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2015 (7) TMI 953

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..... ed in under invoicing its imports and consequent to investigation, the suppressed customs duty payable by the assessee has been quantified at ₹ 89,43,152/-. 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. CIT(Appeals) as well as the Appellate Tribunal were not justified in arriving at a conclusion that re-opening the assessment under Section 147 of the Act by issuance of notice under Section 148 by the assessing Officer was improper. Hence, the substantial questions of law framed hereinabove have to be answered in favour of the revenue. Perusal of records that the jurisdictional assessing Officer in the reassessment order dated 21.07.2006 has arrived at the value of "Brave Act" horse at ₹ 2,16,96,697/- and .....

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..... led return of income declaring loss of ₹ 3,49,80,579/- and assessment came to be concluded on 29.10.2004 determining the loss at ₹ 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 09.06.2005 declaring the loss of ₹ 2,34,80,483/-. Thereafter, assessment came to be concluded on 21.07.2006 making additions in regard to investments on the ground that such investments were made outside the books and out of undisclosed sources. 4. The assessing Officer had issued notice under Section 148 of the Act to re-open the assessment concluded on 29.10.2004 on the ground that he was in receipt of information that the Directorate of Revenue Intelligence has established that undisclosed payments had been made by the assessee towards purchase of Horses and as such, the concluded assessment came to be re-opened and assessment order came to be passed under Section 147 of the Act. Being aggrieved by this order, appeal came to be filed by the assessee before CIT (Appeals), who by order dated 04.06.2008 allowed the appeal on the ground that the issue was concluded in favour of .....

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..... al 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 LAW (1) (2): 9. Adjudication and answer to the above substantial questions of law would overlap and as such both of them are taken up for being adjudicated together. 10. Having heard the learned Advocates appearing for parties and on perusal of the original records which has been made available by the learned counsel appearing for the revenue, it would indicate that on framing of the assessment order on 29.10.2004 which was undisputedly based on the return of income filed by the assessee for the year 2003-04, same was sought to be re-opened under Section 147 of the Act and as such, a notice under Section 148 of the Act came to be issued to the assessee on 12.05.2005. The records would indicate that the jurisdictional assessing officer before issuance of such notice has opined as under to re-open the concluded assessment: The assessee M/s United Racing Blo .....

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..... y 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 ₹ 35,69,994.68 and interest @ 18% from 15.04.2005 to 25.04.2005 on ₹ 8,90,391/-. 13. Section 147 of the Act prior to its amendment which was undisputedly from 01.04.1989 is substantially different from what it existed after amendment. The scope and effect of the amendment to Section 147 came to be considered by 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) and held as under: 16. Section 147 authorises and permits the Assessing Officer to assess 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 th .....

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..... tion 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 at hand is covered by the main provision and not the proviso. 14. Smt.Anuradha, learned Advocate appearing for assessee relying upon the judgment of COCO COLA (supra) which was also referred to by the appellate authorities has contended that, though Section 147 of the Act has been amended with effect from 01.04.1989, the twin conditions existing in the pre-amended Section 147 of the Act is not wiped out in its entirety and in the substituted Section 147 of the Act, the first condition as it was existing has still remained namely, assessing Officer should have reason to believe for re-opening the assessment already concluded and he cannot rely upon the proceedings initiated by a different authority to re-open the assessment which has been concluded. 15. Though, at first blush, this argument would look attractive, .....

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..... 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 COLA's case very heavily relied upon by the assessee would not come to the rescue of assessee for two reasons, (1) the interpretation by the Hon'ble Apex Court was in the background of unamended provision of Section 147 of the Act; and (2) the facts obtained in COCO COLA's case was that two letters dated 04.05.1973 and 06.11.1974 issued by the Department of Economic Affairs was allegedly laying down certain ceiling on remittances on account of head office expenses and service charges and in the said assessment order excess deduction on these counts had been permitted than permissible as stipulated in these two letters, which undisputedly was clear from the very letters that the Government had reviewed such remittance facilities on different counts which was afforded to the assessee (therein) in the pa .....

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