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TMI Blog2015 (7) TMI 953X X X X Extracts X X X X X X X X Extracts X X X X ..... t two Horses Tuscan and Brave Act were purchased at Rs. 1,38,729/- and Rs..10,09,641/- was actually Rs. 5,32,784/- and Rs. 2,16,96,697/- respectively as detected by Directorate of Revenue Intelligence and customs duty of Rs. 1,87,540/- and Rs. 58,54,471.68 having been paid cannot be treated as information for the purpose of reopening assessment and bringing the same to tax, in view of the judgment of the Apex Court in Coca Cola Export Corporation 231 ITR 200? 2) Whether the Appellate Authorities have failed to take into consideration that the order passed by the Settlement Commission, which had quantified the customs duty based on the detection made by the Revenue Intelligence and the value of Horses would clearly show that income liable to tax had escaped assessment?" 3. Facts in brief which has led to the filing of this appeal are as under: For the assessment year 2003-04 the assessee filed return of income declaring loss of Rs. 3,49,80,579/- and assessment came to be concluded on 29.10.2004 determining the loss at Rs. 2,34,80,483/-. Notice under Section 148 of the Act came to be issued to the assessee on 12.05.2005 and in response to the same, return of income was filed on 09 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of unamended provision of Section 147 of the Act and the assessing Officer is empowered to re-open the assessment if he has reason to believe that income has escaped assessment. In support of his submission, he relies upon the judgment of the Hon'ble Apex Court in ASSISTANT COMMISSIONER OF INCOME TAX VS. RAJESH JHAVERI STOCK BROKERS (P) LTD., reported in (2007) 291 ITR 500 (SC) . 8. Per contra, Smt.S.R.Anuradha, learned Advocate appearing for assessee would support the order passed by the appellate authorities and contends that in the case of the very same assessee, for the assessment year 1998-99 the Tribunal has decided the issue in favour of the assessee after concluding that for alleged violation of Customs Law, the income tax authorities cannot re-open the concluded assessment and same cannot be the basis for formation of opinion. Hence, she prays for dismissal of the appeal by answering the substantial questions of law in favour of the assessee. In support of her submission, she has relied upon the judgment of Hon'ble Apex Court in COCO COLA EXPORT CORPORATION ETC. vs INCOME TAX OFFICER AND ANOTHER reported in (1998) 231 ITR 200 (SC). RE: SUBSTANTIAL QUESTIONS OF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment for the year 2003-04 on 29.10.2004 has issued the notice for its re-opening and the reason assigned as could be discerned from the order sheet was on account of the information which has been secured from the Directorate of Revenue Intelligence, Mumbai Zonal Unit, I floor, Construction House, Ballard Estate, Mumbai that assessee had indulged in under invoicing its imports and consequent to investigation, the suppressed customs duty payable by the assessee has been quantified at Rs. 89,43,152/-. 12. It is an undisputed fact that the Directorate of Revenue Intelligence had issued a show cause notice dated 13.02.2004 to the assessee demanding differential duty of Rs. 89,43,152/- on five horses which came to be imported by the assessee. Pursuant to the said show cause notice, assessee approached the Settlement Commission by filing an application under Section 127B of the Customs Act, 1962 which proceedings culminated in an order dated 01.02.2006 whereunder assessee has agreed to pay differential customs duty of Rs. 35,69,994.68 and interest @ 18% from 15.04.2005 to 25.04.2005 on Rs. 8,90,391/-. 13. Section 147 of the Act prior to its amendment which was undisputedly fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate clauses (a) and (b) laid down the circumstances under which income escaping assessment for the past assessment years could be assessed or reassessed. To confer jurisdiction under Section 147(a) two conditions were required to be satisfied firstly the Assessing Officer must have reason to believe that income profits or gains chargeable to income- tax have escaped assessment, and secondly he must also have reason to believe that such escapement has occurred by reason of either (i) omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment of that year. Both these conditions were conditions precedent to be satisfied before the Assessing Officer could have jurisdiction to issue notice under Section 148 read with Section 147(a). But under the substituted Section 147 existence of only the first condition suffices. In other words if the Assessing Officer 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 proviso to section 147. The case a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f income on 09.06.2005 along with a covering letter whereunder assessee has not called upon the assessing Officer to furnish the reasons for re-opening the concluded assessment. Records also do not disclose about assessee having sought for reasons from the assessing Officer as to grounds on which assessing Officer is reopening the concluded assessment. Hence, it is too late on the day to contend that reasons had not been furnished by assessing Officer for re-opening the assessment at this stage, as contended. 17. In the background of aforestated discussion, when the facts on hand are examined, it would clearly indicate that on issuance of show cause notice by the Directorate of Revenue Intelligence, the jurisdictional assessing Officer has formed an opinion about there being escapement of income of the assessee chargeable to tax. As to whether the said "reason to believe" of such escapement of income to tax by the assessee is justifiable or not, would not be an exercise which can be undertaken by the assessing Officer at the stage of issuing of notice. In that view of the matter, contention of the assessee cannot be accepted. 18. The judgment of Hon'ble Apex Court in COCO COL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alue of "Brave Act" horse at Rs. 2,16,96,697/- and that of "Tuscan" horse at Rs. 5,32,784/- which undisputedly was not the value determined by the Settlement Commission while accepting the claim of the assessee for arriving at a settlement and directing payment of differential customs duty. In that view of the matter, we are of the considered view, it would be just and appropriate to remit the matter back to the assessing Officer for adjudicating said factual aspect. Accordingly, matter is remitted to the assessing Officer. It is made clear that Assessing Officer would be at liberty to arrive at the value of the horses after considering the contentions that may be raised by the assessee. It is also made clear that no opinion is expressed in this regard by this Court and it would be needless to state that Assessing Officer shall proceed to value uninfluenced by the order of Settlement Commission or any observations made hereinabove. 21. For the reasons aforestated, we proceed to pass the following: ORDER 1) Appeal is hereby allowed. 2) The order dated 31.03.2009 passed in ITA No.1122/Bang/2008 by Income Tax Appellate Tribunal, Bangalore Bench is hereby set aside and the matter i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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