Friday, December 20, 2013

[aaykarbhavan] Without bringing new facts on record, AO can't allege escapement of income to justify reassessment



IT : Where method adopted by assessee for computing book profit under section 115JB was considered in scrutiny assessment, in absence of any new material before Assessing Officer, reopening of assessment on said issue was not valid
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[2013] 40 taxmann.com 25 (Madhya Pradesh)
HIGH COURT OF MADHYA PRADESH
Commissioner of Income-tax, Bhopal
v.
Fujistu Optel Ltd.*
KRISHN KUMAR LAHOTI, ACTG. CJ.
AND M.A. SIDDIQUI, J.
IT APPEAL NOS. 80 & 81 OF 2012
JUNE  28, 2013 
Section 115JB, read with section 147, of the Income-tax Act, 1961 - Minimum alternate tax [Reassessment] - Assessment years 2001-02 and 2002-03 - While working out book profit under section 115JB, assessee reduced unabsorbed depreciation which was lower of brought forward business loss - Assessment was completed under section 143(3) accordingly - Subsequently, assessment was reopened on ground that assessee had not disclosed income correctly and book profit was wrongly computed - Whether since there was no new material before Assessing Officer to hold that it was a case of escaped assessment, reassessment proceedings could not be sustained [Para 7] [In favour of assessee]
CASES REFERRED TO
 
Jt. CIT v. Rolta India Ltd. [2011] 330 ITR 470/196 Taxman 594/9 taxmann.com 36 (SC) (para 5).
Sanjay Lal for the Appellant.
ORDER
 
Krishn Kumar Lahoti, Actg. CJ. - As the facts of both the cases are identical, both the cases are being decided by this common order.
2. These appeals have been preferred by the Revenue against the orders passed by the Commissioner of Income Tax (Appeals) and the Income Tax Appellate Tribunal, Indore by which the assessment orders framed under section 147/143(3) of the Income Tax Act were set aside by the authorities.
3. Brief facts of the case are that the respondent is a joint venture with Government of Madhya Pradesh, declared its total income nil in its return filed for the assessment year 2001-2002 and 2002-2003. The book profit was calculated under section 115JB of the Act. The case was selected for scrutiny, notices were issued and the assessment order was framed under section 143(3) of the Act on 27.02.2004. Subsequently a notice under Section 148 of the Act was issued on 09.04.2007 to the assessee. Reasons for re-assessment supplied to the assessee were that the assessee had not disclosed the income correctly, had wrongly claimed depreciation of brought forward loss while as per the provisions as contained in Section 115JB of the Act the same was required to be adjusted from the lower of brought forward loss or unabsorbed depreciation. The assessing officer was of the opinion that the aforesaid adjustment was wrongly made by the assessee and on the aforesaid ground the assessing officer was of the opinion that the income of the assessee was wrongly shown in the return. The assessment order was an escaped assessment within the meaning of provisions of section 147 of the Act. On the aforesaid reasons, the assessing officer had formed an opinion that the assessee had not disclosed truly and fully all material facts necessary for the assessment so the income to be reassessed under section 147 read with section 148 of the Income Tax Act. On the aforesaid ground, the assessment order was re-framed. This order was assailed by the assessee before the Commissioner of Income Tax (Appeals).
4. The appellate authority found that if there was some falsity in the return, only then the reassessment can be done as there was no true and full disclosure of facts by the assessee. On the contrary, the assessee had disclosed all the material facts to the assessing officer and the assessing officer after considering the facts by applying its mind, as the matter was in the scrutiny, passed an order of assessment, so it was not an escaped assessment. The income was truly and correctly disclosed with all material facts by the assessee, so the notice under section 148 could not have been issued. On the aforesaid ground, the appellate authority allowed the appeal.
5. The Revenue challenged the order of the Commissioner of Income Tax (Appeals) before the Income Tax Appellate Tribunal by filing an appeal. The Tribunal considered the matter and found that sub-section (5) of section 115JB of the Act provides that "save as otherwise provided in this section, all other provisions of this Act shall apply to every assessee being a company mentioned in that section". In other words, except for substitution of tax payable under the provision and the manner of computation of book profits, all the provisions of the tax including the provision relating to charge, definitions, recoveries, payment assessment, etc. would apply in respect of the provisions of section 115JB. The ITAT relied on the judgment of Jt. CITv. Rolta India Ltd. [2011] 330 ITR 470/196 Taxman 594/9 taxmann.com 36 (SC), held that while working out the book profit, the assessee reduced the unabsorbed depreciation which was lower out of the two i.e. brought forward business loss and unabsorbed depreciation and that there was no error in the calculation of the assessee and it was not a case of escapement of income and the initiation of proceedings under section 148 were not justified. On the aforesaid grounds, the appeal has been dismissed by the ITAT.
6. Learned counsel for the appellant submits that these appeals involve substantial questions of law for consideration of this Court. The assessing officer had assumed valid jurisdiction under section 148 and notices were rightly issued to the assessee and these appeals may be admitted on the aforesaid substantial questions of law.
7. We have considered the case and find that it is a case in which after filing of the return by the assessee the matter was scrutinized and on thorough examination of the facts, the initial assessment order was passed. On the basis of same set of facts, if the assessing officer was of the view that it was a case of escaped assessment, then it was a case of change of opinion and not a case for reassessment. In the present case, there was no new material before the assessing officer to record a finding that on the basis of some new material, he had formed an opinion that it was a case of escaped assessment and the assessee had not disclosed the fact truly and rightly. On the basis of the material on which the assessment order was passed, the assessing officer could not form another opinion that the original assessment order was an escaped assessment and case deserves to be reassessed under section 147(b), then it was a case of change of opinion and not a case for reassessment as is required under section 147(b) of the Act.
8. In view of the aforesaid settled position, we are of the view that these appeals do not involve any substantial question of law for our consideration, devoid of any merit and are dismissed at admission stage, without notice to the other side.
USP


 
Regards
Prarthana Jalan


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