K. Raviraja Pandian, J.:— The appeal is filed against the order of the Income-tax Appellate Tribunal, Madras “A” Bench, dated November 23, 2006, made in I.T.A No. 1227.Mds/2005 for the assessment year 1996–97.
2. The assessee is a company engaged in the business of leasing and finance. For the assessment year 1996–97, the Assessing Officer, while making the original assessment, has called for the basic details regarding two purchases. After receipt and taking into consideration of the details furnished by the assessee, the Assessing Officer came to the conclusion that the purchase of two items and leasing them to related parties do not fall under the category of sale and lease back transaction and, therefore, the Assessing Officer has not made any further investigation.
3. The Assessing Officer disallowed the depreciation in respect of machineries got back under lease from two parties and added back to the total income. Against that order, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals) and the Commissioner of Income-tax (Appeals) allowed the assessee's appeal stating that there was no fault of the assessee in disclosing the material facts and it was a case for change of opinion. Against that order, the Department preferred an appeal before the Income-tax Appellate Tribunal and the Income-tax Appellate Tribunal, following the decision of this court in the case of Commissioner Of Income-Tax v. Annamalai Finance Ltd. reported in [2005] 275 ITR 451, dismissed the appeal filed by the Department. Being aggrieved by that order, the Department is in appeal before us by formulating the following question of law:
“Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that the assessment has been reopened after four years from the end of the relevant assessment year, even though the assessee had not disclosed fully and truly the material facts for completing the assessment is valid in law?”
4. Learned counsel appearing for the Revenue relied on Explanation 2 appended to section 147 of the Income-tax Act and contended that the case of the assessee would come within the purview of sub-clause (iv) of clause (c) of Explanation 2 to the effect that the assessee has claimed excessive loss or depreciation allowance and in that circumstance, section 147 would apply.
5. We heard the argument of learned counsel for the Revenue and perused the materials on record.
6. In the original assessment order passed by the Assessing Officer, it was held that the assessee was asked, vide questionnaire dated August 31, 1998, to give invoices for assets on which depreciation was claimed during the year (100 per cent, rate and 40 per cent, rate) along with a list of lease transactions. The assessee submitted that information on December 4, 1998. In order to verify the genuineness of these transactions, a notice under section 133(6) calling for certain information was issued to all the lessees and suppliers involved in the lease transactions. Further, the assessee was asked to clarify, vide letter dated December 18, 1998, whether they had entered into any sale and lease back transactions during the relevant assessment year. As far as the regular transactions are concerned, they were thoroughly scrutinised. The invoices and lease agreements furnished by the assessee were compared with invoices, delivery notes/challans, lease agreement and other details submitted by the lessees/suppliers in response to the notice under section 133(6) and found that there was no discrepancy in it. From that, it was clear that while making the original assessment the Assessing Officer had called for the basic details regarding those purchases, and the assessee had furnished those details. On that basis, the assessment has been completed. This factum has been taken into consideration by the Commissioner of Income-tax (Appeals), who held that perhaps the Assessing Officer came to the conclusion that the purchase of these two items and leasing them to related parties do not fall under the category of “sale and lease back transaction” and, therefore, the Assessing Officer has not made further investigation. But the fact was that the Assessing Officer has spotted those two transactions and called for certain details and the asses-see has furnished the same. In those circumstances, it could not be regarded that the assessee had failed to disclose fully and truly all material facts relevant for the assessment. As the facts revealed that the Assessing Officer who made the original assessment order has called for all the details regarding the case where 100 per cent, depreciation were claimed and the assessee had furnished the invoices for purchase of assets on which 100 per cent, depreciation were claimed, there was no failure on the part of the assessee and if at all there was any failure, according to the Commissioner of Income-tax (Appeals), it was on the part of the Assessing Officer, who made the original assessment without going behind the nature of the transactions accepting the details furnished by the assessee. The Tribunal also extracted that portion of the order and found on the fact that there was no fault on the part of the assessee so as to enable the Department to reopen the assessment as the proviso to section 147 of the Income-tax Act would squarely apply to the case of the assessee. We find no infirmity in the order passed by the Tribunal. Hence, the appeal is dismissed.