TMI Blog2004 (2) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... The petitioners are engaged in the business of manufacture of various consumer products in respect of which excise duty is payable. The petitioners also import certain raw materials for their manufacturing activities subject to payment of customs duty may be leviable under the provisions of the Customs Act, 1962. The petitioners had filed their return of income for the assessment year 1996-97 on November 30,1996. The computation of income was accompanied by a specific note reading as under: ". . . . in accordance with the practice followed for the earlier years, the company has not made a provision for excise duty and customs duty on stocks lying at the year end in bonded warehouse estimated at Rs.5,85,71,968 (1994-95 Rs. 11,25,02,531) and accordingly not included the said amount in the valuation of inventories. This has no effect on the profits for the year." The accounts which accompanied the return of income also made a specific reference to this accounting policy which was followed. The audit report which was furnished in accordance with the provisions of section 44AB also made a specific reference to the method of accounting adopted by the petitioners in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioners filed their return under protest and, thereafter, they were served with the notice dated December 3, 2002, under section 142(1) of the Act, issued by respondent No. 2, by which the petitioners were called upon to show cause as to why the sum of Rs.5,85,71,968 should not be added to the value of the closing stock and their income for the relevant year be not increased to that extent. The petitioners were also required to explain the deductions claimed by them under sections 80HHC and 80-IA as well as on account of the leave salary that was debited. The petitioners finding failure on the part of the Assessing Officer to disclose the reasons in spite of specific request filed this petition under article 226 of the Constitution of India to challenge notice dated November 5, 2002, issued under section 148 of the Act. On being noticed, the respondents appeared and filed their counter affidavit disclosing the reasons recorded prior to the issuance of the notice under section 148. The said reasons recorded read as under: "From the notes to the audited accounts, it is seen that while valuing closing stock, Central excise and customs duty leviable on stock lying in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition is squarely covered by the judgment of this court. Mr. Desai, learned counsel for the Revenue, tried to contend that so far as the merits of the case are concerned the same can be dealt with by the Assessing Officer and the petitioners should be directed to appear before the Assessing Officer with liberty to raise all the contentions. Mr. Desai, with respect to the contention that the notice under section 148 is barred by limitation and that the Assessing Officer has no jurisdiction to issue such notice, contends that even if the words "failure to disclose fully and truly all material facts relevant for assessment for the assessment year" are absent in the reasons recorded, still such reasons can be inferred on the text of the reasons recorded. He, therefore, submits that the notice under challenge is well within the scope of section 147 as such this petition is liable to be dismissed being without any substance consideration : Having heard the parties at length, we are of the opinion that the petition can be disposed of on the first contention raised by the petitioner, wherein the petitioner has contended that the notice issued under section 148 is without jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such assessment year by reason of the failure on the part of the assessee to disclose all material facts necessary for his assessment for that assessment year. In the case in hand it is not in dispute that the assessment year involved is 1996-97. The last date of the said assessment year was March 31, 1997, and from that date if four years are counted, the period of four years expired on March 31, 2001. The notice issued is dated November 5, 2002, and received by the assessee on November 7, 2002. Under these circumstances, the notice is clearly beyond the period of four years. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his re ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
