TMI Blog2021 (2) TMI 566X X X X Extracts X X X X X X X X Extracts X X X X ..... The balance sheet for the year ending 31.03.2013 revealed that the Company had incurred ₹ 18.39 crores more than the declared expenses on land which appear to have escaped assessment for the A.Y. 2013-14. This fact was discovered by the Assessing Officer on the basis of the report of District Registrar, Seraikella-Kharsawan after the assessment was complete and not on re-examining the materials and documents already on record filed by the assessee along with the return or subsequently brought on record during the assessment proceedings. This is the basis on which the Assessing Officer formed a reasonable belief that the assessee had failed to truly and fully disclose his income. As such, this income of the assessee had escaped assessment. Thus, the ingredients of first proviso to section 147 appear to be made out on the basis of materials on records. If that is so, the initiation of reassessment proceedings under section 148 beyond the limitation of four years, as prescribed under the first proviso to section 147 and also under section 149(1) (b) is not in breach of the statutory provisions. - Decided against assessee. - W.P (T) No. 70 of 20 21 - - - Dated:- 18-1-2021 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that the income chargeable for tax for the A.Y. 2013-14 has escaped assessment within the meaning of section 147 of the Act. Petitioner was asked to deliver a return in the prescribed form for the said assessment year in order to assess / re-assess the income / loss for the said Assessment Year. Petitioner submitted his reply on 02.04.2020 in response to the said notice asking the Assessing Officer to disclose the reasons recorded for issuance of notice under section 148 of the Act. Again, he made a request vide letter dated 05.06.2020 asking for the recorded reasons. By letter dated 14.09.2020 (Annexure-9), reasons recorded under section 148 of the Act was provided by the Assessing Officer. Petitioner objected to the reasons for reopening the assessment by reply dated 10.11.2020 (Annexure-11). By order dated 05.01.2021 (Annexure-12), impugned herein, the objections raised by the petitioner was disposed of. 4. Whether the ingredients of section 147 of the Act are made out for initiation of the proceedings for assessment / re-assessment and issuance of notice under section 148 of the Act, is the question to be answered in the writ petition? Sections 147, 148 and 14 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugh his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax ; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.- For the purpose of assessment or reassessment under this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lause (ii) of subsection (2) of section 143 after the expiry of twelve months specified in the proviso to clause (ii) of sub-section (2) of section 143, but before the expiry of the time limit for making the assessment, reassessment or recomputation as specified in subsection (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice. Explanation .-For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. 149. Time limit for notice-(1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b) or clause (c); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant assessment year. However, notice under section 148 of the Act was issued on 19.03.2020 beyond the limitation of four years. Petitioner requested the Assessing Officer to disclose the reasons by the communication dated 02.04.2020 and also pointed out the limitation of four years in initiation of proceedings under section 147. He also submitted another communication on 05.06.2020 to the same effect. The Assessing Officer by reply dated 14.09.2020, disclosed the recorded reasons (Annexure-9). It is submitted that perusal of the reply and the recorded reasons indicates that the Assessing Officer after examination of the assessment record and the annual return for the year 2012-13 of the assessee noticed that an expenditure of ₹ 11.65 crore was incurred for the purchase of freehold land in the year. However, on cross verification from the report of the District Registrar, Seraikella-Kharsawan, it was found that the assessee had actually purchased the land at ₹ 30.04 crores from 11 different persons on 26.02.2013, as per the table furnished therein. This indicated that the assessee had incurred ₹ 18.39 crores more than the declared expenditure on lands. These ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain precondition and if the concept of change of opinion is removed, then, in the garb of reopening the assessment, review would take place, which is impermissible. It is further argued that the report of the District Registrar, SeraikellaKharsawan cannot be the basis of initiation of reassessment without independent application of mind by the Assessing Officer. In this regard, he has placed reliance on the case of Assistant Commissioner of Income Tax, Gujarat versus Dhariya Construction Company [(2010) 15 SCC 251, para-2]. He submits that opinion of the District Valuation Officer, per se, is not information for the purposes of reopening assessment under section 147 of the Act. The A.O. has to apply his mind to the information, if any, collected and must form a belief thereon. Based on this submission, learned Senior Counsel for the petitioner submits that there has been no failure on the part of the assessee to truly and fully disclose the income during the assessment proceedings. Moreover, notice dated 19.03.2020 issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an the declared expenses on land in such fashion. Therefore, it appeared that unexplained investment to the tune of ₹ 18.39 crore (₹ 18,39,42,054/-) had escaped assessment for the A.Y. 2013-14. Such escapement was on account of failure on the part of the assessee to disclose truly and fully all material facts. It was not a case where A.O. has reexamined the materials and documents already on record filed by the assesse along with the return or subsequently brought on record during the assessment proceedings. By referring to the contents of the reply dated 14.09.2020, she further submits that such information did not form part of the original assessment proceedings and was placed before the Assessing Officer only after the assessment was completed. Based upon such material information received from the District Registrar, Seraikella-Kharsawan, notice under section 148 for reopening of assessment has been issued. Therefore, from the materials founds, there was a reason to believe that income of the assesse had escaped assessment and therefore, it was justified to reopen the assessment. Learned counsel submits that at the stage of initiation of the proceedings under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation Officer which is the basis for formation of the reasons to initiate proceedings under section 148 against the petitioner, but the report of the District Registrar, Seraikella-Kharsawan regarding purchase of the lands in the A.Y. 2012-13 beyond what was disclosed by the assessee by filing his return or revised return or submitting his written submission in response to the notice under section 142(1) vide letters dated 25.07.2016 and 10.11.2016. Therefore, the ratio of the decision in the case of Dhariya Construction Company (Supra), relied upon by the petitioner, is also misplaced. Learned counsel for the Revenue further submits, as per her instruction that the assesse has not appeared on 15.12.2020 before the Assessing Officer despite notices. Learned counsel for the Revenue submits that from the entire facts and circumstances of the case revealed from the records of the writ petition itself, it is clear that on none of the two counts, initiation of the proceedings for reassessment under section 148 is vitiated on facts and in law. Writ petition being devoid of merit, is fit to be dismissed. Learned counsel for the Revenue has placed reliance in the case of GKN Drivesha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-108 (Part of Annexure-4 series) of written submission dated 10.12.2016 and the table furnished by the Assessing Officer in his reply dated 14.09.2020 (Annexure-9) containing the recorded reasons in terms of section 147, it is clear that the assessee had not made full disclosure of the purchase of lands made in the year 2012-13. In particular, he has failed to disclose that on 26.02.2013 he had purchased lands in the district of Seraikella-Kharsawan from certain persons named therein, as also pointed out by the learned counsel for the Revenue. After the assessment was over, on cross verification from the report of the District Registrar, Seraikella-Kharsawan, it was revealed that the Company had actually purchased lands of ₹ 30.04 crores from 11 different persons on 26.02.2013. The balance sheet for the year ending 31.03.2013 revealed that the Company had incurred ₹ 18.39 crores more than the declared expenses on land which appear to have escaped assessment for the A.Y. 2013-14. This fact was discovered by the Assessing Officer on the basis of the report of District Registrar, Seraikella-Kharsawan after the assessment was complete and not on re-examining the materials ..... X X X X Extracts X X X X X X X X Extracts X X X X
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