ACIT, Pune V. Kalyani Hayes Lemmerz Ltd., Pune

ITA 2476/PUN/2012

• Counselvise Citation: 247624514 RSA 2012
• Duration Of Justice: 1 year(s) 8 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 13-12-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: B C MALAKAR
• Keywords: Reopening of assessment; Depreciation; Double taxation relief; Unabsorbed depreciation
• Section: 143(3); 147; 148; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER, AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NO.2476/PN/2012 (A.Y: 2003-04) ACIT, CIRCLE-9, PUNE APPELLANT VS. KALYANI HAYES LEMMERZ LTD., GAT NO.635, VILLAGE:KURULI, TALUKA KHED, CHAKAN, PUNE 410501 PAN: AAACK7841A RESPONDENT ITA NO.680/PN/2013 (A.Y: 2007-08) ACIT, CIRCLE-9, PUNE APPELLANT VS. KALYANI HAYES LEMMERZ LTD., GAT NO.635, VILLAGE:KURULI, TALUKA KHED, CHAKAN, PUNE 410501 PAN: AAACK7841A RESPONDENT ASSESSEE BY : SHRI KISHORE PHADKE DEPARTMENT BY : SHRI B.C. MALAKAR DATE OF HEARING: 06.08.2014 DATE OF ORDER : 28.08.2014 ORDER PER SHAILENDRA KUMAR YADAV, J.M: BOTH THE APPEALS PERTAIN TO THE SAME ASSESSEE FILE D BY THE REVENUE AGAINST THE RESPECTIVE ORDERS OF COMMISSION ER OF INCOME TAX (APPEAL)-V, PUNE FOR A.YS. 2003-04 AND 2007-08. 2. IN ITA NO.2476/PN/2012, THE REVENUE HAS FILED TH E APPEAL ON THE FOLLOWING GROUNDS. 2 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THAT TH E REOPENING OF ASSESSMENT IN THIS CASE WAS NOT VALID WHEN THE A SSESSEE HAS NOT MADE FULL AND TRUE DISCLOSURE OF ALL MATERI AL FACTS NECESSARY FOR ITS ASSESSMENT. 2. WHETHER THE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN HOLDING THA T THE ASSESSEE COMPANY HAS MADE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS NECESSARY FOR ASSESSMENT WHEN THE BU SINESS LOSS OF RS. 2,00,80,465/- FOR A.Y. 1998-99 WILL NOT BE ELIGIBLE FOR SET-OFF AS PER SECTION 79 OF THE ACT A ND BY INCLUDING THE SAID CLAIM IN THE RETURN AFTER RECONS TITUTION OF SHARE HOLDING PATTERN HAS PROVIDED INACCURATE PARTI CULARS AND HENCE THE ASSESSEE HAS NOT MADE THE DISCLOSURE OF MATERIAL FACT. THEREFORE, THE REOPENING U/S, 147 IS VALID. 3. WHETHER THE ON THE FACTS AND CIRCUMSTANCES OF THE C ASE AND IN LAW, THE INFORMATION WHICH WAS SUBMITTED BEF ORE THE ASSESSMENT IN A GENERAL MANNER CAN BE TERMED AS 'FU LL' AND 'TRUE' DISCLOSURE. 4. THE APPELLANT CRAVES LEAVE TO ADD, AMEND OR ALTER A NY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ASSESSEE COMPANY IS A MANUFACTURER OF WHEEL RIMS OF VARIOUS LIGHT, MEDIUM AND HEAVY COMMERCIAL VEHICLES . IT WAS INCORPORATED ON 18.01.1996 WITH KALYANI GROUP HOLDI NG OF 75% AND LEMMERZ WERKE GMBH GERMANY HOLDING REMAINING 25 %. LEMMERZ WERKE GMBH IS A PUBLIC LIMITED COMPANY LIST ED IN FRANKFURT STOCK EXCHANGE. IN JUNE 1998, HAYES CORP ORATION, USA AN ENTITY LISTED ON NEW YORK STOCK EXCHANGE ACQ UIRED LEMMERZ WERKE GMBH, GERMANY. THEREAFTER, LEMMERZ W ERKE GMBH (NOW A PART OF HAYES GROUP USA) INCREASED ITS SHARES HOLDING IN THE APPELLANT COMPANY TO 85% BY ACQUIRIN G ADDITIONAL 60% SHARES FROM KALYANI GROUP. 4. THE ASSESSEE COMPANY HAD FILED RETURN OF INCOME FOR A.Y. 2003-04 ON 29.11.2003 WHICH WAS ASSESSED U/S.143(3) OF INCOME-TAX ACT ON 24.03.2006. THEREAFTER, A NOTICE U/S. 148 OF INCOME-TAX ACT WAS ISSUED ON 29.03.2010 ASKING THE ASSESSEE TO 3 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD EXPLAIN AS TO WHY LOSSES FOR A.Y. 1997-98 & A.Y. 19 98-99 SHOULD NOT BE DISALLOWED BY INVOKING THE PROVISIONS OF SEC .79 OF INCOME- TAX ACT. THE ASSESSMENT U/S. 143(3) R.W.S 147 OF I NCOME-TAX ACT WAS COMPLETED AND ORDER PASSED ON 30.12.2010 IN WHI CH LOSSES AMOUNTING TO RS.7,28,84,073/- WAS DISALLOWED BY THE ASSESSING OFFICER. 5. THE MATTER WAS CARRIED BEFORE FIRST APPELLATE AU THORITY, WHEREIN THE FOLLOWING ISSUES WERE RAISED ON BEHALF OF THE ASSESSEE: 1. THE LEARNED ACIT, CIRCLE 9, PUNE ERRED IN LAW AND ON FACTS IN REOPENING ASSESSMENT FOR A.Y. 2003-04 BY ISSUANCE OF NOTICE U/S 148 WITHOUT APPRECIATING THA T THERE WAS NO FAILURE ON THE PART OF THE APPELLANT I N DISCLOSING FULLY & TRULY ALL MATERIAL FACTS. 2. THE LEARNED AO ERRED IN LAW AND ON FACTS IN INVO KING PROVISIONS OF 79 OF THE INCOME-TAX ACT, 1961 WITHOU T APPRECIATING THAT, DURING A.Y. 2003-04, ENTIRE SHAREHOLDING OF THE COMPANY IS HELD BY THE PERSONS WHO WERE THE SAME PERSONS WHO HELD THE ENTIRE SHAREHOLDING OF THE COMPANY DURING A, Y. 1998-99 & EARLIER. 3. THE LEARNED AO ERRED IN LAW AND ON FACTS IN INVO KING THE PROVISIONS OF SECTION 79 OF INCOME-TAX ACT 1961 IRRESPECTIVE OF THE FACT THAT THE MAJORITY SHAREHOL DER OF THE APPELLANT COMPANY IS A COMPANY LISTED ON THE STOCK EXCHANGE OUTSIDE INDIA AND AS SUCH, IT IS PROTECTED BY ARTICLE 24(4) OF THE DTAA BETWEEN INDI A & GERMANY. 4. ALTERNATIVELY AND WITHOUT PREJUDICE TO THE ABOVE GROUND NO.2 & 3 THE LEARNED AO ERRED IN LAW AND ON FACTS IN NOT CONFINING THE ALLEGED DISALLOWANCE OF SET-OFF OF CARRIED FORWARD BUSINESS LOSS TO AN AMOUNT OF RS.2,00,80,465 INSTEAD OF RS.7,28,84,073/-. HE OUG HT TO HAVE APPRECIATED THAT THE ENTIRE BALANCE LOSS OF RS.5,28.03,608 (I.E. RS.7,28,84,073 - RS. 2,00,80,4 65) WAS, IN FACT, UNABSORBED DEPRECIATION OF PAST YEARS WHICH IS OUTSIDE THE AMBIT OF SECTION 79. 5. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND AND/OR DELETE ALL OR ANY OF THE GROUNDS OF APPEAL.' 4 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD 5.1 THE ASSESSEE ALSO HAS MADE THE FOLLOWING SUBMIS SIONS BEFORE THE CIT(A). 'A)APPLICATION OF MIND IN ORIGINAL PROCEEDINGS - AS STATED ABOVE, THE PRESENT APPEAL IS AGAINST THE SECOND ROU ND OF ASSESSMENT PROCEEDINGS FOR THE A.Y. 2003-04. NOW, I N THE FIRST ROUND OF ASSESSMENT PROCEEDINGS, THE ISSUE OF CHANGE IN SHARE CAPITAL WAS CONSPICUOUSLY DELIBERATED BY T HE AO WHILE FRAMING THE 1 ST ROUND ASSESSMENT DATED 24-3-2006. IN FACT, AT PARA NO.2 (ON PAGE 1 & 2), THERE IS ELABOR ATE DISCUSSION ON THIS ASPECT, I.E. TRANSFER OF 60% SHA RES FROM KALYANI CROUP OF HAYES CROUP. THUS, THE FACTUAL MAT RIX RELATED TO THE PRESENT ISSUE WAS ELABORATELY DISCUS SED AND APPRECIATED BY THE LEARNED AO IN THE PROCESS OF 1 ST ROUND SCRUTINY. IT WILL TRANSPIRE, ALL RELATED FACTS WERE DULY PLACED BEFORE THE AO AND HIS MIND APPLICATION ON THIS FACT UAL MATRIX WAS COMPLETE, NOW, VIDE REASSESSMENT PROCEED INGS (CHALLENGED PRESENTLY), THE LEARNED AO FEELS THAT D UE TO THIS TRANSFER OF 60% SHARES, SECTION 79 GETS TRIGGERED. ON MERITS, THE ANALOGY OF THE LEARNED AO IS CLEARLY WRONG. YET , THE FACT REMAINS, BASIC FACTUAL MATRIX WAS CLEARLY COMMUNICA TED BY THE APPELLANT AND THE SAME WAS DELIBERATED UPON. AS SUCH, THE PROCESS OF MIND APPLICATION WAS COMPLETE AND IT CAN'T BE SAID LATER ON THAT MIND APPLICATION TO CONSEQUENTIA L ASPECT OF SUCH ISSUE IS NOT PRESENT. THE BARRIER TO REOPEN ING OF COMPLETED ASSESSMENT IS INTRODUCED IN THE LAW TO EN SURE THAT DECIDED MATTERS DO NOT GET AGITATED AGAIN. CON SIDERING THIS PERSPECTIVE, IT IS INCORRECT ON THE PART OF TH E PRESENT AO (ONE WHO HAS RECORDED THAT SECTION 79 APPLIES) TO R EOPEN THE COMPLETED ASSESSMENT NOTWITHSTANDING THAT THE SPECI FIC ISSUE OF CHANGE IN SHAREHOLDING WAS ALREADY CONSIDE RED EARLIER. B) PROVISO TO SECTION 147 OF THE ITA, 1961 - AS PER THE 148 NOTICE, THE DATE OF 148 PROCEEDINGS IS 29 TH MARCH 2010. THE RELATED REASONS FOR REASSESSMENT OUGHT TO BE UNDERS TOOD AS RECORDED IN THE PERIOD SOMEWHAT PRIOR TO THE SAID D ATE OF NOTICE. IF IT IS ASSUMED THAT THE REASONS ARE RECOR DED SOMEWHERE IN FEBRUARY OR MARCH OF 2010, IT WILL BE 6 TH YEAR FROM THE A. Y. 2003-04. - 2004-05 - 1 ST YEAR - 2005-06 - 2 ND YEAR - 2006-07 - 3 RD YEAR - 2007-08 - 4 TH YEAR - 2008-09 - 5 TH YEAR - 2009-10 - 6 TH YEAR 5 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD AS SUCH, THE MATTER IS REQUIRED TO BE EXAMINED ON T HE TESTS LAID DOWN IN THE PROVISO TO SECTION 147 OF THE ITA, 1961. CONSIDERING THE SPECIFIC DISCUSSION IN THE ORIGINAL ORDER AND CONSIDERING THE TRANSPARENT AND ELABORATE MENTIONS IN THE NOTES TO ACCOUNTS OF THE ANNUAL REPORT, THE ISSUE O F CHANGE IN SHAREHOLDING IS ALWAYS STATED WITH REQUISITE TRANSPARENCY. AS SUCH, THERE WAS NOTHING LIKE ANY F AILURE ON THE PART OF THE APPELLANT TO DISCLOSE ALL MATERIAL FACTS. HENCE, THE APPELLANT'S CASE GETS SQUARELY COVERED U NDER THE FIRST PROVISO TO SECTION 147, WHICH CREATES A FETTE R AND GRANTS SAFEGUARD TO THE ASSESSEE AGAINST THE AO IN ASSUMPTION OF 147 JURISDICTION. IT IS SUBMITTED, TH E JURISDICTION ASSUMED BY THE LEARNED AO, BY ISSUANCE OF NOTICE U/S 148 IS INCORRECT.' 5.2 HAVING CONSIDERED THE SAME, THE CIT(A) HAS TURN ED DOWN THE RE-ASSESSMENT VIDE PARA 11 OF ITS ORDER AS UNDE R: 11. IN THE PRESENT CASE, AS THE FACTS NARRATED IN THE ORIGINAL ASSESSMENT ORDER REGARDING CHANGE OF SHARE HOLDING PATTERN WHICH HAS BEEN ACKNOWLEDGE BY THE ASSESSING OFFICER IN PARA 2 OF THE ASSESSMENT ORDER DATED 24. 03.2006 IT IS CLEAR THAT ALL THE NECESSARY FACTS WERE DISC LOSED BY THE APPELLANT. IN THE REASONS RECORDED FOR REOPENING, THE ASSESSING OFFICER ACKNOWLEDGES THIS POSITION BUT PR OCEEDS WITH HIS SATISFACTION ON THE GROUND THAT APPLICABIL ITY OF SEC. 79 OF INCOME-TAX ACT WAS NOT EXAMINED BY THE ASSESS ING OFFICER. AS DISCUSSED ABOVE AFTER DISCLOSING ALL THE MATERIAL EVIDENCES, IT WAS NOT FOR THE APPELLANT TO LEAD THE ASSESSING OFFICER AS TO WHAT INFERENCES CAN BE DRAWN BY HIM A S THIS WORK FALLS IN THE DOMAIN OF THE ASSESSING OFFICER. THEREFORE, FROM THE ABOVE FACTS, IT IS CLEAR THAT T HE APPELLANT HAD DISCLOSED ALL THE MATERIAL FACTS RELEVANT FOR T HE ASSESSMENT AND AS PER PROVISO TO SEC. 147, THE ASSE SSING OFFICER CANNOT EXERCISE JURISDICTION TO REOPEN THE ASSESSMENT AFTER LAPSE OF FOUR YEARS. THEREFORE, IT IS HELD THAT THE ASSESSING OFFICER LACKED JURISDICTION TO R EOPEN THE ASSESSMENT PROCEEDINGS BY VIRTUE OF OPERATION OF 1 ST PROVISO TO SEC. 147 OF INCOME-TAX ACT AND ACCORDINGLY REOPE NING WAS NOT VALID. THE GROUND TAKEN BY THE APPELLANT IS THUS ALLOWED. 5.3 SINCE THE REOPENING WAS HELD INVALID, THE CIT(A ) WAS REFRAINED FROM COMMENTING ON THE MERIT OF THE ISSUE AT HAND. THE SAME HAS BEEN OPPOSED BEFORE US ON BEHALF OF TH E REVENUE, INTER ALIA, SUBMITTED THAT THE CIT(A) WAS NOT JUSTI FIED IN HOLDING 6 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD THAT THE REOPENING OF ASSESSMENT IN THIS CASE WAS N OT VALID WHEN THE ASSESSEE HAS NOT MADE FULL AND TRUE DISCLOSURE OF ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT. THE CIT(A) WAS NOT JUSTIFIED IN HOLDING THAT THE ASSESSEE COMPANY HAS MADE FULL AND TRUE DISCLOSURE OF MATERIAL FACTS NECESSARY FOR ASSESSME NT WHEN THE BUSINESS LOSS OF RS. 2,00,80,465/- FOR A.Y. 1998-99 WILL NOT BE ELIGIBLE FOR SET-OFF AS PER SECTION 79 OF THE ACT A ND BY INCLUDING THE SAID CLAIM IN THE RETURN AFTER RECONSTITUTION O F SHARE HOLDING PATTERN HAS PROVIDED INACCURATE PARTI CULARS AND HENCE THE ASSESSEE HAS NOT MADE THE DISCLOSURE OF M ATERIAL FACT. THEREFORE, THE REOPENING U/S, 147 WAS VALID. SO, T HE ORDER OF CIT(A) BE SET ASIDE AND THAT OF ASSESSING OFFICER B E RESTORED. ON THE OTHER HAND, THE LEARNED AUTHORIZED REPRESENTATI VE HAS SUPPORTED THE ORDER OF CIT(A). 6. AFTER GOING THROUGH THE RIVAL SUBMISSIONS AND MA TERIAL ON RECORD, WE FIND THAT THE THE ASSESSEE COMPANY WAS I NCORPORATED ON 18.1.1996 IN A JOINT VENTURE BETWEEN THE KALYANI GROUP AND LEMMERZ WERKE GMBH GERMANY WITH SHARE HOLDING OF 75 % AND 25%. ON 30.06.1997, HAYES CORPORATION, US ACQUIRED LEMMERZ WERKE GMBH GERMANY. IN AUGUST, 1998, THE HAYES GRO UP INCREASED ITS HOLDING IN KALYANI LEMMERZ LTD TO 85% BY ACQUIRING ADDITIONAL 60% OF EQUITY HELD BY KALYANI GROUP. THERE HAS BEEN A CHANGE IN THE SHARE HOLDING PATTERN OF M ORE THAN 51% HOLDING IN A.Y. 1999-2000. SET OFF OF BROUGHT FORW ARD LOSSES OF A.Y. 1997-98 AND 1998-99 WAS NOT ADMISSIBLE AGAINST INCOME OF THE ASSESSEE IN VIEW OF PROVISIONS OF SEC. 79 OF TH E I.T. ACT. THOUGHT THE ASSESSING OFFICER HAS DISCUSSED THE SHA REHOLDING PATTERN IN THE ASSESSMENT ORDER, THE APPLICABILITY OF PROVISIONS OF SECTION 79 OF THE ACT HAS NOT BEEN CONSIDERED BY TH E ASSESSING OFFICER. IT WAS FOUND FROM THE RECORD THAT THAT TH E LOSSES AMOUNTING TO RS. 7,28,84,073/- PERTAINING TO A.Y. 1 997-98 AND 7 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD THE PART OF LOSS PERTAINING TO A.Y. 1998-99 HAS BEE N ALLOWED TO BE SET OFF. IT WAS NOT IN ORDER IN VIEW OF PROVISIONS OF SECTION 79 OF THE ACT. ACCORDING TO THE ASSESSING OFFICER, AN AM OUNT OF RS.7,28,84,073/- HAS ESCAPED ASSESSMENT AND THIS WA S FIT CASE FOR ISSUE OF NOTICE U/S.148 OF THE ACT. IN THIS BA CKGROUND, IT WAS REQUIRED TO APPRECIATE THE ORIGINAL ASSESSMENT PASS ED U/S.143(3) OF THE ACT ON 24.03.2006. THE RELEVANT ISSUE HAS B EEN DISCUSSED IN PARA 2 OF ASSESSMENT ORDER AND THE SAME IS REPRO DUCED AS UNDER: 'THE ASSESSEE IS ENGAGED IN THE BUSINESS ACTIVITIES OF MANUFACTURING WHEEL RIMS FOR LIGHT, MEDIUM AND HEAV Y COMMERCIAL VEHICLES. THE ASSESSEE COMPANY VIZ. KALY ANI LAMMERZ LTD. WAS INCORPORATED ON 18-1-1996 & JOINTL Y PROMOTED BY KALYANI GROUP AND LEMMERZ WERKE GMBH WITH 75% & 25% EQUITY RESPECTIVELY. THE ASSESSEE CO MPANY ACQUIRED THE 'WHEEL RIM' DIVISION OF BHARAT FORGE L TD AND COMMENCED MANUFACTURE OF WHEEL RIMS FROM 4-6-1996. ON 30-6-1997, HAYES CORPORATION, USA, ACQUIRED LEMMERZ WERKE GMBH AND IN AUGUST, 1998, THE HAYES GROUP INCREASED ITS HOLDING IN THE COMPANY TO 85% BY ACQU IRING AN ADDITIONAL 50% OF EQUITY HELD BY THE KALYANI GRO UP. THE ASSESSEE COMPANY RELIES ON HAYES LEMMERZ HOLDING GM BH, THE PARENT COMPANY.' 6.1 SINCE NOTICE U/S. 148 OF INCOME-TAX ACT HAS BEE N ISSUED ON 29.03.2010 IN RESPECT OF ASSESSMENT COMPLETED U/S.1 43(3) OF INCOME-TAX ACT ON 24.03.2006 I.E. AFTER LAPSE OF FO UR YEARS 1 ST PROVISO OF SEC.147 COMES INTO OPERATION. FOR THE S AKE OF CLARITY, THE PROVISO ALONGWITH EXPLANATION THERETO IS REPROD UCED AS UNDER: 'PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTIO N(3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE, FOR THE RELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVANT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEA BLE TO TAX HAS ESCAPED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF FAILURE ON THE PART OF THE ASSESSEE TO MA KE A RETURN U/S. 139 OR IN RESPONSE TO A NOTICE ISSUED U NDER SUB-SECTION(1) OF SECTION 142 OR SEC. 148 OR TO DIS CLOSE FULLY 8 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSE SSMENT, FOR THAT ASSESSMENT YEAR. EXPLANATION 1 - PRODUCTION BEFORE THE ASSESSING OFF ICER OF ACCOUNT BOOKS OR OTHER EVIDENCE FROM WHICH MATERIAL EVIDENCE COULD WITH DUE DILIGENCE HAVE BEEN DISCOVE RED BY THE ASSESSING OFFICER WILL NOT AMOUNT TO DISCLOSURE WITHIN THE MEANING OF THE FOREGOING PROVISO. 6.2 THE ASSESSING OFFICER IN HIS REASONS RECORDED F OR REOPENING AS DISCUSSED ABOVE, HAS STATED THAT DUE TO CHANGE I N SHARE HOLDING PATTERN OF THE ASSESSEE COMPANY PROVISIONS OF SEC.79 OF INCOME-TAX ACT WOULD BE ATTRACTED. THE ASSESSING O FFICER HAS ALSO STATED THAT IN THE ORIGINAL ASSESSMENT ORDER, HE HAS DISCUSSED ABOUT THE SHARE HOLDING PATTERN OF THE AS SESSEE COMPANY BUT APPLICABILITY OF SEC. 79 OF INCOME-TAX ACT WAS NOT CONSIDERED BY THE ASSESSING OFFICER. THE DUTY OF T HE ASSESSEE EXTENDS TO THE FURNISHING OF TRUE AND FULL MATERIAL FACTS NECESSARY FOR THE PURPOSE OF ASSESSMENT BUT IT COULD NOT BE S AID TO BE EXTENDED TO WHAT OPINION HE SHOULD FORM ON THE BASI S OF ABOVE INFORMATION, OR WHAT INFERENCES CAN BE DERIVED OR A S TO WHAT DECISION HE SHOULD TAKE CONSIDERING THE RELEVANT PR OVISIONS OF THE INCOME-TAX ACT. IT IS NOT FOR THE ASSESSEE TO LEAD OR INSTRUCT THE ASSESSING OFFICER AS TO WHAT INFERENCES COULD BE TA KEN FROM THE FULL AND TRUE MATERIAL FACTS SUBMITTED BEFORE HIM. INFERENCES OF FACTS AND LAW FROM THE DISCLOSED FACTS AND APPLICAB ILITY OF THE RELEVANT PROVISIONS OF THE STATUTE IS THE DOMAIN OF THE ASSESSING OFFICER. THE ASSESSEE CANNOT BE BLAMED FOR NOT INFO RMING OR INDICATING THE ASSESSING OFFICER AS TO WHAT INFEREN CES HE COULD DRAW OR WHAT PROVISIONS OF THE STATUTE HE SHOULD AP PLY PROVIDED THE ASSESSEE HAS SUBMITTED FULL AND TRUE MATERIAL F ACTS BEFORE THE ASSESSING OFFICER. THE HON'BLE SUPREME COURT IN TH E CASE OF CALCUTTA DISCOUNT COMPANY LTD. VS. ITO [1961] 41 IT R 191(SC) HAS OBSERVED AS UNDER: 9 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD 'THERE CAN BE NO DOUBT THAT THE DUTY OF DISCLOSING ALL THE PRIMARY FACTS RELEVANT TO THE DECISION OF THE QUEST ION BEFORE THE ASSESSING AUTHORITY LIES ON THE ASSESSEE. TO ME ET THE POSSIBLE CONTENTION THAT WHEN SOME ACCOUNT BOOKS OR SOME OTHER EVIDENCE HAS BEEN PRODUCED, THERE IS NO DUTY ON THE ASSESSEE TO DISCLOSE FURTHER FACTS, WHICH ON DUE DI LIGENCE, THE INCOME-TAX OFFICER MIGHT HAVE DISCOVERED, THE LEGISLATURE HAS PUT IN THE EXPLANATION, WHICH HAS B EEN SET OUT ABOVE. IN VIEW OF THE EXPLANATION, IT WILL NOT BE OPEN TO THE ASSESSEE TO SAY, FOR EXAMPLE - I HAVE PRODUCED THE ACCOUNT BOOKS AND THE DOCUMENTS : YOU, THE ASSESSIN G OFFICER, EXAMINE THEM, AND FIND OUT THE FACTS NECES SARY FOR YOUR PURPOSE : MY DUTY IS DONE WITH DISCLOSING THES E ACCOUNT BOOKS AND THE DOCUMENTS. HIS OMISSION TO BR ING TO THE ASSESSING AUTHORITY'S ATTENTION THOSE PARTICULA R ITEMS IN THE ACCOUNT BOOKS, OR THE PARTICULAR PORTIONS OF TH E DOCUMENTS, WHICH ARE RELEVANT, WILL AMOUNT TO 'OMIS SION TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSA RY FOR HIS ASSESSMENT'. NOR WILL HE BE ABLE TO CONTEND SUCCESS FULLY THAT BY DISCLOSING CERTAIN EVIDENCE, HE SHOULD BE D EEMED TO HAVE DISCLOSED OTHER EVIDENCE, WHICH MIGHT HAVE BEE N DISCOVERED BY THE ASSESSING AUTHORITY IF HE HAD PUR SUED INVESTIGATION ON THE BASIS OF WHAT HAS BEEN DISCLOS ED. THE EXPLANATION TO THE SECTION GIVES A QUIETUS TO ALL S UCH CONTENTIONS; AND THE POSITION, REMAINS THAT SO FAR AS PRIMARY FACTS ARE CONCERNED, IT IS THE ASSESSEE'S D UTY TO DISCLOSE ALL OF THEM INCLUDING PARTICULAR ENTRIES I N ACCOUNT BOOKS, PARTICULAR PORTIONS, DOCUMENTS, AND DOCUMENT S, AND DOCUMENTS AND OTHER EVIDENCE WHICH COULD HAVE ON DISCOVERED BY THE ASSESSING AUTHORITY, FROM THE DOC UMENTS AND OTHER EVIDENCE DISCLOSED. DOES THE DUTY, HOWEVER, EXTEND BEYOND THE FULL AND TRUTHFUL DISCLOSURE OF ALL PRIMARY FACTS ? IN OUR O PINION, THE ANSWER TO THIS QUESTION MUST BE IN THE NEGATIVE. ON CE ALL THE PRIMARY FACTS ARE BEFORE THE ASSESSING AUTHORIT Y, HE REQUIRES NO FURTHER ASSISTANCE BY WAY OF DISCLOSURE . IT IS FOR HIM TO DECIDE WHAT INFERENCES OF FACTS CAN BE REASO NABLY DRAWN AND WHAT LEGAL INFERENCES HAVE ULTIMATELY TO BE DRAWN. IT IS NOT FOR SOMEBODY ELSE-FAR LESS THE ASS ESSEE TO TELL THE ASSESSING AUTHORITY WHAT INFERENCES, WHETH ER OF FACTS OR LAW, SHOULD BE DRAWN. INDEED, WHEN IT IS REMEMBERED THAT PEOPLE OFTEN DIFFER AS REGARDS WHAT INFERENCES SHOULD BE DRAWN FORM GIVEN FACTS, IT WIL L BE MEANINGLESS TO DEMAND THAT THE ASSESSEE MUST DISCLO SE WHAT INFERENCES-WHETHER OF FACTS OR LAW- HE WOULD D RAW FROM THE PRIMARY FACTS. 10 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD IF FROM PRIMARY FACTS MORE INFERENCES THAN ONE COUL D BE DRAWN, IT WOULD NOT BE POSSIBLE TO SAY THAT THE ASSESSEE SHOULD HAVE DRAWN ANY PARTICULAR INFERENCE AND COMMUNICATED IT TO THE ASSESSING AUTHORITY. HOW COU LD AN ASSESSEE BE CHARGED WITH FAILURE TO COMMUNICATE AN INFERENCE, WHICH HE MIGHT OR MIGHT NOT HAVE DRAWN ? IT MAY BE POINTED OUT THAT THE EXPLANATION TO THE S UB- SECTION HAS NOTHING TO DO WITH 'INFERENCES' AND DEA LS ONLY WITH THE QUESTION WHETHER PRIMARY MATERIAL FACTS NO T DISCLOSED COULD STILL BE SAID TO BE CONSTRUCTIVELY DISCLOSED ON THE GROUND THAT WITH DUE DILIGENCE THE INCOME-TAX O FFICER COULD HAVE DISCOVERED THEM FROM THE FACTS ACTUALLY DISCLOSED. THE EXPLANATION HAS NOT THE EFFECT OF EN LARGING THE SECTION, BY CASTING A DUTY ON THE ASSESSEE TO D ISCLOSE 'INFERENCES'- TO DRAW THE PROPER INFERENCES BEING T HE DUTY IMPOSED ON THE INCOME-TAX OFFICER. WE HAVE, THEREFORE, COME TO THE CONCLUSION THAT WHI LE THE DUTY OF THE ASSESSEE IS TO DISCLOSE FULLY AND T RULY ALL PRIMARY RELEVANT FACTS, IT DOES NOT EXTEND BEYOND T HIS.' 6.3 IN THE CASE OF CALCUTTA DISCOUNT COMPANY LTD. ( SUPRA), THE HONBLE SUPREME COURT HAS EXPLAINED THE OBJECTS OF EXPLANATION BELOW SECTION 34 OF 1922 ACT, WHICH IS NOW ANALOGOU S TO EXPLANATION 1 BELOW SECTION 147 OF THE ACT. AS PER THE SUPREME COURT, EVEN UNDER EXPLANATION, IT IS NOT FOR THE AS SESSEE TO INFORM THE ASSESSING OFFICER OF THE INFERENCES OF FACT OR LAW TO BE DRAWN BY THE LATTER. THE DUTY UNDER THE SAID EXPLANATION PLACED ON THE ASSESSEE, IS ONLY TO DISCLOSE PRIMARY FACT AND NOT INFERENCES. THE CAVEAT, HOWEVER, REMAINS THAT THE MATERIAL FACTS WH ICH COULD HAVE BEEN OR EVEN SHOULD HAVE BEEN DISCOVERED AND U NEARTHED BY THE ASSESSING OFFICER WITH DUE DILIGENCE FORM THE B OOKS OF ACCOUNTS OR OTHER EVIDENCE, DOES NOT AMOUNT TO DISC LOSURE. IN THIS CASE, THE HONBLE SUPREME COURT HAS POINTED OU T THAT EXPLANATION HAS NOTHING TO DO WITH THE INFERENCES WHICH THE ASSESSING OFFICER IS REQUIRED TO DRAW FROM THE PRIM ARY FACTS DISCLOSED BY THE ASSESSEE. 11 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD 6.4 IN THE PRESENT CASE, AS THE FACTS NARRATED IN T HE ORIGINAL ASSESSMENT ORDER REGARDING CHANGE OF SHARE HOLDING PATTERN WHICH HAS BEEN ACKNOWLEDGED BY THE ASSESSING OFFICE R IN PARA 2 OF ITS ORDER DATED 24.03.2006 IT IS OBVIOUS THAT AL L THE NECESSARY FACTS WERE DISCLOSED BY THE ASSESSEE. IN THE REASO NS RECORDED FOR REOPENING, THE ASSESSING OFFICER ACKNOWLEDGES THIS POSITION BUT PROCEEDS WITH HIS SATISFACTION ON THE GROUND THAT APPLICABILITY OF SEC.79 OF INCOME-TAX ACT WAS NOT EXAMINED BY THE AS SESSING OFFICER. AS STATED ABOVE AFTER DISCLOSING ALL THE MATERIAL EVIDENCES, IT WAS NOT FOR THE ASSESSEE TO LEAD THE ASSESSING OFFICER AS TO WHAT INFERENCES COULD BE DRAWN BY HIM AS THIS WORK FALLS IN THE DOMAIN OF THE ASSESSING OFFICER. IT I S UNDISPUTED THAT THE ASSESSEE HAD DISCLOSED ALL THE MATERIAL FACTS R ELEVANT FOR THE ASSESSMENT. AS PER PROVISO TO SEC.147, THE ASSESSI NG OFFICER COULD NOT EXERCISE JURISDICTION TO REOPEN THE ASSES SMENT AFTER LAPSE OF FOUR YEARS. THEREFORE, THE CIT(A) WAS JUS TIFIED IN HOLDING THAT THE ASSESSING OFFICER LACKED JURISDICTION TO R EOPEN THE ASSESSMENT PROCEEDINGS BY VIRTUE OF OPERATION OF 1 ST PROVISO TO SEC.147 OF INCOME-TAX ACT AND ACCORDINGLY REOPENING WAS RIGHTLY HELD AS NOT VALID. THIS REASONED FINDING OF CIT(A) NEEDS NO INTERFERENCE FROM OUR SIDE. WE UPHOLD THE SAME. SI NCE WE HAVE UPHELD THE ORDER OF CIT(A) ON THE POINT THAT THE RE OPENING WAS INVALID, WE REFRAIN FROM COMMENTING ON THE MERIT OF THE ISSUE AT HAND. IN VIEW OF THIS, THE ORDER OF CIT(A) IS UPHE LD. AS A RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. 7. IN ITA NO.680/PN/2013 FOR A.Y. 2007-08, THE REVE NUE HAS FILED THE APPEAL ON THE FOLLOWING GROUNDS. 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) WAS JUSTIFIED IN DIRECTING THE A .O. TO ALLOW SET-OFF OF BROUGHT FORWARD LOSSES AS WELL AS UNABSORBED DEPRECIATION AFTER GIVING EFFECT TO THE APPELLATE ORDER PASSED IN THE CASE OF THE ASSESSEE FOR A.Y. 2003-04, WHEN IN A.Y. 2003-04 SET OFF OF BROUGHT FO RWARD 12 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD LOSSES OF A.Y. 1997-98 & 1998-99 WERE NOT ADMISSIBL E IN VIEW OF PROVISIONS OF SEC.79 OF THE I.T. ACT. 2. THE APPELLANT CRAVES LEAVE TO ADDITION, AMEND OR AL TER ANY OF THE ABOVE GROUNDS OF APPEAL 8. THE ASSESSING OFFICER HAS DECIDED THE TAXABLE IN COME OF THE ASSESSEE UNDER THE NORMAL PROVISIONS OF INCOME TAX, WHILE THE ASSESSEE COMPANY HAD FILED RETURN OF INCOME UNDER T HE MAT PROVISIONS. THE ASSESSEE GRIEVANCE WAS ON ACCOUNT OF DENIAL OF SET-OFF OF BROUGHT FORWARDED LOSSES / UNABSORBED DE PRECIATION ON THE BASIS OF ASSESSMENT ORDER PASSES U/S.143(3) R.W .S. 147 OF THE ACT IN 2003-04. IN APPEAL, THE CIT(A) HAS HELD AS UNDER: 6. I HAVE CAREFULLY CONSIDERED THE FACTS OF THE C ASE AS WELL AS SUBMISSIONS OF THE APPELLANT AND I FIND SUFFICIE NT FORCE IN THE SUBMISSIONS OF THE APPELLANT. ACCORDINGLY, THE ASSESSING OFFICER IS DIRECTED TO ALLOW SET-OFF OF B ROUGHT FORWARD LOSSES AS WELL AS UNABSORBED DEPRECIATION A FTER GIVING EFFECT TO MY APPELLATE ORDER IN APPELLANTS CASE FOR A.Y. 2003-04 DATED 03.09.2012. ACCORDINGLY, THE GR OUND IS ALLOWED FOR STATISTICAL PURPOSES. 8.1 THE LEARNED DEPARTMENTAL REPRESENTATIVE HAS SUB MITTED THAT THE CIT(A) WAS NOT JUSTIFIED IN DIRECTING THE ASSESSING OFFICER TO ALLOW SET OFF OF LOSSES AS WELL AS UNABSORBED DE PRECIATION AFTER GIVING EFFECT TO THE APPELLATE ORDER PASSED IN THE CASE OF ASSESSEE FOR A.Y. 2003-04 WHEN IN A.Y. 2003-04 SET OFF OF BR OUGHT FORWARD LOSSES OF A.Y. 1997-98 & 1998-99 WERE NOT ADMISSIBL E IN VIEW OF PROVISIONS OF SECTION 79 OF THE I.T. ACT. IN THESE FACTS AND CIRCUMSTANCES, WE ARE NOT INCLINED TO INTERFERE WIT H THE FINDING OF CIT(A), WHEREBY, HE HAS RIGHTLY DIRECTED THE ASSESS ING OFFICER TO ALLOW SET-OFF OF BROUGHT FORWARD LOSSES AS WELL AS UNABSORBED DEPRECIATION AFTER GIVING EFFECT TO THE APPELLATE O RDER FOR A.Y. 2003-04 DATED 03.09.2012. ACCORDINGLY, THE CIT(A) WAS JUSTIFIED IN ALLOWING THIS GROUND FOR STATISTICAL PURPOSES AS DISCUSSED ABOVE. THE SAME NEEDS NO INTERFERENCE FROM OUR SID E. WE UPHOLD THE SAME. 13 ITA NO.2476/PN/12 & ITA NO.680 OF 13 KALYANI HAYES LEMMERZ LTD 9. IN THE RESULT, BOTH THE APPEALS FILED BY THE REV ENUE ARE DISMISSED. PRONOUNCED IN THE OPEN COURT ON THIS THE 28 TH DAY OF AUGUST, 2014. SD/- SD/- (R.K. PANDA) (SHAILENDRA KUMAR YADAV ) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 28 TH AUGUST, 2014 GCVSR COPY TO:- 1) DEPARTMENT 2) ASSESSEE 3) THE CIT(A)-V, PUNE 4) THE CIT-V, PUNE 5) THE DR, A BENCH, I.T.A.T., PUNE. 6) GUARD FILE BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE