The Commissioner Of Income Tax-5, Mumbai v. M/S.perfect Circle Victor Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.192 OF 2011 The Commissioner of Income Tax-5, Mumbai Versus M/s.Perfect Circle Victor Ltd. .. Respondent .. Appellant S.V.Bharucha for the Appellant.None for the Respondent. P.C. CORAM : J.P.DEVADHAR &M.S.SANKLECHA, J.J. DATE : 11[th] FEBRUARY, 2013. In this appeal by the Revenue for the assessment year 1999-2000, the following question of law has been raised for our consideration. Whether on the facts and circumstance of the case and in law, the Tribunal justified in holding that the reopening of the assessment under section 147 is null and void under the Income Tax Act, 1961 and quashing the assessment made under Section 143(3) r.w.s.147 vide order dated 06.10.2006 ? 2.The order of assessment, consequent to scrutiny was passed by Assessing Officer on 27.3.2002. The assessment was reopened beyond the period of four years from the end of the relevant assessment year under section 148 of the Income Tax Act on 21.3.2006 for the following reasons. “ On perusal of Schedule-16 of P & L A/c. i.e.schedule of personal expenses, it is noticed that this expenditure includes prior period expenses of Rs.1,05,97,000/- on account of superannuation fund. But Assessee Company has not added back this prior period expenditure. Since Assesee is following mercantile system of accounting, this claim of Rs.1,05,97,000/- on account of superannuation fund pertaining to earlier year is not allowable during the year under consideration. Hence, in these circumstances, I have reason to believe that income chargeable to tax has escaped assessment in terms of provision of Section 147, explanation 2(c) of the Income Tax Act, 1961.” 3.From the reasons recorded, it is clear that the re-opening was done on the basis that the claim for expenditure incurred on account of Superannuation Fund was not allowable as the same pertained to an earlier year. 4.The Revenue contends that the re-opening of the assessment was on account of audit objection. However the nature of audit objection i.e. whether an opinion on law or an account of tangible material has not been pointed out by the revenue nor is it reflected in the impugned order. Be that as it may, we find that both the CIT (A) and the Tribunal have recorded a finding of fact that during the course of assessment proceeding, specific questions were asked of the respondent/assesssee by letter dated 26.12.2001 in respect of it's claim as expenditure for contribution made to Superannuation fund by the Assessing Officer. The queries was replied in detail by the respondent/assessee and thereafter the assessment order was passed on 27.3.2002. Therefore, even if it is assumed that the claim for expenditure on account of Superannuation Fund is not allowable as contended by Revenue, yet in the facts of this case there is no failure on the part of the respondent-assessee in disclosing all facts necessary for assessment before the assessment order was originally passed on 27.3.2002. This is further supported by the fact that even in the Notice dated 21.3.2006 no mention is made of any failure on the part of the respondent-assessee to fully and truly disclose all facts necessary for assessment. Thus on this ground itself the reopening of assessment beyond a period of four years from the end of the relevant assessment year 1999-2000 is bad-in-law. 6.In view of the above, we see no reason to entertain the proposed question of law. 7.Accordingly, the appeal is dismissed with no order as to costs. (M.S.SANKLECHA,J.) (J.P.DEVADHAR, J.)