Pr. Commissioner Of Income Tax-10 v. Jord Engineers (India) Ltd

Digitally signedby URMILAURMILAPRAMODPRAMODINGALEDate:INGALE2023.07.0610:38:46+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 431 OF 2018 Pr. Commissioner of Income Tax-10 ….. Appellant Vs.Jord Engineers (India) Ltd. ….. Respondent Mr. Akhileshwar Sharma a/w Ms. Shilpa Goel, for Appellant.None for Respondent. CORAM:K.R.SHRIRAM, J &FIRDOSH P. POONIWALLA, J. DATED :JUNE 28, 2023 P.C. 1.The following three questions of law are proposed : a) Whether on the facts and in thecircumstances of the case and in Law, theHon’ble ITAT erred in holding that thereopening of the assessment is bad in law forthe reason that the Assessing Officer has notstated that there was failure on the part of theassessee to disclose fully and truly all thematerial facts, without going into the meritsof reasons recorded for reopening theassessment ? b) Whether on the facts and in thecircumstances of the case and in Law, is it theprimary requirement of mentioning failure onthe part of the assessee to disclose fully andtruly all the material facts in the reasons to berecorded by the Assessing Officer, when thebasic requirement of forming reason tobelieve that income has escaped assessmenthas been fulfilled? c) Whether on the facts and in thecircumstances of the case and in law, merelythe absence of words namely ‘failure on thepart of the assessee to disclose fully and trulyall the material facts’ will render the reasonsfor reopening invalid?” 2.Admittedly, the notice issued under Section 148 of the Income TaxAct, 1961 (‘the Act’) to reopen the assessment of respondent was dated19/03/2010. This related to the Assessment Year 2003-04. Therefore,notice was issued after the expiry of 4 years from the end of the relevantassessment year. Admittedly, the assessment order under Section 143 ofthe Act had been passed on 24/03/2006. Therefore, proviso to Section147 of the Act would apply inasmuch as reopening is permissible onlywhen there was failure to truly and fully disclose all material facts byassessee. The reason to believe tax has escaped assessment is reproducedin paragraph 2 of the assessment order that was passed on 12/11/2010under Section 144 of the Act. The reason also clearly indicates that therewas no failure on the part of respondent to truly and fully disclose allmaterial facts because the Assessing Officer (‘AO’) in his reason to believehas also relied upon the documents filed by respondent before the originalassessment order was passed. The AO states “on perusal of P &L A/c(Schedule X), it was revealed that semi finished goods opening stock wasvalued at Rs. 3126.53 lakhs and closing stock was valued at Rs. 354.97lakhs and Rs. 2871.56 lakhs being decrease in stock was debited to cost of material. From the quantitative details, it was seen that there is no changein opening stock and closing stock which consist 4 no. of filter and 1 no. ofcane harvester.” He further states “due to change in method of valuationof inventory the loss to the extent of Rs. 2871.56 lakhs overstated whichshould have been disallowed” which indicates change of opinion.Therefore, the ITAT was correct in coming to the conclusion that the AOnowhere states that there was failure on the part of respondent to disclosefully and truly all facts material to the computation of income which isprimary condition to be satisfied for reopening of the assessment afterexpiry of 4 years from end of the assessment year. 3.No substantial question of law arises. 4.Appeal dismissed. (FIRDOSH P. POONIWALLA, J) (K.R.SHRIRAM, J)