सद�य/ACCOUNTANT MEMBER

चे�नई/Chennai, �दनांक/Dated: 9th March, 2017. TLN

आदेश क� ��त�ल�प अ�े�षत/Copy to: 1. अपीलाथ�/Appellant 4. आयकर आयु�त/CIT 2. ��यथ�/Respondent 5. �वभागीय ��त�न�ध/DR 3. आयकर आयु�त (अपील)/CIT(A) 6. गाड� फाईल/GF