Case Law Details
Purulia Central Cooperative Bank Limited Vs ACIT (ITAT Kolkata)
Conclusion: In present facts of the case, the Hon’ble Tribunal set aside Notice under Section 148 by making observation that the ld. Assessing Officer failed to pinpoint the failure at the end of the assessee to disclose all material facts fully and truly, which led the escapement of income from taxation.
Facts: In present facts of the case, the assesese has filed its return of income in compliance to a notice issued under section 142(1) dated 27.03.2007. Subsequently in order to scrutinize the return, a notice under section 143(2) was issued and served upon the assessee. After verification of the record, ld. AO has passed the assessment order under section 143(3) on 31.12.2008 at a loss of Rs.1,73,54,450/-. On account of some internal audit objection, the assessment of the assessee has been reopened by issuance of a notice under section 148 on 26.03.2012.
The Hon’ble Tribunal after taking submissions from both sides observed that a perusal under section 147 would reveal that if the ld. AO 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 re-assess such income. Thus the ld. Assessing Officer must have information in his possession, which has a direct nexus between the formation of belief demonstrating the escapement of income from taxation. The first proviso appended to this section puts an embargo upon the powers of the ld. Assessing Officer. The interdiction provided in this proviso would contemplate that if an assessment order under section 143(3) or under section 147 has been made for the relevant assessment year, then no action shall be taken under this section after 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 return under section 139 or in response to a notice under section 142(1) or 148 or to disclose fully and truly all material facts necessary for assessment for that assessment year. The ld. Assessing Officer sought to reopen this assessment order after five years, but nowhere in the reasons the ld. Assessing Officer has alleged, which material was not truly and fully declared by the assessee, and such non-disclosure has led to escapement of income.
Further, it was observed that the ld. Counsel for the assessee has demonstrated that two-fold of reasoning assigned by ld. Assessing Officer, namely that assessee has claimed carry forward of losses, i.e. the first-fold of reasoning and the second-fold of reasoning is that a provision for NPA has been made which is not allowable in case loss is concern, the first one is factually incorrect and in the second observation, ld. Assessing Officer has not visualize the provision under section 36(viia) of the Act. He has not pinpointed, which provision has been made illegally. The assessee being a non-scheduled Bank is entitled to make provision. If there were some error that has not been demonstrated in the reason. Therefore, ld. Assessing Officer failed to pinpoint the failure at the end of the assessee to disclose all material facts fully and truly, which led the escapement of income from taxation. Further, it was observed that under the original assessment, loss was determined at Rs.1,73,54,450/- In the re-assessment order, this loss has been reduced to Rs.1,05,47,793/-. The only fact is that loss has been reduced. The loss has not claimed as a carry forward. There is no impact on taxation. It is just an academic exercise undertaken by the ld. Assessing Officer. Had the ld. Assessing Officer verified subsequent return, then, he would have dropped the proceedings.
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