JUDGMENT Prafulla C. Pant Both the above mentioned appeals are directed against the judgment and order dated 09-03-2006, passed by Income Tax Appellate Tribunal Delhi Bench "C” Delhi (herein after referred as ITAT) in ITA No. 1398/Dell2003 for the assessment year 1992-93 and ITA No. 13971 Del/2003 for assessment year 1991-92. 2. Heard learned counsel for the parties. 3. The common question of law in the two appeals is as under : Whether the ITAT has erred in law in holding that notice under Section 148 of Income Tax Act, 1961, was issued without jurisdictional foundation under Section 147 available to Assessing Officer, and is the action under Section 147 of the Act covered under sub-clause (i) of Clause (c) of Explanation 2 to Section 147 of the Act? 4. Brief facts of the case are that respondent/assessee Atlas Offshore Services GMBH is non resident company. Assessment for the years 1991-1992 and 1992-1993, were completed 2008(2) The Commissioner of Income Tax, Dehradun Vs. Atlas Offshore Services 221 on 19-07-1993 and 10-09-1993 respectively (on the total income of Rs. 31,71,760/- for the year 1991-92 and Rs. 50,06,440/- for the year 1992-93). Later it was noticed by the Assessing Officer (herein after referred as A.O.) that the taxes to be borne by the contracted i.e. Grate Atwood Ltd. (GAL) were not included in the total receipt of the assessee. On this, a notice was issued in May 2001 under Section 148 of Income Tax Act, 1961 (herein after referred as the Act), after obtaining approval from Commissioner Income Tax, Meerut. The assessee filed its objections to the notice and contended that it was not at fault in alleged escaped assessment, for the assessee had provided the copy of agreement with GAL to the A.O. However, A.O. rejected the objections of the assessee and issued notices of demand and also initiated penalty proceedings under Section 271 (1) (c) of the Act. Aggrieved by the orders, assessee preferred appeals before the Commissioner of Income Tax Appeals, Dehradun (herein after referred as CIT (Appeals). Aggrieved by the orders, assessee preferred appeals before the Commissioner of Income Tax Appeals, Dehradun (herein after referred as CIT (Appeals). The CIT (Appeals) after hearing the parties took the view that since there was no failure on the part of the assessee to make a return under Section 139 of the Act nor to disclose the material fact to the A.O. in response to the notices issued by him, in view of the proviso to Section 147, the reopening of the assessment under the said Act cannot be maintained. Accordingly, C.I.T. (Appeals) allowed both the appeals. Aggrieved by the orders dated 27-11-2002, passed by CIT (Appeals), in appeal No. 264/DDN/2002-03 and 266/DDN/2002-03, the revenue filed appeals before the ITAT, which was registered as ITA No. 1397/Del/03 and 1398/Del/03. After hearing the parties, the ITAT dismissed the appeals, filed by the revenue. Hence these appeals. 5. Before further discussions, we think it just and proper to mention the proviso to Section 147 of Income Tax Act, 1961, which provides reopening of the assessment on escaped income. The proviso reads as under : "Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the 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 a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. " 6. The above proviso makes it clear that no action shall be taken under Section 147 after the 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 failure on the part of assessee to make a return or to disclose the material facts in response to the notice issued by the Assessing Officer. Admittedly in this case, reopening in respect of both the assessment years have been made after expiry of four years. Admittedly in this case, reopening in respect of both the assessment years have been made after expiry of four years. Though the approval has been obtained from the Commissioner of Income Tax, as required under Section 151 of the Act, but it does not allow A.O. to disregard the conditions mentioned in the proviso quoted above. The requirements contained in above quoted proviso are independent of the approval taken by the A.O. under Section 151 of the Act. 7. Shri Arvind Vashistha, learned counsel for the appellant drew attention of this Court to Explanation 1 to Section 147 and argued that mere filing of the copy of agreement does not necessarily amount to disclosure within the meaning of proviso to Section 147. He further contended that it was the duty of the assessee to disclose that he was not liable to pay the tax in respect of tax on income, which has been shown to be payable by GAL under the agreement with the respondent/assessee. Having heard learned counsel for the parties and after going through the impugned orders, we find that CIT (Appeals) has clearly mentioned in its order that he has examined the case records of the assessee. He has further observed that the assessee was confronted with the issue of taxability under Section 44 BB and the related issue of grossing up of tax. It is further observed by him that it was disclosed by the assessee that as per the terms of the agreement between the assessee and the GAL, on the payments to the assessee from GAL the tax liability would be borne by the GAL. From the orders of CIT (Appeals), it is also clear that said information was given by the assessee in the year 1993 i.e. when the processes were undertaken under Section 143 of the Act. That being so, it cannot be said that the assessee had merely filed the agreement and not disclosed the material fact as who was liable to pay tax in respect of the amount received by GAL. Therefore, we are in agreement with CIT (Appeals) and the ITAT that there is no failure on the part of the assessee to file return or to disclose the material fact as such, the reopening of assessment after four years cannot be maintained. Therefore, we are in agreement with CIT (Appeals) and the ITAT that there is no failure on the part of the assessee to file return or to disclose the material fact as such, the reopening of assessment after four years cannot be maintained. We are also of the view that Clause (i) of Clause (c) of Explanation 2 of Section 147 of the Act, does not exempt from the requirements of Proviso to the Section. 8. This Court in McDermott International Inc. Panama Vs. Additional Commissioner of Income Tax IT 2003 U.D. Pg. 301 and in the case of Commissioner of Income Tax Vs. Atlas Offshore Services (ITA No. 37 of 2007) decided on 21-09-2007, had taken similar view on the point. Therefore, there is no illegality committed by CIT (Appeals) in allowing the appeals of assessee and upholding the orders of CIT (Appeals), setting aside the reassessment orders passed by A.O. 9. Accordingly, the substantial question of law stands answered. Both the appeals are dismissed.