9911796707
TMI Blog2013 (1) TMI 373X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs.1,50,00,000/= is over and above the estimated income for the year, so that the total income will be Rs.2,50,00,000/=. The assessment for the year 2006-2007 was completed under Section 143(3) vide order dated 28.12.2008. However, the appellant was served with Ext.P6 notice dated 09.12.2011 wherein it was stated that the officer had reasons to believe that the appellant's income chargeable to tax for the assessment year 2006-2007 had escaped assessment within the meaning of Section 147 of the Income Tax Act. A return was directed to be filed within thirty days. The appellant vide Ext.P7, relying on the Judgment of the Apex Court in GKN Driveshafts (India) Ltd. v. Income-Tax Officer And Others ((2003) 259 ITR 19), requested the officer to give in writing the recorded reasons for reopening the assessment. It was thereupon that Ext.P8 was issued, wherein, reference was made to the survey and the statement made by the Managing Partner. It is also indicated that the assessee had confirmed the statements by letter filed on 03.02.2009. Ext.P8 is dated 25.4.2012. The Writ Petition was filed challenging Ext.P6 notice. The learned Single Judge has found that the proceedings are only at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year 2000-2001, the assessment was completed on 08.03.2001. There was a survey operation under Section 133A on 23.01.2001. A statement was recorded from the Managing Partner, wherein he admitted that there were irregularities and discrepancies in the books of account, in that, there was excess payment of cash over what was available as per the cash book and also unaccounted investment in properties and suppression of receipt and inflation of expenses. The Managing Partner offered an amount of Rs.43 lakhs as additional income for the three years, i.e. Rs.13 lakhs for 1998-1999, Rs.10 lakhs for 1999- 2000 and Rs.20 lakhs for 2000-2011. The assessing officer determined the business income on the basis of reckoning net profit at 8%. The Commissioner of Income Tax, however, felt that it was erroneous and prejudicial to the interest of the Revenue on the basis that the additional income disclosed for each each year should have been taken into account separately while making the assessment. Acting under Section 263 of the Act, he set aside the assessment and directed the Assessing Officer to re-frame the assessment afresh. It was in the context of Section 263 of the Act that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he various aspects of the matter and related facts that the Assessing Officer accepted the offer made by the assessee. In such circumstances, the view taken by the Income-tax Officer could not be said to be prejudicial to the Revenue nor could it be said to be erroneous. The order of revision was not valid." In Pala Marketing Co-operative Society Ltd. v. State of Kerala And Another ((1999) 236 ITR 604), a learned Single Judge was dealing with a case under Section 147 of the Act. A return of income was filed, wherein the assessee had deducted a sum towards depreciation allowance. On a certain basis, the assessment was completed under Section 143(3). An order was passed seeking to rectify the mistaken assessment as perceived. The appellate authority invalidated the proceedings for want of notice and opportunity. Fresh proceedings were taken under Section 154 and it was thereafter that a notice was issued under Section 148 to reassess the income. The assessee objected on the score that it was bad for limitation. The learned Single Judge held, inter alia, as follows: "The primary facts regarding t4he claim of written down value had been furnished. However, while working the depreciat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pt of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, the Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Section 147 of the Act, as quoted hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receipt of representations from the companies against omission of the words "reason to believe", Parliament introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer." In GKN Driveshafts (India) Ltd. v. Income-Tax Officer And Others ((2003) 259 ITR 19), the Court, inter alia, held as follows: "When a notice under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome-Tax (2011) , a bench of the High Court of Delhi was dealing with the assessment years 1999-2000 and 2000-2001. For the assessment year 2001-2002, certain additions were made as deemed dividend. The addition was restricted in appeal to a lesser sum. Thereafter, the assessing officer initiated re-assessment proceedings for the two assessment years, on the score that the appellate authority had restricted the addition, as the restricted amount was alone advanced to the appellant during the year 2001- 2002. Therefore, the assessing officer reasoned that as the addition on the issue of deemed dividend for advance was confirmed for the year 2001-2002, he had reason to believe that the income shown in the notice as received during 1999-2000 and 2000-2001 and escaped assessment. The Bench found that Explanation 1 to Section 147 does not help the Revenue. It was found that all material facts were available on the record and no material fact has 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. It was found that the failure to a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d out by this court that the assessee does not discharge his duty to disclose fully and truly material facts necessary for the assessment of the relevant year by merely producing the books of account or other evidence. He has to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even if it may be assumed that, from the books produced, the Income-tax Officer, if he had been circumspect, could have found out the truth, he is not on that account precluded from exercising the power to assess income which had escaped assessment. At page 643 of the report Shah J., speaking for the court, observed as follows: "The Income-tax Officer had, therefore, prima facie, reason to believe that information material to the assessment had been withheld, and that on account of withholding of that information income liable to tax had escaped assessment. From the mere production of the books of account it cannot be inferred that there had been full disclosure of the material facts necessary for the purpose of assessment. The terms of the explanation are too plain to permit an argument being reasonably advanced, that the dut ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Rajesh Jhaveri Stock Brokers P. Ltd. ((2007) 291 ITR 500), the Apex Court held as follows: "Section 147 authorises and permits the Assessing Officer to asses or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for the public exchequer with an inbuilt idea of fairness to taxpayers. As observed by the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. ITO (1991) 191 ITR 662, for initiation of action under Section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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: Provided further that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matter of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation I.- Production before the Assessing Officer of account books or other evidence from which material evidence could, with due diligence, have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso." 8. We must here, at this stage, before we consider the contentions, notice the stand of the Revenue as disclosed in the statement filed before the learned Single Judge. Therein, it is, inter alia, stated as follows: The assessment was completed under Section 143(3) on 22.12.2008 for the assessment year 2006-2007, accepting the taxable income of Rs.1,14,28,850/=. There was a change of incumbent in the office of the Assistant Commissioner twi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come, is not the legal requirement at the initiation stage as held by the Apex Court. It is in the realm of subjective satisfaction. We would, therefore, think that we may not be justified in this proceedings to hold that Ext.P6 notice is without jurisdiction. We make this observation because the learned Single Judge has permitted the appellant to file objections to Ext.P6 notice and it is for the assessing officer to take a decision after considering the objections. We are only of the view that it is not open for us to veto further action pursuant to Ext.P6 on the basis of the Writ Petition filed by the appellant. 10. It is then contended by the appellant that the learned Single Judge ought to have followed the decision of the Apex Court in GKN Driveshafts (India) Ltd. v. Income-Tax Officer And Others ((2003) 259 ITR 19). He points out that the Apex Court in the said case had directed the objections to be disposed of by a speaking order before proceeding with the assessments. He pointed out that the learned Single Judge has instead directed that the proceedings are to be finalised in accordance with law after giving time to the appellant to submit objections. 11. Learned ..... X X X X Extracts X X X X X X X X Extracts X X X X
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