TMI Blog2019 (12) TMI 39X X X X Extracts X X X X X X X X Extracts X X X X ..... , but the reference is only to the financial statement of the Petitioner itself. Therefore, there is not only no failure to disclose any material facts, there is no mention in the reasons that there has been a failure to disclose. A specific query was raised regarding the implications of Shareholders account, which dealt with by the AO in the assessment order and what is sought to be done by the AO in the impugned notice and order is a mere change of opinion, which is not permissible. These grounds, which constitute jurisdictional requirements, by series of judicial pronouncements, are held to be grounds for setting aside the initiation of reassessment proceedings. The impugned notice and impugned order passed by the AO being beyond thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er issued a notice under Section 148 of the Act. The Petitioner filed its return of income pursuant to the notice and sought reasons for the notice under Section 148 of the Act seeking to reopen the assessment. The reasons were supplied to the Petitioner. The Petitioner submitted its objections for initiation of reassessment which were rejected by order dated 9 June 2019 by the Assessing Officer. Hence this Petition. 3. We have heard Mr. Pardiwala, Senior Advocate appearing for the Petitioner and Mr. Walve, learned Counsel appearing for the Respondents. 4. As a narration of above facts would show the reassessment is sought to be opened after period of four years. The period of four years is of significance as under the sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IRDA Act, 1999. Section 11(1B) of the Insurance Act, 1938, inserted vide the said amendment provides that every insurer shall keep separate accounts relating to funds of shareholders and policyholders as opposed to the earlier requirement of maintaining a consolidated revenue account. The formats for presentation of insurance accounts have been prescribed by the IRDA (Preparation of Financial Statements and Auditors Report of Insurance Companies) Regulations, 2002. Part V deals with the provisions of financial statements. Every insurer is required to prepare- (i) a revenue account/technical account which is also described as a policyholder s account; and (ii) a profit and loss account, which is also described as a s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... olders Account only. Whereas income earned from the activities other than life insurance business is accounted for in Form A-PL i.e. Non Technical account or Profit and Loss Account of Shareholders. It is the income of the assessee from investment of funds available to it in the shareholders account. It is also seen from the Balance sheet that the funds in shareholders account are maintained separately and distinctly from the funds in Policyholders account. In view of this, the income of life insurance business alone is taxable on the basis of actuarial surplus under the provisions of section 44. Since the income of the assessee company in shareholders account is different and distinct from the income of the Policyholders account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This resulted in under assessment of income amounting to ₹ 283,30,05,000/- with consequent short levy of tax of ₹ 60,13,05,018/-. 05. In view of the above facts of the case, the undersigned is satisfied that income of ₹ 283,30,05,000/- chargeable to tax has escaped assessment for the assessment year under consideration within the meaning of provisions of section 147 of the Act. In this case more than four years have lapsed from the end of the assessment year under consideration. Hence, necessary sanction to issue notice u/s 148 has been obtained separately from the Pr. Commissioner of Income Tax as per the provisions of section 151 of the Act. In the reasons there is not even an averment that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven by the Petitioner as to how the Shareholders account also constitutes part of life insurance business. Case has been put up before the Assessing Officer by the Petitioner squarely that the entire income earned whether on Shareholders account or Policy holders account should be recorded as income arising from life insurance business. Upon this submission of the Petitioner and the documents furnished by the Petitioner that an assessment order under Section 143(3) of the Act came to be passed. 8. It is clear from the Reasons that there is no reference to any new tangible material, but the reference is only to the financial statement of the Petitioner itself. Therefore, there is not only no failure to disclose any material facts, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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