B. Arunkumar Capital & Credit Services Pvt.ltd v. Dy. Commissioner Of Income-Tax Cir 3(1

KJ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETTION NO.2323 OF 2010 B. Arunkumar Capital & Credit Services Pvt.Ltd.,)..PetitionersVs. Dy. Commissioner of Income-tax Cir 3(1) )..Respondents---- Mr. P.J. Pardiwala Sr.Counsel along with P.R.Toprani for the petitioners. Mr.Vimal Gupta for the respondents. ---- CORAM : J. P .DEVADHAR & MRS.MRIDULA BHATKAR,JJ DATE : 24/1/2011. PC 1Heard. 2Rule. Rule returnable forthwith. By consent, petition is taken up for final hearing. 3The petitioners have challenged the Notice issued under Section 148 of the Income Tax Act 1961 dated 22/3/2010 whereby the assessment for A.Y. 2003-2004 is sought to be re-opened. 4The reasons recorded for re-opening the assessment reads thus :- “ In this case, vide assessment order dtd.28.02.2006, the total income was assessed at Rs.88,85,534/- u/s. 115 JB of the I.T.Act. After perusal of the records, it is found that the assessee company had debited the provision for doubtful loans and advances of Rs.2,50,43,760/- and provision for investment of Rs.2,08,390/-. While computing the book profit u/s.115JB, the above provisions were not added back. As per retrospective amendment to the Sec.115 JB through Finance (No.2) Act, 2009, provision for diminution in value of any asset is to be added back while computing the book profit u/s. 115 JB of the I.T. Act. In view of the same, the provision for doubtful loans & advances of Rs.2,50,43,760/- and provision of investment of Rs.2,08,390/- should be added back to the net profit while computing the book profit u/s. 115 JB of the I.T.Act. Therefore, the case is required to be reopened u/s. 147 of the I.T. Act.” 5From the aforesaid reasons recorded by the Assessing Officer, it is evident that the assessment is sought to be re-opened solely on the ground that Section 115 JB of the Act has been retrospectively amended by Finance (No.2) Act 2009 as a result whereof amounts set aside as provision for diminution in value of any asset is required to be added back while computing the book profit u/s. 115 JB of the I.T.Act 1961. 6Since the assessment in the present case is sought to be re-opened beyond four years from the end of the relevant A.Y., the question that is to be considered is, whether there was any failure on the part of the assessee to disclose fully and truly all material facts. As per the proviso to Section 147 of the Income Tax 1961, the assessment beyond the period of four years can be re-opened only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. It cannot be said that the retrospective amendment to Section 115 JB of the Act, constitutes failure on the part of the assessee to disclose fully and truly all material facts. If there is no failure to disclose fully and truly all material facts, then, concluded assessment orders passed under Section 143(3) of the Act cannot be reopened beyond the period of four years from the end of the relevant assessment year. 7In this view of the matter, in the present case, re-opening of assessment beyond four years from the end of the relevant assessment year cannot be sustained. Accordingly rule is made assessment year cannot be sustained. Accordingly rule is made absolute by quashing the Notice dated 22/3/2010 issued u/s. 148 of the Income Tax Act. No order as to costs. (MRS.MRIDULA BHATKAR,J) (J.P.DEVADHAR,J)