Madhya Pradesh H.C : the CIT(A) as well as the Tribunal committed an error in interfering in the reopening of the assessments under s. 147/148 of the Act and in quashing the consequent assessment orders

High Court Of Madhya Pradesh : Jabalpur Bench

CIT vs. Steel Tubes Of India Ltd.

Section 147, proviso, 148

Asst. Year 1997-98, 1998-99

Viney Mittal & Prak ash Shrivastava, JJ.

IT Appeal No. 95 of 2009

11th January, 2010

Counsel appeared :

R.L Jain with Miss. Veena Mandlik, for the Appellant

ORDER

Parkash Shrivastava, J. :

This order will govern the disposal of IT Appeal No. 95 of 2009 and IT Appeal No. 96 of 2009 which have been filed against the common order dt. 19th June, 2009 passed by the Tribunal, Indore Bench, Indore in ITA Nos. 518 and 519/Ind/2007, asst. yrs. 1997-98 and 1998-99. The respondent is a company engaged in manufacturing of steel tubes and strips. It had taken certain plant and machinery on lease from M/s Tata Finance Ltd. for which monthly rent of Rs. 3,62,866 was paid for a period of 5 years. It had submitted return of income for relevant assessment year. The respondent subsequently found some technical problems in transactions and to avoid litigation as also to purchase peace, the principal amount was offered back. The respondent submitted revised return on 15th Jan., 1999 for assessment year in question to offer the principal amount of Rs. 29,17,657 out of total lease rent paid to M/s Tata Finance Ltd. Rs. 43,54,392. The respondent submitted that since it had paid interest of Rs. 14,36,735 which was included in lease rent paid, the same had been excluded iron lease rent and only the balance part was offered back as in any case the transaction concerned was a finance transaction if not a lease transaction. For the asst. yr. 1997-98 the assessment under s. 153(3) of the IT Act, 1961 (“Act” hereafter) was completed on 31st March, 2000 and for the asst. yr. 1998-99 the assessment under s. 153(3) of the Act was completed on 30th March, 2001. The notices under s. 148 of the Act were issued for the asst. yrs. 1997-98 and 1998-99 on 17th March, 2004 and 4th March, 2005 respectively. The respondent objected to the issuance of notices under s. 148 of the Act on the ground that the same were issued beyond the period prescribed under s. 147 of the Act. The AO rejected the objection and reopened the assessment under s. 147/148 of the Act. The respondent raised the issue of reopening of assessment beyond 4 years before the CIT(A)-I, Indore and the CIT by order dt. 22nd June, 2007 held that the re-opening of assessment under s. 147 of the Act for the assessment year in question was not sustainable and accordingly the CIT quashed both the assessment orders. The Tribunal, Indore by the order under appeals has affirmed the order of the CIT and dismissed the appeals of the Revenue. Aggrieved with the same, the Revenue has filed the present appeals.

Learned counsel appealing for the appellant submitted that the CIT(A) as well as the Tribunal committed an error in interfering in the reopening of the assessments under s. 147/148 of the Act and in quashing the consequent assessment orders. We have heard learned counsel for the appellant and perused the records. Under s. 147 of the Act the AO can reopen assessment if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. In terms of proviso to s. 147 of the Act, action under s. 147 of the Act cannot be taken after the expiry of 4 years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to make a return under s. 339 or in response to a notice under s. 142(1) or s. 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. In the present case undisputedly the assessment for the asst. yrs. 1997-98 and 1998-99 were completed under s. 143(3) of the Act on 31st March, 2000 and 30th March, 2001 respectively whereas the notices under s. 148 of the Act for these assessment years were issued on 17th May, 2004 and 4th March, 2005 respectively. Thus, the notices under s. 148 of the Act were issued after the expiry of 4 years from the end of the relevant assessment years.

Learned counsel for the appellant has submitted that in the case of failure by the assessee to disclose all material facts necessary for his assessment, the assessment can be re-opened after the expiry of 4 years. In the present case the CIT(A) as well as the Tribunal or he examination of the matter has found that it is not the case where the Respondent assessee had failed to disclose fully and truly all material facts necessary for his assessment. Before the final assessment, the respondent had submitted revised returns which were duty considered and discussed by the AO while passing the order of assessment. In the revised return, the assessee had disclosed the entire facts, therefore, the CIT(A) as well as the Tribunal have rightly reached to the conclusion that it is not a case where the assessee failed to disclose fully and truly all material facts necessary for his assessment. The Tribunal has committed no error in reaching to the conclusion that in the facts of the case, in view of the proviso to s. 147 of the Act, the notice issued under s. 148 of the Act after lapse of 4 years was beyond the jurisdiction of the AO. Learned counsel for the appellant has failed to point out any error in the order of the Tribunal. Thus, we find that the appeals do not involve any substantial question of law requiring consideration by this Court under s. 260A of the Act. The appeals are accordingly dismissed in limine. A copy of this order be placed in the record of connected appeal, an particularized above, for ready reference.

[Citation : 326 ITR 46]

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