ASST CIT 4(3), MUMBAI vs. LATIN MANHARLAL SECURITIES P. LTD, MUMBAI

, revenue has raised following grounds of appeal: - “1. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) has erred in quashing the action initiated u/s.147 of the Income Tax Act, 1961 by the Assessing Officer in the interest of protecting revenue.

At the time of hearing, none appeared on behalf of the assessee nor any adjournment letter was filed, hence we proceed to decide the appeal ex-parte qua the assessee on merits after hearing Ld. DR.

The brief facts are that, the assessee has filed its return of income under section 139(1) on 27.10.2007 declaring total income of Rs. 16,11,71,435/-. The said return of income was selected for scrutiny and order under section 143(3) was passed vide order dated 23.04.2009, assessing the total income at Rs.16,13,39,460/- and the total tax payable worked out at Rs.82,09,792/- after giving rebate under section 88E of Rs.4,63,93,679/-. After having completed the assessment in the aforesaid manner, the assessee’s case was sought to be reopened under section 147, vide issuance of notice dated 06.09.2012 under section 148 after the expiry of 4 years from the end of the relevant assessment year, on following “reasons recorded”:

In the first appellate proceedings, the Ld. CIT(A), held that such a reopening of assessment under section 148 is bad in law, on the ground that all the material facts for computing the taxable income was there on records and there is no failure on the part of the assessee to disclose truly and fully all material facts necessary for the assessment. Once an assessment has been completed under section 143(3), then no action under section 147 can be taken after the expiry of 4 years, unless any income chargeable to tax has escaped assessment owing to the failure on the part of the assessee as mentioned in Proviso to section 147. Here in this case, there is no such failure and accordingly, such a reopening is bad in law. Apart from that, on merits also, he has decided the issue in favour of the assessee, after following the decision of Hon’ble Karnataka High Court in the case of CIT vs Horizon Capital Ltd, reported in [2011] 245 CTR 601.

After considering the relevant finding given in the impugned order and after hearing Ld. DR, we find that the sole reason for which the assessment completed under section 143(3) has been sought to be reopened is that, tax liability under section 115JB is more than the normal provision of the Act and further, assessee is not liable for deduction of rebate under section 88E while determining the tax liability under section 115JB. During the course of the original assessment proceedings, all these details of return of income under the normal provisions and under the book profit under section 115JB was there before the AO and AO after completing the assessment under section 143(3) has computed the tax liability. Now after the expiry of 4 years from the end of the लाट�न मनहरलाल से�यू�रट�स �ाइवेट �ल�मटेड 4 M/s Latin Manharlal Securities P Ltd. relevant assessment year, the said assessment has been sought to be reopened in utter violation of statutory limitation as given in the proviso to section 147. Conditions precedent for lifting the ban of 4 years time limit under proviso to section 147 is that, if the assessment has been completed under section 143(3) then reopening of the assessment can be done only when there is failure on the part of the assessee filed a return under section 139 or there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Such a failure of the assessee has to be ascribed and demonstrated by the AO in the “reasons recorded” itself. Here in this case, it is an admitted position that, there is neither any failure on the part of the assessee either to furnish the return of income under section 139(1) nor any failure to disclose fully and truly all material facts necessary for the assessment which is evident from the bare perusal of the “reasons recorded” and even from the assessment order. The assessee has duly shown the tax liability under the normal provisions and also as per under section 115JB. The AO while computing the income in the original assessment under section 143(3) has taken note of this fact. So now, the AO cannot hold that such a tax liability computed by the AO is erroneous or there is any failure on the part of the assessee to disclose fully and truly all material facts. Thus, the conclusion of the CIT(A) for holding that, reopening of the assessment is bad in law is thus affirmed. Accordingly, we also direct that such an action initiated under section 148 should be quashed.

However, without prejudice on merits also, we find that Ld. CIT(A) has decided this issue in favour of the assessee after following the decision of Hon’ble Karnataka High Court in the case of CIT vs Horizon Capital Ltd (supra), wherein it has been held that, the assessee is entitled to rebate under section 88E of the Act in respect of STT paid where the income is assessed under section 115JB. Without there being any contrary decision brought

In the result, appeal of the revenue stands dismissed. Order pronounced in the open court on 16th March, 2016.