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TMI Blog2015 (7) TMI 606X X X X Extracts X X X X X X X X Extracts X X X X ..... e to notice, returns were filed offering the same business income for these years and as proposed at the time of search additional business income of E10,00,000/- was offered in the assessment year 2007-08 to purchase peace with the department and to cover any omission in the contract receipts to the extent of E1.25 crores. The assessment were completed u/s.143(3)r.w.s. 153C for the assessment years 2004-05 to 2006-07 and u/s.143(3) for the assessment year 2007-08 accepting the income admitted by the assessee. The Assessing Officer in contrast to the audit object has relied on the seized materials and concluded that there was an escapement of income to the extent of E13.25 lacs for assessment year 2004-05, E15.12 lacs for assessment year 2005-06, and E22.70 lacs for assessment year 2007-08 and issued notice u/s.148 on 31.03.2011. The re-assessments were completed on 22.12.2011 u/s.143(3) r.w.s 148 of the Income Tax Act. Regarding assessment year 2004-05, the Assessing Officer has noticed as per the seized material as well as appraisal report suppression of contact receipts to the tune of E13,25,000/-. Similarly for the assessment year 2005-06 an amount of E15,12,000/- was not repor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 taxpayer. As observed by the Delhi High Court in Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 191 ITR 662(SC), 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 words, at the initiation stage, what is required is 'reason to believe', but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 22.12.2011 was passed by the Assessing Officer after analyzing the material seized during the search, he has considered all the material for the purpose of assessment and there was no escapement of income. According, to the ld. counsel only for the purpose of making re-enquiry, he has issued notice for reopening assessment which cannot be done. 9. On the other hand, the Departmental Representative relied on the order of the Assessing Officer passed u/s. 153C r.w.s. 148 of the Act. The Assessing Officer has a jurisdiction for assessment or reassessment proceedings for all the six years to compute the total income of the assessee including undisclosed income where action have been taken against the assessee u/s.132(1) of the Act. Proceeding initiated u/s. 153A/153C for all six years shall become a subject matter to assessment u/s.153A/153C of the Act and the Assessing officer shall have freehand, on assessment, only on the proceeding that are pending to frame the assessment afresh. But in the case where the proceedings have reached finality, the assessment u/s.153A/153C r.w.s.143(3) of the Act confined to incriminating material / document found during the search indicating undisc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be recorded by him in writing, is of the opinion 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 (here after in this section and in sections 148 to 153 referred to as the relevant assessment year) :' (emphasis supplied) 4. After the Amending Act, 1989, section 147 reads as under : '147. Income escaping assessment.-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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and deleted the word 'opinion' on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular No. 549 dated October 31, 1989, which reads as follows ([1980] 182 ITR (St.) 1, 29) : '7.2. Amendment made by the Amending Act, 1989, to reintroduce the expression "reason to believe" in section 147.-A number of representations were received against the omission of the words "reason to believe" from section 147 and their substitution by the "opinion" of the Assessing Officer. It was pointed out that the mean ing of the expression, 'reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission from section 147 would give arbitrary powers to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to reintroduce the expression "has reason to believe" in the place of the words 'for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new section 147, however, remain the same.' (emphasis supplied)". 11. In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... record does not indicate that the assessee had drawn the attention of the Assessing Officer to the fact that the reasons mentioned for reassessment at the time of completion of original assessment. According to the ld. Authorised Representative for assessee it is not necessary for the assessee to point out the above set of facts to the Assessing Officer merely because the Assessing Officer mentioned in assessment order passed u/s.153C r.w.s 143(3) about seized documents, it does not mean the Assessing Officer is examined the seized documents. Thus, the Assessing Officer while framing the original assessment u/s.153C r.w.s. 143(3) of the Act does not appear to have formed an opinion with regard to seized documents and he has accepted the claim of the assessee, as the assessee wanted to be accepted by the Assessing Officer. The assessee having failed to draw the attention of the Assessing Officer regarding seized documents, it cannot be said that there is no violation of provisions of the Act. Further, when no opinion has been expressed in the assessment order and no details or explanation in relation to the seized document has been called for by the Assessing Officer, it is not poss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icer under section 153A/153C has been entrusted with the duty of bringing to tax the total income of an assessee who case is covered by section 153A/153C, by even making reassessments subject to provision u/s.153B of the Act. Accordingly, the contention of the ld. Authorised Representative for assessee is that the assessment is time barred is rejected. 13. Regarding quantum of income, the ld. Authorised Representative for assessee submitted that entire unaccounted contract receipts cannot be considered as undisclosed income of the assessee. Further, he pointed out that the Assessing Officer has not given the basis of computation of gross contract receipts. 14. According to the Departmental Representative, it is as per the seized materials gross contract receipts has been considered as income as business expenditure which has already been taken care by regular books of accounts while computing the income in regular assessment. Thus, the total unaccounted gross receipts has been considered as undisclosed income of the assessee. 15. We have heard both the parties on this issue. In our opinion, it is not appropriate to consider the entire unaccounted gross receipts as income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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