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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI A. MOHAN ALANKAMONY
आदेश /O R D E R
PER N.R.S. GANESAN, JUDICIAL MEMBER:
This appeal of the assessee is directed against the order of the Commissioner of Income Tax (Appeals) – 11, Chennai, dated 22.01.2016 and pertains to assessment year 2007-08.
Shri R. Sivaraman, the Ld.counsel for the assessee, submitted that the first issue arises for consideration is with regard to reopening of assessment under Section 147 of the Income-tax Act, 1961 (in short 'the Act'). According to the Ld. counsel, the assessee filed return for the assessment year 2007-08 on 31.10.2007. In fact, the return was processed under Section 143(1) of the Act. Subsequently, the case was selected for scrutiny and the assessment under Section 143(3) was completed on 16.12.2009. Subsequently, the Assessing Officer reopened the assessment by issuing notice under Section 148 of the Act on 21.03.2014. Referring to the proviso to Section 147 of the Act, the Ld.counsel submitted that when the assessment was completed under Section 143(3) of the Act by order dated 16.12.2009, the same cannot be reopened after expiry of four years from the end of the relevant assessment year unless any income chargeable to tax escaped assessment for such assessment year, by the reason of failure on the part of the assessee to disclose fully and truly all the material facts necessary for completing the assessment. In this case, according to the Ld. counsel, it is nobody’s case that there was any negligence on the part of the assessee in furnishing the particulars which are required for completing the assessment.
Referring to the reasons recorded for reopening assessment, a copy of which is available at page 38 of the paper-book, the Ld.counsel for the assessee submitted that the Assessing Officer has not whispered anything about the negligence of the assessee in producing of necessary material before him. Only after referring to the Profit & Loss account for the assessment year 2007-08, which was filed by the assessee in the regular assessment, the Assessing Officer reopened the assessment and came to a conclusion that unabsorbed depreciation, as per the books, would be only `51,47,812/-. Accordingly, he recomputed the book profit at `45,20,448/-. According to the Ld. counsel, re-appreciation of material available on record and coming to a different conclusion by the Assessing Officer, would amount to change of opinion.
According to the Ld. counsel, the Assessing Officer has already applied his mind and completed the assessment under Section 143(3) of the Act. Therefore, the Assessing Officer cannot reopen the assessment on the basis of Profit & Loss account filed by the assessee in the regular course of assessment and say that the income has escaped assessment. According to the Ld. counsel, even if the income escaped assessment, it cannot be reopened unless there was negligence on the part of the assessee in furnishing the material facts which are relevant for completing the assessment. In the absence of any allegation that there was negligence on the part of the assessee, according to the Ld. counsel, the assessment cannot be reopened.
Referring to Explanation 1 to Section 147 of the Act, the Ld.counsel for the assessee submitted that it is not the case of the Assessing Officer that he discovered anything on the basis of new material. The Profit & Loss account was very much available before the Assessing Officer and if the Assessing Officer could not verify the same, which was filed in the regular assessment under Section 143(3) of the Act, that cannot be a reason for reopening the assessment. Therefore, according to the Ld. counsel, the error or negligence committed by the Assessing Officer cannot be a justifiable reason to reopen the assessment after expiry of four years.
On the contrary, Sh. P. Radhakrishnan, the Ld. Departmental Representative, submitted that the assessment was reopened after expiry of four years. Referring to Explanation 1 to Section 147 of the Act, the Ld. D.R. pointed out that production of Profit & Loss account or other material evidence cannot be construed that the assessee has disclosed all the materials required for completing the assessment. According to the Ld. D.R., there was a clear mistake on the part of the assessee since the assessee has claimed excess depreciation much more than what was eligible for set off during the year under consideration. Since the assessee has claimed excess depreciation, according to the Ld. D.R., the Assessing Officer has rightly reopened the assessment by issuing notice under Section 148 of the Act.
We have considered the rival submissions on either side and perused the relevant material available on record. It is not in dispute that the assessment was reopened after expiry of four years from the end of the relevant assessment year. We have also gone through Explanation 1 to Section 147 of the Act. Explanation 1 to Section 147 of the Act says that production of books of account or other evidence before the Assessing Officer will not necessarily amount to disclosure within the meaning of Section 147 of the Act.
In the case before us, the assessee claims unabsorbed depreciation on the basis of Profit & Loss account filed before the Assessing Officer in the original assessment. The Assessing Officer ought to have examined the same. The Profit & Loss account is obviously prepared on the basis of books of account maintained by the assessee. If the Profit & Loss account was not filed before the Assessing Officer, then the Assessing Officer may claim that with due diligence he would not have discovered the unabsorbed depreciation from the books of account. In this case, the summary of books of account is nothing but the Profit & Loss account.
Therefore, when the summary of books of account was presented before the Assessing Officer in the form of Profit & Loss account, the Assessing Officer cannot claim that with diligence he could not find out the claim made by the assessee with regard to unabsorbed depreciation. Therefore, this Tribunal is of the considered opinion that there was no negligence on the part of the assessee in disclosing all material facts for completing assessment before the Assessing Officer. If at all there was any negligence it is on the part of the Assessing Officer to examine the material filed by the assessee in the course of assessment proceeding. In the absence of any new material, this Tribunal is of the considered opinion that re-appreciating the material filed by the assessee in the regular assessment cannot be a justifiable reason for reopening the assessment after expiry of four years from the end of the relevant assessment year.
In view of the above, this Tribunal is of the considered opinion that reopening of assessment is barred by limitation under proviso to Section 147 of the Act. Therefore, we are unable to uphold the orders of the lower authorities. Accordingly, the orders of the lower authorities are set aside.
In the result, the appeal of the assessee is allowed.
Order pronounced on 12th May, 2016 at Chennai.