TMI Blog2012 (4) TMI 273X X X X Extracts X X X X X X X X Extracts X X X X ..... is to the reopening of an assessment for Assessment Year 2004-2005 by a notice dated 29 March 2011. 2. For Assessment Year 2004-2005 the assessee filed a return of Income declaring a nil income, in view of the exemption which was claimed under section 11 of the Income Tax Act, 1961. An order of assessment was passed under section 143(3) on 22 December, 2006. While completing the assessment, the Assessing Officer determined the total income of the Assessee at Rs.47,32,738/-. The Assessment is now sought to be reopened by a notice under section 148, which was issued on 29 March, 2011. 3. The reasons on the basis of which the assessment is sought to be reopened, have been disclosed to the assessee on 19 August, 2011. Briefly stated, the reasons are as follows : (i) During the course of the scrutiny assessment for Assessment Year 2008-2009, the Assessing Officer came to know of the fact that the assessee had lodged a First Information Report (FIR) on 16 March, 2006 against Mr. Jagmohan Dalmiya, the then Secretary of the Board of Control for Cricket in India and others inter alia for misappropriation of funds; (ii) The FIR was transferred to the Economic Offences Wing (EOW), Cri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4-2005 were completed on 22 December, 2006, the figures set out in the FIR were not disclosed to the Assessing Officer. (ix) On this basis, the Assessing Officer has stated that there was reason to believe that at the minimum, income of the appellant in the amount of Rs.30,79,802/- chargeable to tax has escaped assessment within the meaning of section 147 of the Act. 5. The Assessee raised objections to the reopening of the assessment on 16 September, 2011. The objections were disposed of by an order dated 27 September, 2011 passed by the Assessing Officer. 6. Counsel appearing on behalf of the Assessee submits that : (i) The reopening of the assessment for Assessment Year 2004-2005 has taken place beyond a period of four years of the end of the relevant assessment year. Since the assessment was completed under Section 143(3), the proviso to Section 147 would come into operation and the reopening can be justified only if there was a failure on the part of the assessee to fully and truly disclose all material facts necessary for the assessment for that assessment year ; (ii) The FIR filed by the assessee on 16 March, 2006 only dealt with the misuse of funds in the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... March, 2006, at which point of time, the assessment proceedings for Assessment Year 2004-2005 were pending. The assessment proceedings for Assessment Year 2004-2005 were completed on 22 December, 2006. The fact that the assessee had filed an FIR in which it is alleged by the assessee that the funds pertaining to the World Cup had been misappropriated and had not been utilized for the charitable purposes on the basis of which an exemption has been granted to the assessee under section 11, was not disclosed to the Assessing Officer. Therefore, the jurisdictional requirement as stipulated in the proviso to section 147 has been fulfilled; (iii) Even a reading ex facie, of the letter of the assessee dated 16 March 2006 addressed to the Officer in Charge of Marine Drive Police Station and the FIR lodged on the same date would indicate that the period to which the misappropriation relates also covers Assessment Year 2004-2005. A plain reading of the complaint and the FIR would reveal facts to the contrary to what is asserted by the Petitioner; (iv) The merits of the contentions of the assessee would have to be decided by the Assessing Officer. Therefore, issues such as whether the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod from the opening of the account and thereafter untill the account was closed on 4 February 2006. That period also includes the period of Assessment Year 2004-2005. In fact a close reading of the letter dated 16 March 2006 (Exh. B) indicates that specific transactions are alleged to have taken place even during the period covered by the financial year relevant to Assessment Year 2004-2005. Therefore, on a plain reading of the FIR as it stands, we are unable to accept the contention of the learned counsel for the petitioner that the filing of the FIR was irrelevant and it was not required to be disclosed to the Assessing Officer. The allegations made by the Assessee would indicate that the income of the assessee was misappropriated and was not applied to that extent for charitable purposes. The submission of the counsel for the assessee was based on the foundation that the period covered by the FIR relates to a time span after the conclusion of the financial year relevant to Assessment Year 2004-2005. As we have noted earlier, that is factually incorrect. Be that as it may, the issue before the Court is whether there was material before the Assessing Officer on the basis of whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ive coal mining said to have been done by the assessee over and above the figure disclosed by it in its returns and this could provide the foundation for reopening the assessment. The Supreme Court held as follows : "Whether the facts stated in the letter are true or not is not the concern at this stage. It may well be that the assessee may be able to establish that the facts stated in the said letter are not true but that conclusion can be arrived at only after making the necessary enquiry. At the stage of the issuance of the notice, the only question is whether there was relevant material, as stated above, on which a reasonable person could have formed the requisite belief. Since we are unable to say that the said letter could not have constituted the basis for forming such a belief, it cannot be said that the issuance of notice was invalid." 10. On behalf of the petitioners reliance was placed on the judgment of the Division Bench of this Court in S.P. Divekar and A.P. Divekar Vs. Commissioner of Income Tax (Central) 1986 157 ITR 629. The judgment is clearly distinguishable for the reason that as the Division Bench held in that case the memorandum recording reasons for the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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