The ACIT, Circle-4, Ahmedabad V. M/s. GSL Nova Petrochemicals Ltd., Ahmedabad

ITA 2488/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1414 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 7 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 07-06-2016
• Assessment Year: 2004-2005
• Appeal Filed On: 06-11-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRASENJIT SINGH
• Keywords: Reopening of assessment; Depreciation; Tangible material; Difference of opinion; Reason to believe; Change of opinion
• Section: 143(3); 147; 148; 139

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.2488/AHD/2012 / ASSTT. YEAR: 2004-2005 ACIT, CIR.4 AHMEDABAD. VS GSL NOVA PETROCHEMICALS LTD. 7 TH FLOOR, CITY CENTRE CG ROAD, AHMEDABAD 380 009. PAN : AAACN 5419 K ! / (APPELLANT) '# ! / (RESPONDENT) REVENUE BY : SHRI PRASENJIT SINGH, CIT - DR ASSESSEE BY : MS.URVASHI SHODHAN / DATE OF HEARING : 07/06/2016 / DATE OF PRONOUNCEMENT: 07/06/2016 $%/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A)-XI, AHMEDABAD DATED 09.08.2012 PASSED FOR THE ASSTT.YEAR 2004-05. 2. SOLITARY GROUND OF APPEAL RAISED BY THE REVENUE IS THAT THE LD.CIT(A) HAS ERRED IN QUASHING REASSESSMENT ORDER. ITA NO.2488/AHD/2012 2 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HA S FILED ITS RETURN OF INCOME ON 1.11.2004 DECLARING TOTAL LOSS OF RS.9,59 ,87,357/-. AN ASSESSMENT ORDER WAS FRAMED UNDER SECTION 143(3) OF THE INCOME TAX ACT ON 29.12.2006. THE INCOME OF THE ASSESSEE WAS COMPUTED AT RS.26,66,90,113/- AS AGAINST THE RETURNED LOSS. TH E AO, THEREAFTER, REOPENED THE ASSESSMENT AND ISSUED NOTICE UNDER SEC TION 148 OF THE INCOME TAX ACT ON 23.3.2010. THE AO HAS PASSED REA SSESSMENT ORDER ON 18.11.2010. DISSATISFIED WITH THE REASSESSMENT, THE ASSESSEE CARRIED THE MATTER BEFORE THE LD.CIT(A). THE LD.CIT(A) HAS QUASHED THE RE- ASSESSMENT ORDER BY WAY OF IMPUGNED ORDER. THE BAS IC REASON ASSIGNED BY THE LD.CIT(A) IS THAT THE ASSESSMENT HAS BEEN RE OPENED BY ISSUANCE OF NOTICE UNDER SECTION 148 OF THE ACT AFTER EXPIRY OF FOUR YEARS FROM THE END OF THE ASSESSMENT YEAR. THE AO, NOWHERE, ALLEG ED THAT THE INCOME HAS ESCAPED ASSESSMENT ON ACCOUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS FULLY AND TRULY. 4. WE HAVE CONSIDERED RIVAL CONTENTIONS AND GONE TH ROUGH THE RECORD CAREFULLY. WE FIND THAT ON THE STRENGTH OF AUTHORI TATIVE PRONOUNCEMENT AT THE END OF THE HONBLE HIGH COURTS AS WELL AS OF THE HONBLE SUPREME COURT, THE ITAT IN THE CASE OF NEPTUNE TEXTILE MILL S PVT. LTD. VS. ACIT PASSED IN ITA NO.2195/AHD/2009 HAD MADE A LUCID ENUNCIATION OF THE SCOPE OF SECTION 147. WE CANNOT DO BETTER THAN EXT RACTING THE DISCUSSION MADE BY THE TRIBUNAL IN THIS REGARD. IT READS AS U NDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE MATERIAL ON RECORD. IN OUR CONSIDERED VIEW THE REOP ENING OF THE ASSESSMENT IS BAD IN LAW. FOR THE SAKE OF CONVENIEN CE WE REPRODUCE SECTION 147 AND PROVISO THERETO:- ITA NO.2488/AHD/2012 3 147. IF THE ASSESSING OFFICER HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY SUBJECT TO THE PROVISIONS O F SECTIONS 148 TO 153 ASSESS OR RE-ASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHARGEABLE TO TAX WHICH HAS ESCAPED ASSESSME NT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURS E OF THE PROCEEDINGS UNDER THIS SECTION, OR RECOMPUTED THE L OSS OR THE DEPRECIATION ALLOWANCE OR ANY OTHER ALLOWANCE, AS T HE CASE MAY BE, FOR THE ASSESSMENT YEAR CONCERNED (HEREAFTER IN THIS SECTION AND IN SECTIONS 148 TO 153 REFERRED TO AS THE RELEV ANT ASSESSMENT YEAR): PROVIDED THAT WHERE AN ASSESSMENT UNDER SUB-SECTION (3) OF SECTION 143 OR THIS SECTION HAS BEEN MADE FOR THE R ELEVANT ASSESSMENT YEAR, NO ACTION SHALL BE TAKEN UNDER THI S SECTION AFTER THE EXPIRY OF FOUR YEARS FROM THE END OF THE RELEVA NT ASSESSMENT YEAR, UNLESS ANY INCOME CHARGEABLE TO TAX HAS ESCAP ED ASSESSMENT FOR SUCH ASSESSMENT YEAR BY REASON OF TH E FAILURE ON THE PART OF THE ASSESSEE TO MAKE A RETURN UNDER SEC TION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB-SECTION (1) O F SECTION 142 OR SECTION 148 OR TO DISCLOSE FULLY AND TRULY ALL M ATERIAL FACTS NECESSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT Y EAR; [PROVIDED FURTHER THAT THE AO MAY ASSESS OR REASSES S SUCH INCOME OTHER THAN THE INCOME INVOLVING MATTERS WHICH ARE T HE SUBJECT MATTERS OF ANY APPEAL, REFERENCE OR REVISION WHICH IS CHARGEABLE TO TAX AND HAS ESCAPED ASSESSMENT]. THE REQUIREMENTS OF THE SECTION ARE AS UNDER :- (1) THE AO HAS REASON TO BELIEVE; (2) THAT AN INCOME CHARGEABLE TO TAX HAS ESCAPED AS SESSMENT; (3) IF FOUR YEARS HAVE EXPIRED FROM THE END OF THE RELEVANT ASST. YEAR THEN SUCH ESCAPEMENT WAS DUE TO FAILURE ON THE PART OF THE ASSESSEE- (I) TO FILE A RETURN U/S 139; (II) TO FILE A RETURN IN RESPONSE TO NOTICE U/S 142 (1) OR SECTION 148; (III) TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACT S NECESSARY FOR THE ASSESSMENT. ALL THESE ASPECTS MUST COME IN THE REASONINGS RECOR DED BY THE AO. THE REASONS RECORDED BY THE AO SHOULD REFLECT (I) ASSESSEE IN RESPECT OF WHOM ASSESSMENT IS SOUGHT TO BE REOPENED; ITA NO.2488/AHD/2012 4 (II) ASSESSMENT YEAR AS SOUGHT TO BE REOPENED; (III) AMOUNT OF INCOME WHICH HAS ESCAPED ASSESSMENT; (IV) HOW THE ORIGINAL ASSESSMENT HAS BEEN DONE WHETHER U /S 143(1) OR U/S 143(3) OR SEC.147/148; (V) WHAT IS THE REASON OF ESCAPEMENT OF ASSESSMENT; (VI) WHETHER THERE IS ANY FAILURE AS MENTIONED IN THE PR OVISO IF ASSESSMENT IS SOUGHT TO BE REOPENED AFTER FOUR Y EARS FROM THE END OF THE RELEVANT ASST. YEAR; (VII) IN PARTICULAR, WHETHER THERE IS ANY THE FAILURE OF THE ASSESSEE TO DISCLOSE MATERIAL FACTS FULLY AND TRULY NECESSARY FOR THE ASSESSMENT FOR THAT ASSESSMENT YE AR. (VIII) IF ASSESSMENT IS DONE U/S 143(1), THEN WHETHER THE PROVISION OF SECTION 149 ARE APPLICABLE. 8. IF REASONS RECORDED DID NOT REFLECT THESE INGRE DIENTS THEN REOPENING CANNOT BE SUSTAINED. ON THE ASPECT OF NEC ESSITY TO MENTION THE FAILURE OF THE ASSESSEE TO DISCLOSE TRU LY AND FULLY ALL MATERIAL FACTS NECESSARY FOR ASSESSMENT HON. ALLAHA BAD HIGH COURT IN CIT VS. PRADESHIYA INDUSTRIAL AND INVESTME NT CORPORATION OF UTTAR PRADESH LTD (2011) 332 ITR 324(ALL) HAS OB SERVED AS UNDER :- ADMITTEDLY, NOTICE UNDER SECTION 148 OF THE ACT WA S ISSUED AFTER THE EXPIRY OF FOUR YEARS. THE NOTICE UNDER THE PROV ISO OF SECTION 147 OF THE ACT CAN BE ISSUED AFTER THE EXPIRY OF FO UR YEARS ONLY IN CASE WHERE INCOME CHARGEABLE TO TAX HAS ESCAPED ASS ESSMENT BY REASON OF THE FAILURE ON THE PAR! OF THE ASSESSES T O MAKE A RETURN UNDER SECTION 139 OR IN RESPONSE TO A NOTICE ISSUED UNDER SUB- SECTION (1) OF SECTION 142 OR SECTION 148 OR TO DIS CLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR HIS ASSESSME NT FOR THAT ASSESSMENT YEAR. FROM THE PERUSAL OF THE REASON REC ORDED IT IS APPARENT THAT NO CASE HAS BEEN MADE OUT THAT THE AS SESSES HAD FAILED TO DISCLOSE FULLY AND TRULY ALL MATERIAL FAC TS NECESSARY FOR HIS ASSESSMENT AND NO OBSERVATION HAS BEEN MADE IN THIS REGARD, ON THE BASIS OF THE SAME MATERIAL WHICH WAS AVAILABLE ON RECORD, THE ASSESSING AUTHORITY WAS OF THE VIEW THAT THE DEDUCT ION HAD BEEN WRONGLY ALLOWED UNDER SECTION 36(1)(VIII) OF THE AC T. THE TRIBUNAL OBSERVED THAT THE ASSESSEE HAD FURNISHED THE REQUIS ITE DETAILS IN RESPECT OF LEASING INCOME AND UPFRONT FEE AS RECEIV ED IN THE ASSESSMENT YEAR UNDER CONSIDERATION AND THE SAME WA S DULY DISCLOSED IN THE AUDITED PROFIT AND LOSS ACCOUNT, A S IS EVIDENT FROM PAGES 4 AND 5 OF THE PAPER BOOK READ WITH PAGE 23 O F THE PAPER BOOK AND ALSO COMPUTATION OF INCOME FILED ALONG WIT H RETURN, A COPY OF WHICH IS PLACED AT PAGES 33 TO 35 OF THE PA PER BOOK. THIS FINDING OF THE TRIBUNAL HAS NOT BEEN DISPUTED BY RA ISING ANY QUESTION AND DURING THE COURSE OF THE ARGUMENT BY T HE LEARNED ITA NO.2488/AHD/2012 5 COUNSEL FOR THE APPELLANT. THEREFORE, WE ARE OF THE VIEW THAT ON THE FACTS AND CIRCUMSTANCES, NO SUBSTANTIAL QUESTIO N OF LAW ARISES FOR CONSIDERATION BY THIS COURT. LEARNED COUNSEL FOR THE APPELLANT CITED A DECISION OF THE BOMBAY HIGH COURT IN THE EASE OF DR. AMIN'S PATHOLOGY LABO RATORY V. P. M. PROSAD, JOINT CIT [2001] 252 ITR 673 ; [2002] 172 C TR 696. WE HAVE GONE THROUGH THE DECISION OF THE BOMBAY HIGH C OURT. WE ARE OF THE VIEW THAT THE SAID DECISION IS NOT APPLI CABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE, THE BOMBAY H IGH COURT HAS HELD THAT THE ASSESSING AUTHORITY HAS OVERLOOKED TH E DISPUTED ITEM WHICH HE HAS NOTICED SUBSEQUENTLY AND AT THE T IME OF PASSING THE ORIGINAL ORDER OF ASSESSMENT, HE COULD NOT BE SAID TO HAVE OPINED ON THE ABOVE ITEM. THEREFORE, THERE WAS NO CHANGE OF OPINION. WHILE IN THE PRESENT CASE, COMPLETE DET AILS WERE FURNISHED ALONG WITH THE RETURN AND DURING THE COUR SE OF THE ASSESSMENT PROCEEDINGS AND AFTER AN APPLICATION OF MIND, THE DEDUCTION UNDER SECTION 36(1)(VIII) OF THE ACT WAS ALLOWED. IN THE REASON RECORDED NO CASE HAS BEEN MADE OUT THAT THER E WAS FAILURE TO DISCLOSE ANY MATERIAL PARTICULAR ON THE PART OF THE ASSESSEE. THEREFORE, LIMITATION BEYOND THE PERIOD OF FOUR YEA RS WAS NOT AVAILABLE TO THE ASSESSING AUTHORITY. ADMITTEDLY, T HE NOTICE WAS ISSUED AFTER FOUR YEARS, THEREFORE, THE PROCEEDING WAS BARRED BY TIME AND THE TRIBUNAL HAS RIGHTLY HELD SO. FOR THE REASONS STATED ABOVE, THE APPEAL FAILS AND IS DISMISSED. HON. BOMBAY HIGH COURT, IN THE CASE OF BHAVESH DEVE LOPERS VS. A.O. & OTHERS (2010) 329 ITR 249 (BOM), NOTED THAT THE RECORDED REASONS DID NOT SHOW FINDING THAT THERE WAS A FAILU RE TO DISCLOSE NECESSARY FACTS. IN THAT CASE ASSESSEE HAS CLAIMED DEDUCTION U/S 80IB(10) FOR RS.3.85 CRORES WHICH WAS ALLOWED BY TH E AO VIDE ORDER U/S 143(3) AND ASSESSMENT WAS SOUGHT TO BE RE OPENED AFTER EXPIRY OF FOUR YEARS ON THE GROUND THAT THE C LAIM OF DEDUCTION U/S 80IB(10) INCLUDED INELIGIBLE ITEMS OF OTHER INCOME SUCH AS SOCIETY DEPOSITS, STREET PARKING CHARGES, S UNDRY BALANCES, ETC. HON. BOMBAY HIGH COURT IN THE CASE OF BHAVESH DEVELOPERS VS. A.O. & OTHERS (SUPRA) OBSERVED AS UNDER :- HELD, ALLOWING THE PETITION, THAT EX FACIE, THE RE ASONS WHICH HAD BEEN DISCLOSED TO THE ASSESSEE WOULD SHOW THAT THE INFERENCE THAT THE INCOME HAD ESCAPED ASSESSMENT WAS BASED ON THE DISCLOSURE MADE BY THE ASSESSEE ITSELF. THE REASONS SHOWED THA T THE FINDING WAS BASED ON THE DETAILS FILED BY THE ASSESSEE AND FROM THE PROFITS AND LOSS ACCOUNT. THEREFORE, IT WAS IMPOSSI BLE FOR THE ASSESSING OFFICER TO EVEN DRAW THE INFERENCE THAT T HERE WAS A ITA NO.2488/AHD/2012 6 FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE FUL LY AND TRULY ALL MATERIAL FACTS NECESSARY FOR ITS ASSESSMENT FOR ASS ESSMENT YEAR 2002-03. SIGNIFICANTLY, THE REASONS THAT HAD BEEN D ISCLOSED TO THE ASSESSEE DID NOT CONTAIN A FINDING TO THE EFFECT TH AT THERE WAS A FAILURE TO FULLY AND TRULY DISCLOSE ALL NECESSARY F ACTS, NECESSARY FOR THE PURPOSE OF ASSESSMENT. IN THESE CIRCUMSTANCES, THE CONDITION PRECEDENT TO A VALID EXERCISE OF THE POWER TO REOPE N THE ASSESSMENT, AFTER A LAPSE OF FOUR YEARS FROM THE RE LEVANT ASSESSMENT YEAR, WAS ABSENT IN THE PRESENT CASE. TH E NOTICE WAS NOT VALID AND WAS LIABLE TO BE QUASHED. HON. SUPREME COURT IN THE CASE OF ITO VS. LAKHMANI MEWAL DAS (1976) 103 ITR 437 (SC) HELD THAT WHERE ASSESSMENT IS SOUGHT TO BE REOPENED AFTER EXPIRY OF FOUR YEARS REASONS FOR BELIEF MUST SHOW LIVE LINK BETWEEN THE MATERIAL AND BELIEF. THE RE SHOULD BE A RATIONAL CONNECTION OR RELEVANT BEARING ON THE FORM ATION OF THE BELIEF. RATIONAL CONNECTION POSTULATES THAT THERE M UST BE A DIRECT NEXUS OR LIVE LINK BETWEEN THE MATERIAL COMING TO T HE NOTICE OF THE ITO AND THE FORMATION OF THE BELIEF THAT THERE IS A N ESCAPEMENT OF INCOME OF THE ASSESSEE FOR THAT PARTICULAR YEAR BEC AUSE OF HIS FAILURE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FA CTS. EVEN THOUGH COURT CANNOT GO INTO SUFFICIENCY OR ADEQUACY OF THE MATERIAL AND SUBSTITUTE ITS OWN OPINION FOR THAT OF THE ITO ON T HE POINT AS TO WHETHER ACTION SHOULD BE INITIATED FOR REOPENING OF THE ASSESSMENT, BUT AT THE SAME TIME WE HAVE TO BEAR IN MIND THAT IT IS NOT ANY AND EVERY MATERIAL, HOWSOEVER VAGUE AND INDEFINITE OR DISTANT, REMOTE AND FAR FETCHED, WHICH WOULD WARRAN T THE FORMATION OF THE BELIEF RELATING TO ESCAPEMENT OF T HE INCOME OF THE ASSESSEE FROM ASSESSMENT. HON. SUPREME COURT IN THE CASE OF CIT VS. KELVINATO R INDIA LTD. (2010) 320 ITR 561(SC), WHILE DISMISSING THE LEGISL ATION OF SECTION 147, HELD THAT EXPRESSION REASONS TO BELIE VE NEEDS TO BE GIVEN SCHEMATIC INTERPRETATION IN ORDER TO ENSURE A GAINST AN ARBITRARY EXERCISE OF POWER BY THE AO. THE POWER TO REOPEN THE ASSESSMENT IS NOT AKIN TO POWER TO REVIEW THE ASSES SMENT AND MERE CHANGE OF OPINION WOULD NOT JUSTIFY THE COURSE OF ACTION U/S 147. UNLESS THE AO HAS TANGIBLE MATERIAL FACT TO RE OPEN THE ASSESSMENT, POWER U/S 147 CANNOT BE VALIDLY EXERCIS ED. 9. IN THE PRESENT CASE THERE IS A CLEAR CASE OF CHA NGE OF OPINION. EVEN THOUGH RELIANCE HAS BEEN PLACED ON THE DECISIO N OF HON. SUPREME COURT IN BALLIMAL NAVALKISHORE AND OTHERS V S. CIT (SUPRA), THAT JUDGMENT EXISTED AT THE TIME WHEN THE AO TOOK THE DECISION U/S 143(3) AND HELD THE EXPENDITURE AS CUR RENT REPAIRS ALLOWABLE IN THE PROFIT AND LOSS ACCOUNT UNDER SECT ION 143(3). ITA NO.2488/AHD/2012 7 WITHOUT THERE BEING MATERIAL ON RECORD AND AN ALLEG ATION OF FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIA L WHICH COULD HAVE MADE THE AO TO BELIEVE THAT EXPENDITURE SO INC URRED WAS CAPITAL IN NATURE, NEW VIEW SO TAKEN FOR REOPENING OF ASSESSMENT WOULD BE ONLY A CHANGE OF OPINION. EARLIER SAME EXP ENDITURE WAS HELD AS REVENUE IN NATURE AND NOW CONSIDERED AS CAP ITAL WOULD BE AKIN TO REVIEWING HIS OWN DECISION ON THE SUBJECT. HON. BOMBAY HIGH COURT IN THE CASE OF ICICI PRUDENCIAL LIFE INS URANCE CO. LTD. VS. ACIT (2010) 325 ITR 471 (BOM) ALSO HELD THAT WH EN THERE IS NO MATERIAL ON RECORD AND WITHOUT THERE BEING ANY A LLEGATION OF FAILURE OF THE ASSESSEE TO DISCLOSE SUCH MATERIAL F ACT, ASSESSMENT CANNOT BE REOPENED AFTER FOUR YEARS. HON. GUJARAT H IGH COURT IN INDUCTO ISPAT ALLOYS LTD. VS. ACIT (2010) 320 ITR 4 58 (GUJ) AND NIKHIL K. KOTAK VS. MAHESH KUMAR (2009) 319 ITR 445 (GUJ) ALSO HELD THAT WHERE THE PERIOD OF FOUR YEARS HAS EXPIRE D FROM THE END OF RELEVANT ASST. YEAR THE PROVISO TO SECTION 147 W OULD COME INTO PLAY. IT STIPULATES THREE CONDITIONS AND ONE OF THO SE CONDITIONS IS SHOWING OMISSION OR FAILURE ON THE PART OF THE ASSE SSEE TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECESSARY FOR TH E ASSESSMENT. WHEN WE GO THROUGH THE REASONS RECORDED AND AS MENT IONED ABOVE WE DO NOT FIND ANY REFERENCE TO SUCH FAILURE ON THE PART OF THE ASSESSEE TO DISCLOSE ANY MATERIAL FACT NECESSAR Y FOR ASSESSMENT AND IN FACT NARRATION GIVEN IN THE REASO NS DO NOT SHOW ANY SUCH FAILURE WHICH COULD BE INFERRED EVEN IF NO T SO MENTIONED SPECIFICALLY IN THE REASONS. IN OUR CONSIDERED VIEW WHEN NEITHER THERE IS ANY ALLEGATION OF FAILURE NOR THE AO HAS B ROUGHT ANY MATERIAL ON RECORD TO SUGGEST ESCAPEMENT OF INCOME THEN IT IS ONLY A CHANGE OF OPINION AND THEREFORE ASSESSMENT C ANNOT BE REOPENED AFTER EXPIRY OF FOUR YEARS. 5. IN THE LIGHT OF THE ABOVE, LET US EXAMINE THE FA CTS OF THE PRESENT CASE. THE REASONS RECORDED BY THE AO HAS BEEN REPR ODUCED BY THE LD.CIT(A) ON PAGE NO.16 IN PARA-3.1. THEY READ AS UNDER: ' THE ASSESSES COMPANY HAD FILED RETURN ON 01.11.2004 SHOWING TOTAL LOSS AT RS.9,59,87,357/-. THE ASSESSMENT U/S. 143(3) WAS FINALIZED ON 29.12.2006, DETERMINING TOTAL INCOME A T RS.NIL. 2. ON VERIFICATION OF RECORDS, IT IS SEEN THAT DURI NG THE COURSE OF ORIGINAL ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER DISALLOWED DEPRECIATION ON CAPTIVE POWER PLANT AT AN AMOUNT OF RS.63,66,750/-. HOWEVER, IN THE ORDER PASSED U/S. 1 43(3) OF THE ACT, THE ASSESSING OFFICER HAS GIVEN EXCESS DEPRECI ATION OF RS.2,09,56,984/-. THIS FIGURE HAS BEEN WORKED OUT, BASED ON THE ITA NO.2488/AHD/2012 8 FIGURE OF DEPRECIATION TO BE ALLOWED, WHICH WAS MEN TIONED BY ASSESSING OFFICER AT THE TIME OF WORKING OUT DISALL OWANCE, AT PARA 4.3 OF THE ASSESSMENT ORDER IN RESPECT OF VARIOUS A SSETS. THE WORKING OF EXCESS DEPRECIATION, ALLOWED BY THE ASSE SSING OFFICER, IS AS UNDER:- DATE OF PURCHASE OF ASSET NAME OF ASSET RATE OF DEPRECIAT ION 1ST HALF 2ND HALF DEPRECIATION ALLOWABLE DEPRECIATION ALLOWED IN ASST. ORDER EXCESS DEPRECIATION FACTORY BUILDING POWER 10% 5894517 41808447 2679874 4475571 1795696 PIPE FITTINGS 25% 2920964 6030261 1484024 1872686 388662 PLANT & - MACHINERY 25% 21764331 148872479 24050143 39938661 15888519 ELECTRICAL INSTALLATIONS 25% 23888614 46961459 11842335 14726442 2884107 TOTAL EXCESS DEPREDATION ALLOWED: RS.20956984 THE EXCESS DEPRECIATION ALLOWED, AS WORKED BUT ABOV E, IS REQUIRED TO BE WITHDRAWN. 3. FURTHER, IT IS ALSO SEEN THAT THE INTEREST EXPEN SES CLAIMED BY ASSESSEE INCLUDE INTEREST PAYMENT TO LBBW, AMOUNTIN G TO RS.41,27,287/-, WHICH HAS BEEN INCURRED AS EXPENDIT URE IN FOREIGN CURRENCY, ON WHICH NO TDS HAS BEEN MADE. HENCE, THI S EXPENDITURE WAS REQUIRED TO BE DISALLOWED AS THE ASSESSEE HAS NOT C OMPLIED WITH THE PROVISIONS OF SECTION 195 OF THE ACT. 4. HENCE, I HAVE REASON TO BELIEVE THAT INCOME CHAR GEABLE TO TAX HAS ESCAPED ASSESSMENT IN THE FORM OF UNDER-ASSESSMENT OF INCOME WITHIN THE MEANING AS ENVISAGED BY SECTION 147 R.W EXPLANA TION 2(C)(I) & (IV) OF THE ACT. HENCE NOTICE U/S148 IS ISSUED ACCORDINGLY.' ITA NO.2488/AHD/2012 9 6. AS OBSERVED EARLIER, THE INTERDICTION PROVIDED I N THE PROVISO APPENDED TO SECTION 147 OF THE INCOME TAX PUTS AN E MBARGO UPON THE POWERS OF THE AO TO ISSUE NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, IN CASES WHERE, THE ORIGINAL ASSESSMENT WAS MA DE UNDER SECTION 143(3) AND FOUR YEARS HAVE EXPIRED. THE AO HAS BEE N DENUDED FROM HIS POWERS TO ISSUE NOTICE IN SUCH CASES UNLESS IT IS E STABLISHED THAT INCOME CHARGEABLE TO TAX HAS ESCAPED THE ASSESSMENT ON ACC OUNT OF FAILURE OF THE ASSESSEE TO DISCLOSE ALL THE MATERIAL FACTS FULLY A ND TRULY IN RESPECT OF ITS INCOME. THE AO HAS NOWHERE ALLEGED ANY FAILURE OF THE ASSESSEE. THE LD.CIT(A) HAS RIGHTLY APPRECIATED THE FACTS. WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD.CIT(A) ON THIS ISS UE. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 7 TH JUNE, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 07/06/2016