TMI Blog2011 (11) TMI 51X X X X Extracts X X X X X X X X Extracts X X X X ..... the return was not taken up for scrutiny and no order under Section 143(3) of the Act was passed. Therefore, the contention that there was change of opinion cannot be accepted. - order passed by the CIT (Appeals) in the assessment year 2001-02 would constitute information or material from any external source and the decision of the Supreme Court in Phool Chand Bajrang Lal’s case (1993 -TMI - 5423 - SUPREME Court) would be applicable and supports the stand of the Revenue. - Decided in favor of revenue. - ITA NOS. 52/2010 & 87/2010 - - - Dated:- 11-11-2011 - MR. JUSTICE SANJIV KHANNA MR. JUSTICE R.V. EASWAR JJ. Mr. Kaanan Kapur, Advocate. For Appellant Mr. Kamal Sawhney, Sr. Standing Counsel. For Respondent SANJIV KHANNA, J.: These two appeals under Section 260A of the Income Tax Act, 1961 (Act, for short) have been filed by Atma Ram Properties Private Limited, the appellant and relate to assessment years 1999-00 and 2000-01. For the said years, the appellant had filed returns of income on 10th December, 1999 and 30th November, 2000 declaring income of Rs.49,85,970/- and Rs.39,87,710/-, respectively. Return for the assessment year 1999-2000 was taken up for scrut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irmed by the Ld. CIT(A) in A.Y. 2001-02, I have reason to believe that income of the assessee as shown in Col. (3) has escaped assessment for A.Y., shown in col. (1). The assessee has failed to disclose fully truly all material facts necessary for its assessment. The income in this case has been under assessed in terms of clause (e) of explanation 2 to sec. 147 of the I.T. Act, 1961. 4. Reassessment orders were thereafter passed making addition, under Section 2(22)(e) of the Act of Rs.79,23,834/- and Rs.60,00,000/- for the assessment years 1999-2000 and 2000-01 respectively. The said additions were sustained by the CIT (Appeals) and the Income Tax Appellate Tribunal (tribunal, for short). 5. On 17th October, 2011, the following substantial question of law was framed and the learned counsel for the parties were heard:- 1) Whether the Assessing Officer was justified and correct in law in initiating the reassessment proceedings for reasons recorded in Annexure A2. 6. Learned counsel for the appellant-assessee has submitted that the reassessment proceedings were initiated after four years but the tribunal has erroneously held that there was failure/omission on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return; (c) where an assessment has been made, but (i) income chargeable to tax has been under assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed. Explanation 3. For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Assessment year 1999-2000. (ITA No. 87/2010) 8. In the assessment year 1999-00, the undisputed position is that the appellant had answered queries raised by the Assessing Officer vide letter dated 8th February, 2002. The said letter reads as under:- Dated 08 Feb, 2002 The assessing Officer, Circle 2(1), CR Building, IP estate New Delhi. Sub:-Atma Ram Properties (P) Limited, Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of the appellant-assessee. The annexure to the said letter contains a statement mentioning the opening balance, entries made during the year in respect of each one of the creditors and debtors and the closing balance. Notings on the said letter indicates that the Assessing Officer had examined whether these were old entries or there were also deposits or payments during the year in question. 12. In view of what we have stated above, it is apparent that the Assessing Officer at the time of original proceedings had one into the question of loans and advances from sister concerns. Figures and details were furnished and given along with an annexure which had particulars like opening and closing balance as well as entries/transactions during the year in question. Account of Atma Ram Builders Pvt. Ltd. was enclosed. 13. Revenue has debated and stated that the Assessing Officer had not examined and gone into the question whether or not provisions of Section 2(22)(e) of the Act were attracted to the present case and therefore re-assessment proceedings have been validly initiated. 14. No doubt Section 2(22)(e) of the Act is not mentioned in the order sheet or in the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is of the averment/statement should be either stated or should be apparent/ lucid/explained from the record. 16. In the present appeal, Explanation (1) to Section 147 also does not help or assist the Revenue. All material facts were available on record and no material facts had to be inferred or discovered by the assessing officer. The assessing officer in spite of being aware of the facts, failed to apply or, at best failed to consider whether Section 2(22)(e) of the Act was attracted. Failure to apply law or a section to admitted facts on record is not covered by Explanation (1). Explanation (1) applies when the assessing officer on the basis of account books or other evidence fails to discover or infer material facts which with due diligence could have been discovered. Explanation (1) deals with failure of the assessing officer to discover or infer all material facts on the basis of books of accounts or other evidence produced by the assessee. Difference between facts and law is well recognized and understood. Explanation (1) reflects the said difference. 17. The assessing officer in the re-assessment order has not discussed the said aspect but the CIT (Appeals) in his order h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is mind regarding the applicability of the provisions contained in section 2(22)(e) of the Act to amount taken from M/s. Atmaram Builders Pvt. Ltd. 18. The aforesaid reasoning is incorrect and cannot be accepted as the letter dated 8th February, 2002, was filed in response to the noting dated 7th February, 2002, made by the assessing officer requiring the assessee to file compilation of sundry creditors, loans and advances. They were described and mentioned as sister concerns. Further along with the letter dated 8th February, 2002, the assessee had filed statement of accounts of each creditor/debtor including the opening balance, closing balance or transaction or entries during the year. We do not think that the law/ statute requires or imposes any further obligation on the appellant. The disclosure in the present case by the appellant was full and true. 19. In CIT versus Burlop Dealers Ltd., [1971] 79 ITR 609 (SC), a similar provision in Section 34(1) of the Income Tax Act, 1922 was examined and it was held that the said provision did not impose a more onerous obligation than disclosing the primary facts relevant to the assessment. It was observed as under: We are of the v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial from any other external source which came to the notice of the Income-tax Officer after the assessment proceedings which could enable the Income-tax Officer to form a reasonable belief that the income of the assessee had escaped assessment in the earlier year. As a matter of fact, after the conclusion of the original assessment proceedings, there was no fresh material at all available with the Income-tax Officer in Burlop Dealers' case [1971] 79 ITR 609 (SC) which could have enabled the Income-tax Officer to entertain any reason to believe that the income of the assessee had escaped assessment for the assessment year 1949-50. An assessment order for the subsequent year could not by itself lead to any inference, much less to the formation of a reasonable belief that income chargeable to tax had escaped assessment in the previous year, on account of the failure on the part of the assessee to make a true and full disclosure of the primary facts during the proceedings of the concluded assessment. The judgment in Burlop Dealers' case [1971] 79 ITR 609 (SC) cannot be understood as laying down any such proposition that even where the Income-tax Officer gets some fresh information whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompletion of the assessment proceedings for further enquiry and investigation into the genuineness of the loan transaction but, in our opinion, his failure to do so and complete the original assessment proceedings would not take away his jurisdiction to act under section 147 of the Act, on receipt of the information subsequently. The subsequent information on the basis of which the Incometax Officer acquired reasons to believe that income chargeable to tax had escaped assessment on account of the omission of the assessee to make a full and true disclosure of the primary facts was relevant, reliable and specific. It was not at all vague or non-specific. 21. In the assessment year 1999-2000, no information or material in the form of facts was furnished from any external source. The facts were already on record furnished by the letter dated 8th February, 2002. In the subsequent year i.e. assessment year 2001-02, an addition under Section 2(22)(e) of the Act, was made but was partly deleted by the CIT (Appeals) on the ground that loans and advances pertaining to other years with the observation that the assessing officer was entitled to take remedial action as per law in the relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X
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