TMI Blog2020 (5) TMI 654X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the reasons recorded by the AO, is unsustainable in law. We, therefore, quash the reassessment proceedings. Order pronounced after ninety (90) days of hearing - COVID-19 pandemic and lockdown ordered by GOI - HELD THAT:- This period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force. In our considered view, even without the words ordinarily , in the light of the above analysis of the legal position, the period during which lockout was in force is to excluded for the purpose of time limits set out in rule 34(5) of the Appellate Tribunal Rules, 1963. Viewed thus, the exception, to 90-day time-limit for pronouncement of orders, inherent in rule 34(5)(c), with respect to the pronouncement of orders within ninety days, clearly comes into play in the present case. Of course, there is no, and there cannot be any, bar on the discretion of the benches to refix the matters for clarifications because of considerable time lag between the point of time when the hearing is concluded and the point of time when the order thereon is being finalized, but then, in our considered view, no such exercise was required to be carried o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral of Income tax (Inv.) Kolkata stated that a commission headed by Retd. Supreme Court Justice M.B. Shah was set up to detect illegal mining activities on iron ore and manganese ore in the States of Odisha, Jharkhand and Goa. The committee has submitted its report and it was noticed that one of the assessee of this charge M/s Ashapura Minechem Ltd. PAN: AAACA0957F has conducted illegal/unaccounted mining activity in various F.Ys. Retd. Justice M.B. Shah commission report is also available on the website of Ministry of Mines, Govt. of India. It is noticed that in the said report the commission has summarized the under invoicing of the export of iron ore from the State of Goa: Sr. No SHIPPING BILL DATE NAME ADDRESS OF EXPORTER FE CONTENT (K) QUNTITIY EXPORTED (WMT) FOB VALUE (RS.) FOR RATE PER WMT (RS.) COUNTRY TO WHCH EXPORTEDI % of under invoicing 1 8.12.2010 M/s Ashapura Minechem Ltd Mumbai 54 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... harges, export duty, charges of sampling and analysis, rent of Plots at stocking yards (various stages), etc. The prudent exporter can t afford such low prices. The exporter cannot sell the iron ore at the rate of ₹ 500 to ₹ 600 per MT. In view of the methodology adopted by the Commission and data analysis of the export material and value, the assessee has under invoiced the export of iron ore of ₹ 11,04,27,609. The perusal of assessment folder, submissions made by the assessee during the course of original assessment clearly shows that assessee has suppressed the information regarding under invoicing of export of iron ore as mentioned above. Hence in terms of the provisions of section 147 of the Income tax I have reason to believe that assessee has engaged in under invoicing of export or iron ore and income of ₹ 11,04,27,609 chargeable to assessment has escaped assessment for the A.Y.2011-12. 4. Armed with these reasons recorded for reopening the assessment, the Assessing Officer proceeded to refer the matter to his Additional Commissioner of Income Tax who approved the action of the Assessing Officer by observing as follows: In view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egal consequences. The Commission, in other words, has no power to adjudicate in the sense of passing an order which can be enforced. What the Commission says is merely an expression of its opinion; it lacks both finality and authoritativeness. The differences in export prices of various exporters, so far as iron ore is concerned, maybe matters of fact, which are said to have been derived by Shah Commission from the material available in public domain, but the Commission's conclusion on the basis of these differences in prices that there was under-invoicing, is a matter of conclusion drawn by the commission. This conclusion is purportedly drawn on the basis of the primary facts of differences in export prices; and it is a deduction by the Commissioner by way of an expression of his opinion, as we have explained above. That per se cannot be treated as a primary fact, on the basis of which any belief can be formed by the assessing authorities. Besides, it must be noted that when the Shah Commission matters were argued before this Court, the Union of India made an express statement on the same lines as was made before the Supreme Court in the Goa Foundation petition. Learned Couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from such facts which also can form part of the material on which the Assessing Officer may form his belief. Learned counsel is right there. As the Supreme Court has explained in this case, from the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise, the Assessing Authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw a proper legal inference on whether any income has escaped assessment. But then, any inference to be drawn from the primary facts in possession of the Assessing Officer must be such as might follow from those primary facts; it cannot be a matter of conjecture or surmise and in any event, the officer has to apply his mind to arrive at such inference. 17. As the Supreme Court has explained in the case of A. Raman and Co. (supra), the law does not oblige a trader to make maximum profit out of his trading transactions. It is the income which accrues to a trader which is taxable in his hands; not the income which he could have, but has not earned. No doubt, by a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome has escaped assessment simply on the basis of the differences in the export prices of the Assessee when compared to others. 19. Learned Counsel for the revenue places strong reliance on the case of Central Provinces Manganese Ore Co. Ltd. v. ITO [1991] 59 Taxman 17/191 ITR 662 (SC). Relying on this case, it is submitted that based on export prices showing a systematic lesser value as compared with the prevailing market prices for the same quality of goods, a reopening notice could indeed be issued under Section 148. In Central Provinces Manganese Ore Co. Ltd. (supra), the facts were quite peculiar. The appellant before the Court was a non-resident company having its office in London. It also had an office in India at Nagpur and was assessed to income tax in Nagpur. It had been the practice of the appellant to produce before the Income Tax Officer relevant books kept at its local office at Nagpur and balance sheets, trading accounts and profit and loss accounts at its head office in London. The customs authorities came to know that the appellant had declared very low prices in respect of all its consignments of manganese ore exported out of India. It was also foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tives or traders comprehensively due to time constraints. It is at best a tentative opinion expressed by a Commission of inquiry without affording any opportunity to the concerned exporters to explain the material used against them. Besides, there is no case of related parties to whom such exports were made. At least, the reopening notice and the reasons indicated by the Assessing Officer do not indicate any of these things. In the absence of these and such other materials, the simple and bare primary fact of the Assessee having charged lesser export prices from its counter-parties as compared to some other exporters, is no basis for formation of any belief that any income has escaped assessment to tax. 20. The judgments in cases of Phool Chand Bajrang Lal v. ITO [1993] 69 Taxman 627/203 ITR 456 (SC), I.P. Patel Co. v. Dy. CIT [2012] 27 taxmann.com 200/346 ITR 207 (Guj.), ITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC), Rattan Gupta v. Union of India [1998] 234 ITR 220 (Delhi), AGR Investment Ltd. v. Addl. CIT [2011] 9 taxmann.com 62/197 Taxman 177/333 ITR 146 (Delhi), Raymond Wollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC) and Asstt. CIT v. Rajesh Jhave ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eceived by any party or by the Assessee through any backdoor method. In the premises, there is no legitimate reason to believe which can sustain the impugned notice issued by the Assessing Officer. 21. The other main objection of the Assessee is that there was no belief on the part of the Assessing Officer that escapement of income had arisen by reason of any 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 or truly all material facts necessary for the assessment. It is not good enough for the Assessing Officer to simply make a bald assertion that escapement of income is as a result of failure on the part of the assessee to fully and truly disclose all material facts. He must indicate, however briefly, what is it that was not disclosed and which gives the Assessing Officer reason to believe that income has escaped assessment. The entire case of the revenue is founded on the so-called under-invoicing of exports. It is difficult to fathom what information or particulars was the Assessee expected to disclose in its assessment insofar as the export price ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hose reasons; and no inference can be allowed to be drawn based on these reasons which is not recorded. It is for the Assessing Officer to form an opinion as to whether there was escapement of income from assessment and whether such escapement occurred from failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year; and it is for him to put his opinion on record in black and white. The reasons recorded must disclose his mind and they should be self-explanatory. The reasons recorded cannot be supplemented by the time the matter reaches the Court by filing of any affidavit or making any oral submission. In the premises, it is not open to the revenue to seek to sustain the re-opening notice on a new reason, namely, disallowance of deduction of expenditure since the whole activity was illegal. 23. In the premises, the impugned notice issued by the Assessing Officer under Section 148 of the Act cannot be sustained and must be set aside. 8. The material facts of the present case being identical inasmuch as the reopening, beyond any doubt or controversy, is entirely based on the Hon ble Justice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riod of 30 days and due notice of the day so fixed shall be given on the notice board. 12. Quite clearly, ordinarily the order on an appeal should be pronounced by the bench within no more than 90 days from the date of concluding the hearing. It is, however, important to note that the expression ordinarily has been used in the said rule itself. This rule was inserted as a result of directions of Hon ble jurisdictional High Court in the case of Shivsagar Veg Restaurant Vs ACIT [(2009) 317 ITR 433 (Bom)] wherein Their Lordships had, inter alia, directed that We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now), all the revisional and appellate authorities under the Income-tax Act ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill 30th April 2020 shall continue further till 15th June 2020 . It has been an unprecedented situation not only in India but all over the world. Government of India has, vide notification dated 19th February 2020, taken the stand that, the coronavirus should be considered a case of natural calamity and FMC (i.e. force majeure clause) maybe invoked, wherever considered appropriate, following the due procedure . The term force majeure has been defined in Black s Law Dictionary, as an event or effect that can be neither anticipated nor controlled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 14. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least ..... X X X X Extracts X X X X X X X X Extracts X X X X
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