CIT V. LEAR AUTOMOTIVE INDIA PVT LTD

ITA/413/2012

AI Insights

The case revolves around the Revenue's appeal against the Tribunal's decision which quashed the reassessment order for the assessment year 2004-2005. The original assessment was completed on December 28, 2006, and was later reopened by the Assessing Officer (AO) on December 8, 2009, citing underassessment of income due to certain accounting entries. The Tribunal found that the AO had reopened the assessment based on facts already available during the original assessment, and there was no failure on the part of the assessee to disclose material facts. The High Court agreed with the Tribunal's findings and dismissed the Revenue's appeal.

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 732356 (HC-DELHI)
• Appeal Type: Others
• Pronouncement Date: 27-09-2012
• Assessment Year: misc
• Other Referred Cases: Rakesh Aggarwal Vs. Assistant CIT (1997), 225 ITR, 496
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Respondent
• Court: HIGH COURT
• Assessee Lawyers: SANJEEV SABHARWAL
• Keywords: Re-opening of assessment; Underassessment of income; Provisions not allowable; Full and true particulars disclosed
• Section: 147; 148; 143(3)

Judgement Text

"rl I $-s * IN THE HIGH -r- rTA 41312012 CIT COURT OF DELHI AT NEW DELHI ..... Appellant Through Mr. Sanjeev Sabharwal, Advocate VCTSUS I.EAI{ AI]TOMOTIVE INDIA PVl' LTD Respondent 'I-hrough none CORAM: IION'BLtr] MR. JUSTICE S. RAVINDRA BHAT IION'BI,E MR. JUSTICE R.V.EASWAR OITDT]R % 27.09.2012 'l'he Revenue claims to be aggrieved by an order of 1hc I'fA'f passed in l'I'A No. 3627 (Del)12011 dated 22nd Septernber,20ll. The substarrtial question of law urged is whether thc 'lribunal, while affirrning the order of the CIT (Appeals), fell into error in holding that there was no justification for re-opening the asscssment under Scction 147 of tlrc Act. 'l'he facts necessary for this case are that l'or assessment year i.e, for thc year 2004-2005, the AO framed the assessment under Section 143 (3) on 28tl' Dccember, 2006, deterrninirrg the total incorle at Rs.6,44,02,160/- after making certain disallorvances. On 8tl' Decernber, 2009, the AO recorded reasons why under Sectiorr 147,the assessment has to be re-opened. The re-opening was proposed in respect of the extended period under the proviso to Section 147. 'I'hc assessee responded to the Signing Date:07.09.2024 17:11:16 Certify that the digital and physical file have been compared and the digital data is as per the physical file and no page is missing. Signature Not Verified J I -.] notice on 29tr' December, 2009. Reasons I'or rc-opening the asscsslllent, to the extent rvhich are relevant are re-produced below :- \"On examination of records, it is revealed that :- As per P&L account, the income u'as reduced by Rs.|9779999/- on occount of antounts collected tovards tools trcntsferrecl to fixed assets. Hovever, the fixed a'ssets chart does not shov anlt sush transfer of tools. I'he mistuke resulted in tmderassessment of income annunting to Rs.19770000/- irtvolving tax effect of Rs.9433009/-. 'Ihe assessee had debited other provisions atnounting to Rs.14824000/- in tlte P&L account whiclt is not allowable under the provisions of the Income Tax Act, 961. I:[ence needs to be disctlloved and added back to the income of the assessee. I'he mistuke re,sulted in rmcler asse't:;ment of inconrc cuttounting to Rt.I482,l000/- involving the tar effact of Rs.7073086/-. In vieu, of the above, I have reasons to believe that income of k.34594000/- chargeable to tax has escaped ossessnrcnl v,ithin the nrcaning of .section 147/148.\" 'fhe AO rejected the contentions and held that the sum of Rs.l ,48,24,0001- had to be brought to tax. 'fhe assessee's appeal was accepted. 'I'he Revenue claiming to be aggrieved approached the 'l'ribunal which discussed various judgrnerrts of several Fligh Corrrt's including Rakesh Aggarwal Vs. Assistant CIT (1997),225 ITR, 496 and several other judgrnents and held that duringthe original assesstnent full and true pafticttlars had been disclosed by the assessee. The'Il'iburral's conclusion is as follows :- \"ht the instant cose, as is apparentfront thefacts namated in the irnpttgned orders, the AO reopened the assessntent contpleted on 28.12.2006 nrcrely on the basis of the facts already available before him at the time of original assessment proceedings. Not even a whisper is evident fi\"otn the reasons recordecl or the fucts narrated in the intpugned orders as to whether or not there was arytfailtn'e on the part of the assessee in disclosingfttlly and tnly ull ntaterial facts necessaty for his assessment. We are of the opinion that any xtclt failure as is envisaged in the proviso to section 147 of the Act is a ntatter offact alone ond there can be ? no tleented frtilure. In these circutttstances, in the absence of any faihtre on the pm\"t of the a,ssessee to t{iscl.ose fully ant{ nuly all material facls necesscuy for its assessntent for the assessment )tear consideration, the notice under section l4B of the Act hcwing been issued after the expity of the period of fozn' years ft'om the end of the relevant asses'ement year, the vety initiation of proceeclings under section 147 of the Act stands vitiated and as :such cannot be sustained, the ingredients of section 147 hcning not been fulfilled. In view of the foregoing, especially in the light of the consistent vietv taken in the aforesaid clecision of the I:Ion'bl,e jurisdictional High Com\"t and other courts, con,sidering the fact and in the circumstances of the case, u)e are of the oltinion that there is nothing to suggest that ull the pritnary facts were not disclosecl by the assessee at ths. time of original as,sessment nor ony failure on the part of the assessee to disclose ftily and tnily aII the material facts has been ascribed in the cit\"cumstantces naruated before us. It cannot be saicl that the as,te.ssee utppressed any materialfacts. It is well settled that if ct notice tmder section l4B of the Act has been issued without the jru\"isdictional foundation under sectiott I'17 of the Act being atailable to the AO, the notice and the subseqttent proceeclings will be without jurisdiction and thus, liable to be struck dovn- ht view thereof, ve htwe no hesitation in upholding the findings of the LtI. Cn'@) in quashing the reassessment order. Consequently, g'ound nos. 2 and 2.1 in the appeal are dismissed. As a corollary, the g\"otmd no.3 in the ctppeal of the reverurc does not stnttive for om' adjudication ctnd is, therefore, treated as infi'uctttous. \" Having regard to the above and the basic finding that ,t't. urr.rr.e had not defaulted or concealed any fact, and that consequently, the extended period of limitatiorr could not be rcsorted to, this Court has no reason to interfere with the irnpugned order. No substantial questiorr of law arises. The appeal is thcrefore disrnissed. S. RAVINDRA BITAT, J lr I W,..-t, R.V.EASWAR, J SEPTEMBrcrRZ7.2OI2 I t "