IDEA CELLULAR LTD,MUMBAI vs. DCIT 3(2), MUMBAI

The present appeal has been preferred by the assessee against the order dated 26.11.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2003-04.

The assessee has agitated the impugned additions which have been made pursuant to reopening of the assessment under section 147 of the Act. At the outset, the Ld. A.R. of the assessee has stressed that the reopening in this case is bad in law. He has invited our attention to the opening lines of the assessment order wherein it has been specifically mentioned that the original assessment proceedings in this case were conducted under section 143(3) of the Act and the original assessment order was passed on 31.01.06 determining the total loss of Rs.1,74,69,87,876/-. Subsequently, proceedings under section 2 M/s. Idea Cellular Ltd. 147 of the Act were initiated and notice under section 148 was sent on 30.03.10 and served on the assessee on 31.03.10. The Ld. A.R. of the assessee has stressed that the reopening in this case was done after four years from the relevant assessment year 2003-04. He, in this respect, has submitted that the that the notice under section 148 was issued to the assessee beyond the period of four years from the relevant assessment year, whereas, there was no failure on the part of the assessee to disclose fully and truly all material facts during the original assessment proceedings. Hence the reopening of assessment was bad in law in view of the first proviso to section 147 of the Act.

We have considered the rival submissions and have also gone through the records. As per the provisions of section 147 of the Act, the Assessing Officer (hereinafter referred to as the AO) is authorized to reopen the assessment proceedings, if he has reason to believe that any income chargeable to tax has escaped assessment. The courts of law have time and again held that such a reason to believe that the income of the assessee has escaped assessment should be based on some material which comes to the knowledge of the AO. As per the 1st proviso to section 147 of the Act, the assessment once completed under section 143(3) cannot be reopened under section 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year because of any failure on the part of the assessee to disclose fully and truly all the material facts necessary for the completion of assessment. The said 1st proviso to section 147 for the sake of convenience is reproduced as under: “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 he taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the Assessee to make such 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 facts necessary for his assessment, for that assessment year.”

From the reasons recorded by the AO, copy of which is available at page 58 of the paper book, it reveals that there is no whisper about what material facts the assessee had failed to disclose fully and truly. The reopening has been done on the basis of facts and material which were already on record. There is no allegation that there was any failure on the part of the assessee to disclose fully and truly any material fact, necessary for the completion of assessment. Even, there is no such mention of any failure on the part of assessee to disclose any material fact in the notice dated 30.03.10 served on the assessee under section 148 of the Act. The AO in the reasons recorded has mentioned about the fact and circumstances already available on the record. The reopening in this case, thus, is hit by the 1st Proviso to section 147 of the Act as discussed above.

In view of the above, the very reopening in this case is bad in law and the same is set aside. In view of the setting aside of the reopening, the consequential additions are not sustainable in the eyes of law and the same are accordingly ordered to be deleted.

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