NIKO RESOURCES LTD V. ASSISTANT DIRECTOR OF INCOME TAX

SCA/7307/2013

AI Insights

Niko Resources Ltd., a non-resident company engaged in the exploration and production of natural gas and mineral oil, challenged a notice of reopening issued by the Assistant Director of Income Tax under section 148 of the Income Tax Act, 1961. The reopening was based on the grounds that excessive depreciation had been claimed on an offshore platform, which was classified under the block of 'building' rather than 'plant and machinery'. The original assessment had allowed the depreciation claimed. The court examined whether the reopening was justified, considering the legal provisions and the facts disclosed during the original assessment. The court concluded that the reopening was not justified as all material facts had been disclosed by the assessee, and there was no change in the facts or law that would warrant a reassessment.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 754198 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 25-07-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income-Tax vs. Usha International Ltd, Gujarat Lease Financing Limited vs. Deputy Commissioner of Income-tax Circle-4, Ahmedabad, Calcutta Discount Co.Ltd. vs. Income-Tax Officer, Companies District-I, Calcutta, Indo-Aden Salt Mfg. & Trading Co.P.Ltd. vs. Commissioner of Income-Tax, Bombay, Dishman Pharmaceuticals and Chemicals Limited vs. Deputy Commissioner of Income-Tax (OSD) (No.1), Associated Stone Industries (Kotah) Ltd. vs. Commissioner of Income-Tax, GVK Gautami Power Limited vs. Assistant Commissioner of Income-tax (OSD) and another, Ketan B. Mehta vs. Assistant Commissioner of Income-Tax, Universal Subscription Agency P.Ltd. vs. Joint Commissioner of Income-tax, Parikh Petrol Chemical Agencies P.Ltd. vs. Assistant Commissioner of Income-tax and others, Sita World Travels (India) Ltd. vs. Commissioner of Income-Tax and another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M R BHATT; MAUNA BHATT
• Assessee Lawyers: SAURABH SOPARKAR; B S SOPARKAR
• Keywords: Assessment Year 2005-06; Income Tax; Non-Resident Company; Reopening of assessment; Depreciation on offshore platform
• Section: 147; 148; 143(3); 143(2); 143(1); 32; 139; 115JB

Judgement Text

"C/SCA/7307/2013 CAV JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 7307 of 2013 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH and HONOURABLE MS JUSTICE SONIA GOKANI ================================================================ 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ================================================================ NIKO RESOURCES LTD....Petitioner(s) Versus ASSISTANT DIRECTOR OF INCOME TAX....Respondent(s) ================================================================ Appearance: MR SAURABH SOPARKAR, SR. ADV. with MR B S SOPARKAR, ADVOCATE for the Petitioner(s) No. 1 MR MR BHATT, SR. ADV. with MRS MAUNA M BHATT, ADVOCATE for the Respondent(s) No. 1 NOTICE SERVED for the Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE M.R. SHAH Page 1 of 43 C/SCA/7307/2013 CAV JUDGMENT and HONOURABLE MS JUSTICE SONIA GOKANI Date : 25/07/2014 CAV JUDGMENT (PER : HONOURABLE MS JUSTICE SONIA GOKANI) 1. This petitioner challenges the notice of reopening dated 30.3.2012 issued by respondent for reopening under section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). The petitioner is the non-resident company registered under the laws of Canada and derives income from the business of exploration, prospecting, production and marketing of natural gas and mineral oil. It entered into an agreement dated 23.9.1994 with GPCL, a company incorporated under the laws of India for production sharing contracts with the Government of India for exploration and extraction of mineral oil and natural gas in certain fields situated in the State of Gujarat. The petitioner, therefore, earned income that accrues and arises in India and is subject to taxation in India. 2. The return of income under section 139 of the Act was filed by the petitioner on 29.10.2005 for the assessment year 2005-06 declaring total income as “nil” along with Tax Audit Page 2 of 43 C/SCA/7307/2013 CAV JUDGMENT Report. The petitioner paid tax under section 115JB of the Act. 3. The return of the petitioner was taken under scrutiny assessment under section 143(1) of the Act and notice issued under section 143(2) was duly served upon the assessee. The questionnaire was supplied along with notice under section 142(1) to the petitioner and pursuant to such notice, requisite details were furnished by the petitioner. A letter was issued dated 8.1.2007 requiring the petitioner to furnish all details of depreciation claimed along with items purchased and put to use. Petitioner replied to such specific query as also stated that any supporting document that may be called for at the time of hearing shall be produced being voluminous in nature. 4. The respondent passed the assessment order under section 143(3) of the Act on 30.12.2008 where various deductions claimed by the petitioner assessee were considered, disallowing the depreciation claimed on well and pipelines and allowing the rest of the claims of depreciation. 5. It appears that respondent issued the impugned notice under section 148 dated 30.3.2012 seeking to reopen the assessment of the petitioner assessee for the Assessment Year 2005-06. Page 3 of 43 C/SCA/7307/2013 CAV JUDGMENT 6. The reasons for reopening on asking were supplied to the petitioner on 26.12.2012, nearly 9 months after the issuance of the notice. Such grounds are as under: “Assessee a non-resident company filed its return of income on 31/10/2005 declaring ‘nil’ income and paid tax under section 115JB of the Act. The case was completed under section 143(3) of the Act on 30/12/2008 determining total income for Rs.15,18,91,760/-. It was observed from the depreciation chart filed along with Form 3CD that assessee had claimed and was allowed depreciation of Rs.25,97,14,874/- @ 25% on construction of “offshore Platform” valued Rs. 1038859497/-, depreciation at the rate of 25% was admissible for Plant and Machinery. According to Section 32 read with Rule 5 of Income Tax, depreciation on Plant & Machinery is admissible @ 15% whereas on Building @ 10% from A.Y. 2006-07. Offshore Platform is not exclusively a plant and machinery. It is raised area/stage on which plant and machinery alongwith various monitoring and dwelling units are installed. Three key features tend to make an offshore platform are :(1) The Modules-large pre-built units that include accommodation, production and drilling zones, (2) The Jacket- An intricate ‘spiders web’ of steel piles, beams and triunions combine to provide a formidable foundation which the entire platform sits and (3) Derrick-Usually the highest point on the platform. In this area the drilling is carried out. Offshore Platforms are also not ‘oil rig’. It is usually termed as oil platform or offshore platform/offshore installation for the structure as a whole. Oil Rig actually means the part of the platform where the drill crew operates from, whereas there is a lot more to the structure than just the derrick area. This being due to the fact that an offshore platform is usually one that is permanently fixed to the sea bed. Thus, Offshore Platform is not a plant and machinery in itself. It consists of dwelling units, production units and drilling area. The plant and machinery are installed on such Offshore Platform. Offshore Platform could therefore, correctly be classified under the Block of assets “Building” only. Thus, depreciation was correctly allowable on Offshore Page 4 of 43 C/SCA/7307/2013 CAV JUDGMENT Platform @ 10% applicable to “Building”. Accordingly, the assessee was entitled for depreciation of Rs.103885950/- (10% of Rs.1038859497/-) and this excess depreciation of Rs.155828924/- resulted in underassessment of income of Rs.155828924/-. Therefore I have reason to believe that income to the tune of at least Rs.155828924/- has escaped assessment in case of the assessee for AY 2005-06. Issue notice u/s 148 read with section 147 of the IT Act 1961.” 7. Objections were raised by the petitioner, objecting to the reopening of the assessment, contending inter alia that the assessment beyond the period of 4 years from the end of the relevant assessment year is not permitted statutorily when the assessee has disclosed fully and truly all material facts necessary for the assessment. It is also further contended that the original assessment was completed on scrutiny assessment and admittedly as the assessment was completed on 31.3.2006, the case of the assessee company falls under 1st proviso to section 147 of the Act, for such reopening is on expiry of 4 years period from the end of the relevant assessment year. On merits, it was contended as under:- “1.5 The primary information on depreciation claimed under section 32 was submitted with the return of income along with the Tax Audit Report (TAR). More so this information was specifically called for during the course of assessment proceedings. The following may please be noted:- * In the Return of Income, vide annexure 2, it has been mentioned that tax depreciation claim has been made as per Section 32 of the Act and the amount of depreciation Page 5 of 43 C/SCA/7307/2013 CAV JUDGMENT claim as per Clause 14 of the TAR. * Clause 14 of TAR refers to Enclosure II wherein under the ‘Fixed Assets’ caption entry of ‘Offshore Platform’ is distinctly and separately mentioned with Nil opening balance an addition of Rs.1,038,859,497 along with other numbers corresponding to their respective details like deletion during the year, total as on 31 March 2005, depreciation rate, total depreciation and closing written down value (WDV). The total depreciation claimed on offshore platform of Rs.157,867,098 is also mentioned in the line entry. * During the course of assessment, the assessing officer has in his notice dated 8 Jan 2007 vide point no.5 asked for the full details of depreciation claimed alongwith items purchased and put to use. * In reply to the notice dated 8 Jan 2007, the company in its submission dated 6 July, 2007 has mentioned vide point no.5 that the company has made the depreciation claim as per Annexure 3 and additions to asset are as per Annexure 4. It would be pertinent to note that Annexure 4 was fieldwise depreciation in which fieldwise particulars of all assets like the opening block, additions/deletions made during the year, total depreciation claimed and the closing WDV were tabulated.” 8. These objections were rejected by a detailed order dated 26.2.2013 essentially on the ground that Explanation 1 to section 147 notes that production of accounts books or other evidence from which material evidence with due diligence have been discovered by the Assessing officer, would not amount to disclosure. It also further notes that mere production of accounts and other documents since cannot be termed as disclosure, the Assessing Officer cannot be said to have formed any opinion based on the facts that documents containing entries about the issue under consideration were not filed during the course of assessment proceedings. Page 6 of 43 C/SCA/7307/2013 CAV JUDGMENT Thereafter on 15.3.2013, a draft of proposed reassessment order was prepared. 9. Aggrieved petitioner has preferred present petition, seeking the following prayers :- “ 7(aa) To quash and set aside the impugned assessment order under section 144C(1) r.w.s. 147 r.w.s. 143 at Annexure A1” 7(bb) Pending the hearing and final disposal of the petition to stay the implementation and operation of the order at Annexure A1 and refrain the respondent from initiating recovery proceedings against the petitioner pursuant to the said order.” 10. On issuance of notice, the respondent filed the affidavit- in-reply through the Deputy Director of Income-tax (International Taxation), inter alia, contending that there is an alternative efficacious remedy available by way of appeal to the Commissioner of Income Tax (Appeals) and thereafter to the Income-Tax Appellate Tribunal as per the provisions of the Act, therefore, present petition is not maintainable. 10.1 It is further contended that submissions made by the assessee on 6.7.2007 does not refer to the depreciation on specific items nor had the Assessing Officer raised an query on depreciation of any specific items in the notice referred to by the petitioner. Moreover, Annexure-3 attached to the reply of the assessee referred to the depreciation chart in Tax Audit Page 7 of 43 C/SCA/7307/2013 CAV JUDGMENT Report. However, that itself did not contain details of depreciation. Therefore, it will be wrong to say that the Assessing Officer applied his mind at the stage of assessment proceedings. As also to the reply submitted by the assessee, the Assessing Officer also does not contend any discussion of depreciation on offshore platform. In short, it is contended that when the issue of depreciation on offshore platform was never examined by the Assessing Officer, during the course of assessment proceedings, the Assessing Officer cannot be said to have applied his mind at the stage of assessment proceedings. 10.2 It is further contended that the issue of depreciation on offshore platform was never examined at any stage of assessment. The detailed submission in relation to the depreciation was only the chart as per the Tax Audit Report, listing the items on which different rates were applied. It would not be possible to comment on correct rate of depreciation on an asset as offshore platform was a complex issue, unless fully examined by the Assessing Officer after all the necessary details are furnished. From the Finance Act, 2003, building, furniture and fixtures have been excluded from the meaning of the term plant under section 43(3) of the Page 8 of 43 C/SCA/7307/2013 CAV JUDGMENT Act. Therefore, from Assessment Year 2004-05 onwards, buildings were excluded from the definition of the term plant as the offshore platform is a complex structure having residential units also for operations on Board. It is not correct to say that all these material facts were disclosed by the assessee at the time of assessment. Therefore, it is denied that the Assessing Officer at the time of scrutiny assessment under section 143(3) of the Act had already examined this issue. 10.3 It is therefore contended that no opinion was formed by the Assessing Officer during the assessment proceedings and hence, notice of reopening is not on account of any change of opinion. The assessee, in fact, according to the respondents, has presumed on the basis of the facts that the documents were supplied during the assessment proceedings and, therefore, the Assessing Officer must have considered it. Reliance is placed on the decision of Delhi High Court rendered in the case of Commissioner of Income-Tax vs. Usha International Ltd reported in [2012] 348 ITR 485 (Delhi) wherein on a particular subject matter entry or claim had not been examined by the Assessing Officer, it was held that there cannot be deemed formation of opinion. Page 9 of 43 C/SCA/7307/2013 CAV JUDGMENT 11. Affidavit-in-rejoinder has been filed denying all these contentions. It is emphasized that there was no failure on the part of the petitioner to disclose truly and fully all material facts. 11.1 According to the petitioner it had specifically provided the details of depreciation vide communication dated 6.7.2007 as is evident from Annexure-C. This annexure refers to the claim of depreciation as per the clause 14 of the Tax Audit Report, which was also before the respondents at the time of original assessment. It is further contended that in the original assessment order, the respondent disallowed the depreciation claimed on wells and pipelines. Therefore, it can be assumed that he had applied his mind. The petitioner has disclosed fully and truly all material facts pertaining to the depreciation in response to the specific queries and, therefore, the respondent has exercised his jurisdiction in an unjustified and illegal manner. The offshore platform is nothing but a plant and machinery and separate part of plant and machinery cannot be singled out for the purpose of depreciation. It is highly technical plant and machinery consisting of different parts. 11.2 It is further contended that the petitioner has sought Page 10 of 43 C/SCA/7307/2013 CAV JUDGMENT extension of time to make submissions on merits. However, the respondent finalized the assessment and passed an order under section 144C(1) read with section 143(3) and section 147 of the Act. It is alleged to be in breach of principles of natural justice. 12. We have heard learned Senior Counsel Mr. Saurabh Soparkar for the petitioner assessee. He fervently urged that the petitioner company during the original assessment as well as in the scrutiny assessment has disclosed fully and truly all material facts. The reasons recorded by the Assessing Officer also do not contain any such allegations that there is any failure on the part of the assessee to disclose truly and fully any material facts. He urged that the impugned notice was sought to reopen the assessment beyond the period of 4 years. The law on the subject is absolutely clear. It is not even alleged in the reasons recorded that there was any failure on the part of the assessee. He has heavily relied upon the decision of this Court rendered in the case of Gujarat Lease Financing Limited vs. Deputy Commissioner of Income- tax Circle-4, Ahmedabad reported in [2013] 219 Taxmann 70 (Gujarat), wherein extensively the law on the subject is detailed, after discussing the law at length. Page 11 of 43 C/SCA/7307/2013 CAV JUDGMENT 12.1 Learned counsel further submitted the reasons recorded for reopening of the assessment do not reveal anywhere that there is any failure on the part of the assessee to disclose fully and truly any material facts. What is mentioned is that the assessee has claimed and has allowed the depreciation at the rate of 25% on construction of offshore platform and depreciation at the rate of 25% was admissible on plant and machinery and according to section 32 of the Act read with Rule 5 of the Income Tax Rules,1962(hereinafter referred to as “the Rules”), depreciation on plant and machinery is admissible at the rate of 15% whereas on building, it would be at the rate of 10% for Assessment Year 2006-07. Offshore platform since is not exclusively on plant and machinery on which various monitoring or dwelling units were installed, three key features would make the offshore platform (1) the Modules- large pre-built units that include accommodation, production and drilling zones (2) The Jacket- an intricate ‘spiders web’ of steel piles, beams and triunions combine to provide a formidable foundation on which the entire platform sits and (3) Derrick is usually the highest point on the platform wherefrom drilling is carried out. It further mentioned that the offshore platform which is not a plant and Page 12 of 43 C/SCA/7307/2013 CAV JUDGMENT machinery in itself consists of dwelling units and three drilling areas and thus plant and machineries are installed on offshore platform. Therefore, offshore platform can be classified under the block of assets ‘building’ only and the depreciation correctly allowable was only 10%, applicable to the buildings. Therefore, it is depreciation according to the petitioner. 12.2 Learned counsel further argued that if there was any further query, the Assessing Officer could have raised the same while finalizing the scrutiny assessment during the course of assessment, the Assessing Officer in his notice dated 8.1.2007 had asked for full details of depreciation claimed along with items purchased and put to use and the company had made the submissions disclosing all the details and field- wise depreciation at Annexure-4 was furnished which gave particulars of all assets like opening block, additions/deletions made during the year, total depreciation claimed and the closing WDV etc. Thus all primary facts were disclosed for claiming depreciation under section 32 in the submission made to the Assessing Officer during the course of scrutiny assessment. Therefore, the question of non-disclosure of primary facts in respect of deduction claimed under section 32 would not arise. He further urged that this is not the case where from the production of account books and other Page 13 of 43 C/SCA/7307/2013 CAV JUDGMENT material evidence with due diligence material evidence could not have been discovered by the Assessing Officer. 13. Per contra, learned Senior Advocate Mr.Bhatt appearing for the Department has urged that nomenclature of offshore platform would not be sufficient disclosure. Attention of the Assessing Officer was not drawn by the petitioner as to what exactly offshore platform contains. This being a highly technical subject and when huge amount of tax has escaped the assessment for not having exclusive knowledge on the part of the assessee as he alone would be in a position to state as to for what purpose it is being used, the Assessing officer would not be in a position to make out intricacies. He has relied upon the decisions rendered in the following cases:- 1. Calcutta Discount Co.Ltd. vs. Income-Tax Officer, Companies District-I, Calcutta and another reported in [1961] 41 ITR 191(SC). 2. Indo-Aden Salt Mfg. & Trading Co.P.Ltd. vs. Commissioner of Income-Tax, Bombay reported in [1986]159 ITR 624. 3. Dishman Pharmaceuticals and Chemicals Limited vs. Deputy Commissioner of Income-Tax (OSD) (No.1) reported in [2012]346 ITR 228(Guj). 4. Associated Stone Industries (Kotah) Ltd. vs. Page 14 of 43 C/SCA/7307/2013 CAV JUDGMENT Commissioner of Income-Tax reported in [1997] 224 ITR 560 (SC). 14. In affidavit-in-rejoinder, learned Senior Advocate Mr. Soparkar urged that pursuant to the notice issued during the scrutiny assessment, if the Assessing Officer did not have sufficient details and was desirous to get more details, he could have directed to furnish more details when he allowed the assessee’s claim. However, while so doing, he rejected the depreciation on wells and other pipelines. There is sufficient application of mind on the part of the Assessing Officer and, therefore, any subsequent notice in respect of the very same assessment is nothing but change of opinion. 14.1 Learned Senior Counsel urged that out of the total amount of depreciation, Rs.25.97 crores of depreciation was only of this item. It is unlikely that such huge amount would escape the attention of the Assessing Officer. In absence of any further query with regard to offshore platform, this must be held as a review of his own decision and in absence of any averment with regard to non-disclosure of material facts fully and truly at the time of original assessment, the assessee cannot be put to any jeopardy and no jurisdiction would be available with the Assessing Officer, who has sought reopening of assessment beyond the period of four years from Page 15 of 43 C/SCA/7307/2013 CAV JUDGMENT the relevant assessment year. 15. Upon thus having heard both the sides, prior to adverting to the specific case of the petitioner assessee, the law on the subject requires a closer scrutiny. Sections 147 and 148 of the Act reads as follows:- “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 of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereinafter in this section and in sections 148 to 153 referred to as the relevant assessment year): 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 be 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 a 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. Provided further that nothing contained in the first proviso shall apply in case where any income in relation to any asset ( including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Page 16 of 43 C/SCA/7307/2013 CAV JUDGMENT “148.(1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139: Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this section, and (b) subsequently a notice has been served under sub- section(2) of section 143 after the expiry of twelve months specified in the proviso to sub-section(2) of section 143, as it stood immediately before the amendment of said sub- section by the Finance Act, 2002(20 of 2002) but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub- section(2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005, in response to a notice served under this section, and (b) subsequently a notice has been served under clause (ii) of sub-section (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub- section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in sub-section(2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.” 16. The Assessing Officer is authorized to make Page 17 of 43 C/SCA/7307/2013 CAV JUDGMENT reassessment in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the 1st proviso to section 147 of the Act, assessment can be reopened under section 147 of the Act after expiry of 4 years only if (1) the assessee failed to make a return under section 139 of the Act or in response to notice issued under section 142(1) or under section 148 of the Act, he failed to disclose truly and fully all material facts necessary for the assessment. Once all primary facts are before the assessing authority, no further assistance is required by way of disclosure. All inference of facts and legal inference need to be drawn by the Assessing Officer. It is not for any one to guide the Assessing Officer in respect of inference “ factual or legal”, which requires to be drawn by him alone. 17. Once the case of the assessee is covered by the 1st proviso to section 147 of the Act, the reassessment proceedings beyond the period of 4 years from the end of the relevant assessment year would be without any jurisdiction and bad in law, if all material facts are furnished and there remained no omission or failure on the part of the assessee to disclose truly and fully all material facts. This Court, after extensively discussing law on the issue in case of Gujarat Lease Financing Limited (supra), has held thus: Page 18 of 43 C/SCA/7307/2013 CAV JUDGMENT “10. It can be clearly noted from the reasons recorded that there is no mention at all of the assessee having not disclosed fully or truly material facts which were necessary for the purpose of computing the income of the assessee. Assuming that in the notice for reopening, such wordings are not specifically mentioned and they can be supplemented either while rejecting the objections or by way of affidavit of the Assessing Officer, then also, the revenue has failed to point out as to in what manner there has been non-disclosure on the part of the assessee.” 18. Delhi High Court in the case of Commissioner of Income-Tax vs. Usha International Ltd (supra), has held that the reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situation, it should be accepted that the issue was examined by the Assessing Officer, who did not find any ground or reasons to make additions or he forms an opinion, rejecting the stand of the assessee. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment made, though he had not recorded his reasons. “The expression “change of opinion” postulates formation of opinion and then a change thereof. In the context of assessment proceedings, it means formation of belief by an Assessing Officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. A distinction must be drawn between erroneous application/interpretation/understanding of law and cases where fresh or new factual information comes to the knowledge of the Assessing Officer subsequent to the Page 19 of 43 C/SCA/7307/2013 CAV JUDGMENT passing of the assessment order. If new facts, material or information comes to the knowledge of the Assessing Officer, which was not on record and available at the time of the assessment order, the principle of “change of opinion” will not apply. The reason is that “opinion” is formed on facts. “Opinion” formed or based on wrong and incorrect facts or which are belied and untrue do not get protection and cover under the principle of “change of opinion”. Factual information or material which was incorrect or was not available with the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression “material facts” means those facts which if taken into account would have an adverse effect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have a remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. The question of concealment is not relevant and is not a precondition which confers jurisdiction to reopen the assessment. Correct material facts can be ascertained from the assessment records also and it is not necessary that the same come from a third person or source, i.e., from the source other than the assessment records. 7. The words “opinion” is derived from the latin word “opinari” which means “to believe”, “to think”. The word “opinion” as per the Black’s Law Dictionary means a statement by a judge or a court of a decision reached by him incorporating cause tried or argued before them, expounding the law as applied to the case and, detailing the reasons upon which the judgment is based. Advanced Law Lexicon by P.Ramanatha Aiyar (third edition) explains the term “opinion” to mean “something more than mere retaining of gossip or hearsay; it means judgment or belief, that is, a belief or a conviction resulting from what one thinks on a particular question... An opinion is a conviction based on testimony... they are as a result of reading, experience and reflection”. 10. We may note that the said decision was not dealing with section 147 of the Act, as amended with effect from April 1, 1989, but was with reference to section 147(b) of the Act under which an Assessing Officer could reopen assessment on the basis of “information”. The term “to inform” it was observed means to impart knowledge and it does not means mere availability. It gets transmuted into Page 20 of 43 C/SCA/7307/2013 CAV JUDGMENT an item of information only when its existence is realized and its implications are recognized. However, it is not possible to agree with the observations made in paragraph 16, which have been underlined. The reason is that experience shows that the Assessing Officers do examine several aspects and raise queries but when the written opinion is expressed in the form of the assesment order, there is no discussion or elucidation on certain aspects and issues decided or held in favour of the assessee. The assessee is not the author of the assessment order and has no control over what the Assessing Officer wants to state or mention. It is in this context that the Delhi High Court in CIT v. Eicher Ltd. [2007] 294 ITR 310 (Delhi), observed as under (page 315): “In Hari Iron Trading Co. vs. CIT[2003] 263 ITR 437 (P&H), a Division Bench of the Punjab and Haryana High Court observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee’s explanations are rejected and additions/disallowances are made. We agree. Applying the principles laid down by the Full Bench of this court as well as the observations of the Punjab and Haryana High Court, we find that if the entire material had been placed by the assessee before the Assessing Officer at the time when the original assessment was made and the Assessing Officer applied his mind to that material and accepted the view canvassed by the assessee, then merely because he did express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to suffer the consequences of that lapse.” 13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion. (2) Reassessment proceedings will be invalid in case Page 21 of 43 C/SCA/7307/2013 CAV JUDGMENT the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by the principle of “change of opinion”. (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons.” 19. Andra Pradesh High Court in the case of GVK Gautami Power Limited vs. Assistant Commissioner of Income- tax (OSD) and another reported in [2011] 336 ITR 451 (AP) extensively examined various case laws and adduced the principles governing the exercise of jurisdiction to reopen the assessment. Relevant portion of the judgment is reproduced as under:- “(viii) The Assessing Officer has no power to review. He has the power only to reassess. The concept of “change of opinion” must be treated as an in-built test to check abuse of power by the Assessing Officer (Kelvinator of India Ltd. [2010] 320 ITR 561 (SC)). (ix) The Income-tax Officer acquires jurisdiction to reopen assessment under section 147 read with section 148 of the Act only if, on the basis of specific, reliable and relevant information coming to his possession subsequently, he has reason, which he must record, to believe that any part of the assessee’s income has escaped assessment. (x) The words “ has reason to believe” in section 147 are stronger than the words “ is satisfied”(Ganga Saran and Sons P. Ltd. [1981] 130 ITR 1(SC)). Page 22 of 43 C/SCA/7307/2013 CAV JUDGMENT (xv) Every disclosure is not, and cannot be treated to be, a true and full disclosure. A disclosure may be false or true. It may be a full disclosure or it may not. A partial disclosure may very often be misleading. What is required is a full and true disclosure of all material facts necessary for making assessment for that year (Sri Krishna Pvt. Ltd. [1996] 221 ITR 538(SC)). (xvi) The disclosure must not only be true but must be full-” Fully and truly”. A false assertion, or statement, of material fact attracts the jurisdiction of the Income-tax Officer under section 147 (Sri Krishna Pvt. Ltd., [1996] 221 ITR 538 (SC)). (xvii) The expression “material facts” refers only to primary facts which the assessee is duty bound to disclose. There is no duty cast on the assessee to indicate or draw the attention of the Income-tax Officer to the inferences which can be drawn from the primary facts disclosed (Calcutta Discount Co.Ltd. [1961] 41 ITR 191(SC) and Associated Stone Industries (Kotah) Ltd. [1997] 224 ITR 560 (SC). (xviii)What facts are material, and necessary for assessment, will differ from case to case ( Calcutta Discount Co.Ltd. [1961] 41 ITR 191 (SC)). (xix) The duty of disclosing all primary facts, relevant to the decision on the question before the assessing authority, lies on the assessee. It is the assessee’s duty to disclose all primary facts which could have been discovered by the assessing authority from the documents and other evidence disclosed (Calcutta Discount Co.Ltd. [961] 41 ITR 191(SC)). (xx) The assessee’s obligation, to disclose all material facts necessary for his assessment fully and truly, is in the context of the two requirements-called conditions precedent- which must be satisfied before the Income-tax Officer gets jurisdiction to reopen the assessment under section 147/148. This obligation can neither be ignored nor watered down (Sri Krishna Pvt. Ltd. [1996] 221 ITR 538(SC)). (xxi) Finality of proceedings is certainly a consideration but that avails one who has fully and truly disclosed all material facts necessary for his assessment for that year- and not to others (Sri Krishna Pvt. Ltd. [1996] 221 ITR 538 (SC)). Page 23 of 43 C/SCA/7307/2013 CAV JUDGMENT xxx xxx xxx (xxii) All the requirements stipulated by section 147 must be given due and equal weight (Sri Krishna Pvt.Ltd.[1996] 221 ITR 538 (SC)). 20. In the case of VXL India vs. Assistant Commissioner of Income-tax reported in [1995] 215 ITR 295, Division Bench of this Court held as under:- “ The essential requirement for initiating proceedings under section 148 of the Act is that the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Explanation 2 to section 147 of the Act as appended to newly substituted section 147 makes certain provisions where, in certain circumstances, the income is deemed to have escaped assessment giving jurisdiction to the Assessing Officer to act under the said provision. Another requirement which is necessary for assuming jurisdiction is that the Assessing Officer shall record his reasons for issuing notice. This requirement necessarily postulates that before the Assessing Officer is satisfied to act under the aforesaid provisions, he must put in writing as to why in his opinion or why he holds the belief that income has escaped assessment. “Why” for holding such belief must be reflected from the record of reasons made by the Assessing Officer. In a case where the Assessing Officer holds the opinion that because of excessive loss or depreciation allowance the income has escaped assessment, the reasons recorded by the Assessing Officer must disclose by what process of reasoning he holds such belief that excessive loss or depreciation allowance has been computed in the original assessment. Merely saying that excessive loss or depreciation allowance has been computed without disclosing reasons which led the assessing authority to hold such belief, in our opinion, does not confer jurisdiction on the Assessing Officer to take action under sections 147 and 148 of the Act. We are also of the opinion that, howsoever wide the scope of taking action under section 148 of the Act, it does not confer jurisdiction on change of opinion on the interpretation of a particular provision earlier adopted by the assessing authority. For coming to the conclusion whether there has been excessive loss or depreciation allowance or there has been underassessment or assessment at a lower rate or for applying other provisions of Explanation 2, it must be material and it Page 24 of 43 C/SCA/7307/2013 CAV JUDGMENT should have nexus for holding such opinion contrary to what has been expressed earlier. The scope of section 147 of the Act is not for reviewing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having second thoughts about the inferences drawn earlier. If in the light of the aforesaid principles, we read the reasons recorded by the Assessing Officer, it is plain to us that they fall short of the requirement for conferring jurisdiction on the Assessing Officer to act under sections 147 and 148 of the Act.” 21. Delhi High Court in the case of Commissioner of Income-Tax vs. Eicher Ltd reported in [2007] 294 ITR 310(Delhi) observed that the Assessee had taken a term loan from bank and financial institution but was unable to pay interest on these loans. It did not claim any expenditure or any deduction on this count, as a result of negotiation subsequently between assessee bank and financial institution. The outstanding interest of loan was converted into the funded interest term loan. The assessee filed the return of income for assessment year 1993-94 declaring the loans and claiming waiver of funded interest credited to the profit and loss account. After scrutiny assessment, notice was issued under section 148 to tax the waiver of interest allegedly not offered to tax by the assessee. This was objected to by the assessee on the ground that this was change of opinion on the same facts. The Court held:- “ Applying the principles laid down by the Full Bench Page 25 of 43 C/SCA/7307/2013 CAV JUDGMENT of this court as well as the observations of the Punjab and Haryana High Court, we find that if the entire material had been placed by the assessee before the Assessing Officer at the time when the original assessment was made and the Assessing Officer applied his mind to that material and accepted the view canvassed by the assessee, then merely because he did not express this in the assessment order, that by itself would not give him a ground to conclude that income has escaped assessment and, therefore, the assessment needed to be reopened. On the other hand, if the Assessing Officer did not apply his mind and committed a lapse, there is no reason why the assessee should be made to suffer the consequence of that lapse.” 22. In the case of Ketan B. Mehta vs. Assistant Commissioner of Income-Tax reported in [2012] 346 ITR 254 (Guj), the notice of reassessment was issued after the period of 4 years in wake of dissenting opinion of the two learned Members of the Bench. The matter was referred to the third judge. It has been held that with regard to the question of availability of alternative remedy in a previously framed assessment, the Court held that when the reopening notice was without jurisdiction in absence of any allegations of non-disclosure of material facts fully and truly. It was held that the petitions cannot be dismissed merely on the ground of availability of alternative remedy. It is held and observed that through a series of decisions it has been well settled that where there is likelihood of absence of jurisdiction in the authority, alternative remedy, even if available would not be a bar to entertain a writ petition. In case of Garden Finance Page 26 of 43 C/SCA/7307/2013 CAV JUDGMENT vs. ACIT reported in 268 ITR 48, it has been so held by the Court examining central question whether the notice for reopening the assessment was invalid. Discussing various case laws, it held that the assessee did not fail in his duty to make the disclosure about the investment as well as interest paid on borrowings for making such investment as was required under the law. 23. It was reopening of the assessment beyond the period of 4 years from the end of the relevant assessment year and the Court held thus:- “114. Having, thus, heard learned counsel for the parties and having perused the material on record as well as the opinion of the two learned Members of the Bench, who, previously heard the special civil applications, I am of the opinion that the question of availability of alternative remedy need not detain us for long. The present is the case, wherein the assessee had approached this Court challenging the very validity of the notices for reopening of the assessments, which were previously framed after scrutiny. The case of the assessee was that reopening notices were without jurisdiction. On the admitted facts, the assessee contended before this Court that the Assessing Officer could not have reopened the assessment beyond a period of four years from the end of the relevant assessment years. 115. Such petitions were admitted and were pending before this court for a number of years. I am of the opinion that such petitions cannot be dismissed merely on the ground of availability of alternative remedy. Firstly, the petitioner relied on facts and material already on record, which were undisputed or indisputable. His contention that there was true and full disclosure of material facts on his part, needs to be examined in these petitions. Whether the assessee satisfied such requirements, and, therefore, can validly contend that the reopening of assessments beyond the period of four years was invalid, is to be Page 27 of 43 C/SCA/7307/2013 CAV JUDGMENT judged on the basis of material on record. If the assessee had discharged his primary duty, obviously, the Assessing Officer would, thereafter, have no jurisdiction to reopen the assessment beyond a period of four years. *** *** *** *** *** *** 128. To my mind, considering the facts emerging from the record, it cannot be stated that the assessee failed in his duty. His duty was to make the disclosure about the investments as well as the interest paid for borrowings for making such investments. On the basis of such material, if the Assessing Officer was of the opinion that any further inquiry was necessary to examine the nature of such investments and to ascertain whether the investment was made for the sole purpose of earning dividend income or was predominantly or exclusively for the purpose of acquiring controlling shares of the Mastek Limited, it was open to the Assessing Officer to make further inquires. To my mind, nothing is pointed out to suggest that the assessee owed such a duty to disclose further facts in this regard. 129. Whether the certain expenditure is made wholly and exclusively for the purpose of earning dividend income is to be judged in the light of provisions of Section-57(iii) of the Act. It may be that by virtue of the decision of the Division Bench in the case of Virmati(supra), it was arguable whether the assessee had made such investments for the sole and exclusive purpose of earning income or whether with the dominant or sole purpose of acquiring controlling shares of the Company. However, this is not in the same as to suggest that beyond disclosing the investments made, the borrowings for making such investment, the interest paid and the dividend earned, the assessee owed no further duty to make disclosures with respect to various aspects that the Assessing Officer wanted to examine after reopening the assessment. 130. As already noted, in both the assessments, the assessee had disclosed primary facts in the returns filed. Further, the Assessing Officer had raised certain queries about borrowings and the interest paid thereon and the dividend earned. The assessee, on both the occasions, supplied necessary material through letters and documents produced on record. Thus, during the scrutiny Page 28 of 43 C/SCA/7307/2013 CAV JUDGMENT assessment proceedings, the Assessing Officer was actually aware about the claim of the assessee under Section-57(iii) of the Act. If, on the basis of such disclosures, the Assessing Officer was curious to verify the percentage shift in the holding of the assessee, in the company in question, it was well-within his powers to ask for such material during the assessment. However, primary onus to provide such details even if not disclosed cannot be shifted on the assessee.” 24. In the case of Universal Subscription Agency P.Ltd. vs. Joint Commissioner of Income-tax reported in [2007] 293 ITR 244 (All), the Allahabad High Court held that the assessee had received commission from foreign enterprise for service rendered outside India. The Assessing Officer found that the assessee had specialized in scientific and technical knowledge, marketing and had developed several databases concerning various foreign research project activities, periodicals, corporate publications etc. for the use of its foreign clients and had received commission in convertible foreign exchange. The claim was accepted and the deduction under section 80(o) of the Act was allowed. On issuance of the notice under section 148 beyond the period of 4 years, it was held that only on the basis of mere change of opinion, such notice was issued, which was wholly illegal and without jurisdiction. 25. Bombay High Court in the case of Parikh Petrol Page 29 of 43 C/SCA/7307/2013 CAV JUDGMENT Chemical Agencies P.Ltd. vs. Assistant Commissioner of Income-tax and others reported in [2004] 266 ITR 196(Bom.) was dealing with the notice under section 148 beyond the period of 4 years where the Assessing Officer, at the time of original assessment, disallowed the deduction under section 80(o) only the ground that the amount received in Assessment Year 1994-95 was for services rendered in Financial Year 1990-91. The Commissioner of Appeals concluded that the amount for services rendered became payable when the credit note was issued by the Russian Agencies in Moscow and it accordingly directed the Assessing Officer to allow deduction under section 80(o) only if the amount was brought to India within six months from the issuance of the credit note by Russian Government. On verification, such claim of the assessee was allowed. The reopening of the assessment to deny deduction under section 80(o) was held not permissible in absence of any material on record to show that there was any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Notice was held not valid and was quashed. 26. In the case of Sita World Travels (India) Ltd. vs. Page 30 of 43 C/SCA/7307/2013 CAV JUDGMENT Commissioner of Income-Tax and another reported in [2005] 274 ITR 186, the Delhi High Court was dealing with notice under section 148 beyond the period of 4 years. The tour operator had claimed deduction under section 80HHD of the Act. On scrutiny assessment, the same was allowed after expiry of more than 4 years when the notice was issued under section 148 of the Act stating that the Assessing Officer had reason to believe that the petitioner’s income for the respective years had escaped assessment within the meaning of section 147. The assessment of jurisdiction was objected to on the ground that there was a full and complete disclosure of computation of deduction under section 80HHD of the Act and that the deduction was allowed on the basis of details provided in the profit and loss account. The Division Bench directed the authorities to dispose of the objections raised by the petitioner with regard to the jurisdiction of reopening. However, instead of that the authorities passed a regular assessment order and the same also was challenged before the Court. On the ground that the same was change of opinion, merely the Court allowed the petition holding as under:- “.... from the original assessment orders as well as the order made by the appellate authority, it was clear that the Assessing Officer was well aware of the primary facts, Page 31 of 43 C/SCA/7307/2013 CAV JUDGMENT namely, the claim made by the assessee, the circumstances, under which the claim was made and the provisions of law which could be applied while granting the benefits. A decision may be right or wrong but that was none of the concern of the subsequent officer. If the primary facts were not available or there was concealment or there was no application of mind at all, then a case of reopening the assessment could be made out. But when all the facts were placed before the Assessing Officer and the Assessing Officer consciously considered the facts and arrived at a decision, then it could not be reopened merely because subsequently he changes his opinion or some other officer takes a different view. Hence, this was a case of wrongful assumption of jurisdiction and as such the notices, the speaking orders and the assessment orders made in pursuance of the notices were quashed.” 27. From the ratio that can be culled out from all these decisions, it is amply clear that the Assessing Officer, who is authorized to issue notice under section 148 of the Act for reassessment, on his having a reason to believe that income chargeable to tax had escaped assessment for any assessment year, can assess or reassess such income and also any such other income chargeable to tax, which has escaped the assessment. However, no such action is permissible after lapse of 4 years from the end of the relevant assessment year unless income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of such assessment. The onus is on the assessee to reveal the primary facts and to draw the inferential facts would be the responsibility of the Assessing Officer. Once having revealed Page 32 of 43 C/SCA/7307/2013 CAV JUDGMENT from the record that the assessee disclosed full and complete facts and on scrutiny, at the time of original assessment all these details are examined, no change of opinion is permissible merely because there was some error earlier on the part of the Assessing Officer himself or because he chose not to opine on the issue or even when he changes his mind and interprets the material or law otherwise than what was done by him. 28. In the instant case, in background of this legal position, the facts shall have to be examined closely. 29. It is to be noted hereinabove that the notice issued under section 148 for reopening of case of the petitioner for Assessment Year 2005-06 dated 26.12.2012 directed the petitioner to produce accounts and documents as also the information in respect of the concerned assessment year. The reasons for reopening under section 147 does not say anywhere that on account of any failure on the part of the assessee, excessive depreciation had been allowed. The assessee had claimed and was allowed the depreciation at the rate of 25% on construction of offshore platform. On plant and machinery, the depreciation at the rate of 25% was admissible. However, according to section 32 of the Act read Page 33 of 43 C/SCA/7307/2013 CAV JUDGMENT with Rule 5 of the Rules, as mentioned in the reasons for reopening, the depreciation of plant and machinery was admissible at the rate of 15% whereas depreciation of building was at the rate of 10% from Assessment Year 2006- 07. Offshore plant, according to the Assessing Officer, is not Oil Rig. It can be termed as oil platform or offshore platform and it consists of dwelling units, production unit and drilling units and, therefore, it is not even a plant and machinery in itself. The plant and machineries are installed on such offshore platform, therefore, they can be correctly classified under block of “assets”. Therefore, depreciation correctly allowable to offshore platform was 10% applicable to the buildings. 30. As can be noted from the objections raised by the assessee that the original assessment for the captioned year i.e. 2005-06 was completed under section 143 (3) after the scrutiny and the notice was issued on 30.3.2012 which is after expiry of 4 years from the end of relevant assessment year i.e. 31.3.2006 and, therefore, case of the petitioner is that its case is not covered under first proviso to section 147 of the Act. The first proviso to section 147 states that the assessment can be reopened under section 147 after the expiry of 4 years only Page 34 of 43 C/SCA/7307/2013 CAV JUDGMENT if : (I) Assessee failed to make a return under section 139 or in response to a notice issued under section 142(1) or section 148 or: (II) he failed to disclose fully and truly all material facts necessary for the assessment. 31. It is also brought to the notice of the Assessing Oficer that under section 32, the primary information on depreciation was submitted with return of income along with Tax Audit Report. The total amount of depreciation claimed on off-shore platform was to the tune of Rs.157,867,098/-. A notice was also issued on 8.1.2007 and full details of depreciation claimed along with the items of purchase and those put to use also was sought for. Company also had submitted the reply on 6.7.2007 and had mentioned that as per Annexure-3 and Annexure-4, the claim towards the depreciation had been made by the company. Annexure-IV had indicated field wise depreciation where the particulars of all assets like, building, block, addition/deletion made during the year, total depreciation claimed and closing written down value (WDV) were tabulated. As could be noted from the information called for under Page 35 of 43 C/SCA/7307/2013 CAV JUDGMENT section 142(1) on 8.1.2007 the Point No.5 reads thus:- “5. The full details of depreciation claimed by you. The description of the items purchased and or put to use on the date may be clarified with supporting evidences. Also details of any assets sold or discarded may be furnished.” 32. Out of the total claim of depreciation for the year under question of Rs.56,77,66,844/- (Rs. 56.77 crores rounded off), the depreciation for offshore platform is 50% of the total amount, which is Rs.25,97,14,874/- (Rs. 25.97 crores rounded off). 33. In the return of income in Form-3CD under Rule 6G(2) of the Rules, the statement of particulars to be furnished under section 44AB, point no. 14 required the particulars of depreciation allowable in respect of each asset or block assets to be furnished. Enclosure-II of clause 14 under various heads of fixed assets, the depreciation had been requested, which included plant and machinery, offshore platform, underground pipelines, buildings, motor vehicles etc. Under the Head of “Plant and Machinery”, at Enclosure-2(A), all details are furnished of offshore platform, Hazira. The date of putting the same to use is mentioned and the additions made during the year shown is to the tune Rs.103,88,59,497/-. While replying to the notice under section 142(1) the assessee had answered thus:- “5. Details of depreciation claimed by the Company, description of items purchased and sold or discarded along with the supporting evidence for items purchased and the date on which put to use. Page 36 of 43 C/SCA/7307/2013 CAV JUDGMENT Details of the depreciation claimed by the Company are enclosed as Annexure 3. The Company has neither sold nor discarded any depreciable asset during the year. The summary of additions made to assets is enclosed as Annexure 4. The supporting documents being bulky and voluminous, we shall be glad to produce the same for your verification, if so required, during the course of the assessment proceedings.” 34. The assessment order thereafter was passed on 30.12.2008 whereunder the alternative claim for depreciation, under the head of “Depreciation on 36” 14 Kms, Hazira Pipeline”, the Assessing Officer had made the deduction and disallowed the depreciation amount to Rs.90,32,567/- and the same was added to the income of the assessee and penalty proceedings under section 271(1)(c) were initiated for furnishing inaccurate particulars of income. 35. On detailed discussion in final computation, the Assessing Officer allowed the depreciation to the tune of Rs.9,15,41,627/-. Thus, it can be made out that not only the complete details for the depreciation claimed by the assessee had been made but subsequently under section 142(1), the information had been called for, for the description of the items purchased and put to the use with supporting evidence. Page 37 of 43 C/SCA/7307/2013 CAV JUDGMENT 36. The petitioner had given details of depreciation claimed by the company as per Annexure-3. It had specified that there is no sale nor any act of discard of any depreciable assets during the year under question and additions were made as per Annexure-4. It is true that the assessee had stated that supporting documents are bulky and voluminous and it showed willingness to produce the same for verification at the time of assessment proceedings. 37. In the assessment order passed on 30.12.2008, nowhere there is any reference of non-compliance of the direction of the Assessing Officer. It also does not mention anywhere the absence of production of record ensured to be done at the time of assessment proceedings. Those documents either were produced for perusal and scrutiny or the Assessing Officer, who deemed it fit not to call for them, at the time of assessment, though specifically offered by the assessee. It dealt with the issue of depreciation at length. Disallowed the amount of Rs.90,32,567/- and also allowed the depreciation to the tune of Rs.9,15,41,627/- at the time of final assessment. In such circumstances, in absence of any specific averment in the reasons recorded for reopening of the assessment, that there was any failure on the part of the assessee to disclose fully and truly all material facts, it would not be possible for Page 38 of 43 C/SCA/7307/2013 CAV JUDGMENT the Court to allow the notice under section 148 to be sustained,which is wholly without any backing of law. Contentions of the respondent that no opinion was formed during the assessment proceedings is not finding favour of the Court. 38. The question that still deserves attention however is as to whether description “offshore platform” needed further clarification and other and further substantive details from the assessee or the primary details provided were sufficient to hold full and final disclosures. Were these details so individual specific and within special knowledge of petitioner that without providing those details by the petitioner (assessee) and without its specific revelations, it was impossible for the Assessing Officer to gather/comprehend its true nature and meaning and thereby he was unable to draw inferential facts/conclusions. 39. To our mind, structure of such kinds are not so uncommon that its true picture/ meaning cannot be grasped, without furnishing more details than already provided by the petitioner. Again, assuming without accepting that onus was entirely on the assessee to bifurcate all the three structures (i) The module large pre-built units meant for Page 39 of 43 C/SCA/7307/2013 CAV JUDGMENT accommodation,production and drilling zones (ii) The Jacket- foundation on which platform sits (iii) Derrick -the highest area of platform for drilling, it can be noticed that when specific query was already raised in relation to this in scrutiny assessment and answered by the petitioner as detailed hereinabove, documents were also offered while replying to such query, if they were not found necessary to be called while carrying out original assessment despite due application of mind to the very issue, this case surely does not lend jurisdiction to the Assessing Officer to reopen the assessment beyond the period of four years from the end of the assessment year under question. 40. It is also inevitable to refer to the case of this Court rendered in the case of Aayojan Developers vs. Income-tax Officer reported in [2001] 10 taxmann.com 226 (Guj), where no foundation was laid in reasons for reopening assessment that there was failure on part of assessee to disclose fully and truly all material facts, brought on record and by filing of affidavit-in-reply for the first time such escapement was indicated and the Court held that the notice of reopening beyond four years must fail. 41. Yet another decision of this Court rendered in Dishman Page 40 of 43 C/SCA/7307/2013 CAV JUDGMENT Pharmaceutical & Chemical Ltd. vs. Deputy Commissioner of Income-tax (OSD) (No.2) reported in [2013] 33 taxmann.com 638(Gujarat), it is held and observed that no suggestion in the reasons regarding any attribution on the part of the assessee in fully and truly not disclosing the material facts, indicated that all facts necessary for framing the assessment with respect to the issue under question was very much before the Assessing Officer when he previously took the return of the assessee for scrutiny assessment. The detailed exercise was undertaken by the Assessing Officer with respect to the claim of the assessee under question before coming to the final conclusion, it was therefore, held that notice of reopening was invalid and required to be quashed. 42. At the cost of reiteration, it is essential to note that offshore platform as per the reasons recorded consisted of module, jacket and derrick. If there was any clarification that was further needed after the description of the items purchased and put to use, was particularly replied to by the assessee on 6th July, 2007, it was open for the Assessing Officer to further raise the queries and call for more documents. In the event of the Assessing Officer not being satisfied with the reply, he could have denied the depreciation Page 41 of 43 C/SCA/7307/2013 CAV JUDGMENT as a claim made in the particular year by the assessee which was almost 50% of the total amount of claim of deprecation which ran into 56.77 crores. The amount was not so meager so as to escape the notice of the Assessing Officer. Thus, The Court is also not in agreement with the submissions made by the Revenue that this being a technical subject, all details of offshore platform needed to be provided by the assessee and the details being a special knowledge of the assessee company dealing with the subject concerned, non-furnishing of those particulars should amount to not having revealed the primary facts necessary to be revealed by the assessee. 43. In any case this being the reopening beyond the period of 4 years in absence of any material to indicate the failure on the part of the assessee to disclose fully and truly all material facts, when the assessee had discharged onus of having revealed the primary facts, on jurisdictional ground itself, notice must fail. Accordingly petition succeeds with all consequential relief. (M.R.SHAH, J.) Page 42 of 43 C/SCA/7307/2013 CAV JUDGMENT (MS SONIA GOKANI, J.) SUDHIR Page 43 of 43 "