TMI Blog2014 (4) TMI 126X X X X Extracts X X X X X X X X Extracts X X X X ..... at reassessment u/s 147 is vitiated, because the Assessing Officer failed to invoke his power to correct the assessment period completed u/s 143 (1) by issuing a notice u/s 143(2) of the Act. The purpose of section 147 is to ensure that a party cannot get up by making false or untrue statement at the time of original statement and when that falsity comes to notice the assessee cannot turned around and say that since "you accepted my lie, now your hands are tied and you can do nothing" - In order to proceed u/s 147, if the, AO has reason to believe that any income chargeable to tax has escaped assessment then he can proceed for reassessment - The only requirement of section 147 is that the AO must have good reason to believe that some income had escaped assessment. The letter dated 14.05.2013 written by the Deputy Commissioner of Income Tax Range-VI Lucknow shows that in the return filed by the petitioner for assessment year 2006-07 the petitioner declared its total income "Nil" - during the year share capital and secured loan increases - the assessee did not explain the source of increment, similarly other current assets also increased - apart from District Valuer Report, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aising secured loan of Rs.1,54,67,871/- source of work- in-progress other current assets are remained unexplained . 2. During the assessment proceedings for A.Y. 2008-09 then the A.O. After not being satisfied with the investment shown in institute cum hospital building of assessee Co. referred it to valuation cell for estimating cost of investment. The DVO vide its report dated 02.08.2011 estimated the total investment in the construction of Hospital building during the A.Y. 2006-07 at Rs.1,75,73,800/- against the investment declared by the assessee at Rs.1,50,99,423/- The onus lies on the assessee to establish its investment only upto Rs,1,50,99,423/- with complete bills vouchers before the DVO but the assessee had failed to discharge its onus. The assessee has furnished nothing on the basis of which its investment at Rs.1,50,99,423/- during the relevant year may be relied upon. Therefore, I have reason to believe, that investment in the said property in A.Y. 2006-07 was Rs. 1,75,73,800/- and assessee has underestimated its investment and income. In view of above, I have reason to believe that assessee has understood its income and income chargeable to tax has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at for the assessment year 2008-09 assessment order under section 143(3) of the Act has been passed on the basis of the figures of the loss disclosed by the petitioner without rejecting the books of accounts therefore, in the light of the several decisions of the Hon'ble Supreme Court the matter could not be open for reassessment. Through rejoinder affidavit he has also brought on record the return for the assessment year 2006-07 and submitted that from the return filed by him as well as balance sheets as on 31st March 2006 it is obvious that all the books of the capital profit and loss tally with each other. Therefore, it cannot be said that the petitioners income chargeable to tax has escaped assessment. Percontra Mr. Manish Mishra, learned counsel for the Income Tax Department submitted that it is not in dispute that for the assessment year 2006-07 the return was proposed under section 143(1) of the Act, but no copy of the balance sheet, profit and loss accounts etc were filed, rather those have been mentioned in the return for 2006-07 annexed with rejoinder affidavit itself. Since the assessment is still under process, it is obvious that no order of assessment has been p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her case of the Hon'ble Supreme Court i.e. Assistant CIT Vs. Rajesh Jhaveri Stock Brokers (P). Ltd. [2007] 291 ITR 500/161 Taxman 316 in which Hon'ble Supreme Court held that even proceedings under section 147 are to be taken with regards to the intimation framed earlier under section 143(1), the ingredients of section 147 have to be fulfilled. The ingredient is that there should exist reason to believe that income chargeable to tax has escaped assessment. The said judgment has been upheld by the Hon'ble Supreme Court by dismissing the Special Leave Petition being SLP No. 15859 of 2013 . 2.Sargam Cinema Vs. Commissioner of Income Tax, [2010]328 ITR 513 (SC) in this case the Hon'ble Supreme Court has held as under:- In the present case, we find that the Tribunal decided the matter rightly in favour of the assessee inasmuch as the Tribunal came to the conclusion that the assessing authority could not have referred the matter to the Departmental Valuation Officer (DVO) without the books of account being rejected. In the present case, a categorical finding is recorded by the Tribunal that the books were never rejected. This aspect has not been considered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the provisions of section 147 of the Act proposed to reopen the assessment proceedings, the Hon'ble Supreme Court held as under:- From a combined review of the judgments of this Court, it follows that an Income-tax Officer acquires jurisdiction to reopen assessment under Section 147(a) read with Section 148 of the Income Tax 1961 only if on the basis of specific, reliable and relevant in formation coming to his possession subsequently, he has reasons which he must record, to believe that by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profit or gains chargeable to income tax has escaped assessment. He may start reassessment proceedings either because some fresh facts come to light which where not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose the untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer. The reason is that under section 143(1) (a), no hearing is given to the assessee and the Assessing Officer proceeds on his own on the basis of the return, filed by an assessee. Otherwise also, no addition on enhancement can be made without giving an opportunity of being heard. The provision of opportunity being given under section 143(1)(a) has not been made, because the Assessing Officer has to proceed accepting the return and the adjustments which can make, are only of such a nature which fully record with the information furnished in the return. It means that the Assessing Officer cannot do nothing detrimental to an assessee under section 143(1)(a) and if he wants to do for cogent reasons, then he will have to make a regular assessment under section 143(3) giving a due notice sub section (2) of section 143. Under section 147, if the Assessing Officer, has reason to believe tat any income chargeable to tax had escaped assessment then he is free to initiate reassessment proceedings. The only requirement of section 147 is that the Assessing Officer must have good reason to believe that some income had escaped assessment. Once this belief is well founded, recourse to reasse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bstituted section 147 existence of only the first condition suffices. In other words if the AO for whatever reason has reason to believe that income has escaped assessment it confers jurisdiction to reopen the assessment. It is however, to be noted that both the conditions must be fulfilled if the case falls within the ambit of the both proviso to section 147. The case at hand is covered by the main provision and not the proviso. Section 147 of the Act speaks that, if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. In the light of the aforesaid provisions when we go through the decisions cited above we find that power that can be exercised under section 143(2) to cover the assessment made under section 143(1) does no ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
