TMI Blog2019 (9) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... For the Respondent : Shri Abirama Karthikeyan, DR ORDER PER MAHAVIR SINGH, JM: This appeal filed by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-10, Mumbai [in short CIT(A)], Appeal No. CIT(A)-10/DCIT-5(2)(1)/327/2015-16 vide order dated 21.12.2016. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-5(2)(2) Mumbai (in short DCIT/ITO/ AO ) for the A.Y. 2007-08 vide order dated 30.03.2015 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of assessee is against the order of CIT(A) confirming the action of the AO in reopening the assessment beyond four years whereas the facts of the assessee are totally covered by the proviso to section 147 of the Act. For this assessee has raised the following ground No. 1: - 1. The learned Commissioner of Income Tax (Appeals) [Ld. CIT(A)] has erred in law and on the facts of the case in confirming the action of Assessing Officer in reopening the assessment. The action is unjustified and unwarranted. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nakshatra Business Pvt. Ltd (Hema Trading Co. Pvt. Ltd. ) 15,00,000 5. Javda India Impex Ltd. 15,00,000 6. Javda India Impex Ltd. 15,00,000 7. Kush Hindustan Entertainment Ltd. 15,00,000 8. Kush Hindustan Entertainment Ltd. 15,00,000 9. Olive Overseas Pvt. Ltd (Realgold Trading Co. Pvt. Ltd.) 15,00,000 10. Olive Overseas Pvt. Ltd. (Realgold Trading Co. Pvt. Ltd.) 15,00,000 11. Vanguard jewels Ltd. 15,00,000 12. Vanguar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal of our client along with their acknowledgement of Income Tax Return. 5. Copies of share certificates issued to the parties listed in the reasons for re-opening. 5. As regards to non-service of notice issued under section 133(6) of the Act in subsequent re-assessment, the learned Counsel for the assessee stated that these were issued after a gap of almost 7 years from the end of financial year in which the transactions took place and naturally during this long period the some of the parties may have shifted their area of operation or shifted the place of business. Even otherwise, the learned Counsel relied on the case laws. Hence, he urged that in view of the above reasons recorded by the AO for reopening of assessment there is no whisper in the reasons that there is any failure on the part of the assessee to disclose fully and truly all material facts relating to this assessment. Hence, according to him, once there is no failure on the part of the assessee in term of the proviso of section 147 of the Act, the re-assessment cannot stand to the scrutiny of the law. On the other hand, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Olive Overseas Pvt. Ltd (Realgold Trading Co. Pvt. Ltd.) 15,00,000 10. Olive Overseas Pvt. Ltd. (Realgold Trading Co. Pvt. Ltd.) 15,00,000 11. Vanguard jewels Ltd. 15,00,000 12. Vanguard Jewels Ltd. 15,00,000 13. Lexus Infotech Ltd. 30,00,000 Total 2,10,00,000 7. We find from the records and the arguments of the learned Counsel for the assessee that during the course of original assessment proceedings, the AO issued notices under section 133(6) of the Act on these parties and then, the AO after verifying the details submitted by these parties, have accepted the transactions as genuine and passed the assessment order under section 143(3) of the Act after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... believe that income has escaped assessment. In fact, this would be evident from the fact that in para 16 of the decision in Rajesh Jhaveri Stock Brokers (P.) Ltd.'s, case (supra), it is observed that the word 'reason' in the . 'reason to believe' would mean cause or justification. Therefore, it can only be the basis of forming the belief However, the belief must be independently formed in the context of the material obtained that there is an escapement of income. Otherwise, no meaning is being given to the words 'to believe' as found in Section 147 of the Act. Therefore, the words 'whatever reasons' in Rajesh Jhaveri Stock Brokers (P.) Ltd.'s, case (supra), only means whatever the material, the reasons recorded must indicate the reasons to believe that income has escaped assessment. This is so as reasons as recorded alone give the Assessing Officer power to re-open an assessment, if it reveals/indicate, reasons to believe that income chargeable to tax has escaped assessment. 12. The re-opening of an Assessment is an exercise of extra-ordinary power on the part of the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ued by the Assessing Office on his own satisfaction and not on borrowed satisfaction. 8. We noted from the above facts that the original return of income was filed by assessee on 31.10.2007 for AY 2007-08. This return was processed under section 143(1) of the Act and subsequently the assessment was completed under section 143(3) of the Act dated 20.10.2009. Thereafter, the AO issued notice under section 148 of the Act dated 28.03.2014, which was received by assessee on 31.03.2014. The relevant assessment year involved is 2007-08 and notice under section 148 of the Act was issued on 28.03.2014. It means that the notice under section 148 of the Act was issued beyond four years. Admittedly original assessment was completed under section 143(3) of the Act. We also noted from the reasons recorded that the AO in reasons record nowhere pointed that there is a failure on the part of the assessee to disclose fully and truly all material facts relating to this assessment and due to that reason the income has escaped assessment. 9. To support our view, we follow the decision of Hon ble Supreme Court in the case CIT vs. Foramer France (2003) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nding as contemplated by section 153(3)(ii ) must be a finding necessary for the disposal of a particular case, that is to say, in respect of the particular assessee and in relevance to a particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. To be a direction as contemplated by section 153(3)(ii) it must be an express direction necessary for the disposal of the case before the authority or court vide Rajinder Nath v. CIT[1979]120 ITR 141 (SC); Gupta Traders v. CIT[1982] 135 ITR 5042 (All.); CIT v. Tarajan Tea Co. (P.) Ltd.[1999] 236 ITR 4773 (SC) and CIT v. Goel Bros.[1982] 135 ITR 5114(All.), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or section 44BB. Hence, the observation of the Tribunal in Boudier Christian's case was not a direction necessary for the disposal of the appeal relating to the petitioner. The eligibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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