TMI Blog2021 (9) TMI 374X X X X Extracts X X X X X X X X Extracts X X X X ..... has recorded that the assessee has claimed less TDS in respect of some other deductors and thereby suppressed corresponding receipts to that extent and during the assessment proceedings, the assessee did not produce the accurate particulars of income and TDS claimed and it is only after the rectification application was filed the issue cropped up. Further the Assessing Officer has noted from the rectification application that the assessee has claimed TDS which was neither claimed in the return under Section 143(1) nor during the assessment proceedings AO recorded that the assessee never disclosed and claimed the above TDS during the assessment proceedings though he had opportunity to do so and therefore, deliberately concealed the particulars during assessment proceedings. Therefore, we are fully satisfied that the issue which is now subject matter of the reopening was never discussed during the original assessment proceedings and no opinion was formed by the Assessing Officer during the original assessment proceedings on this issue. In fact, the issue cropped up only after the assessee filed the rectification application. Therefore, the contention of the assessee that the reope ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt before us. 2.The prayer sought for in W.P.No.10846 of 2016 is for issuance of writ of Certiorarified Mandamus to quash the order passed by the first respondent dated 23.02.2016, by which the objections raised by the appellant, objecting to the reopening of the assessment under Section 147 of the Income Tax Act, 1961 ['the Act' for brevity] was disposed of and for a consequential direction to forbear the respondent from in any manner re-assessing the appellant's income for the assessment year 2008-09 under Section 147 of the Act. 3.Writ Appeal Nos.1922/2021 and 1987/2021 are directed against the common order dated 26.04.2021 in W.P.Nos.38185/2016 and 38186/2016. The common prayer in both the writ petitions is to quash the order passed by the first respondent dated 13.10.2016 by which the objections raised by the appellant against the reopening of the assessment under Section 147 of the Act for the assessment year 2009-2010 and 2010-2011 were disposed of by the respondent. The writ petitions have been dismissed by two separate orders both dated 26.04.2021. 4.Since the petitioner in all the three writ petitions is one and the same, namely, M/s.Thiriveni E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g. On 12.10.2015, the second respondent to whose file the case was transferred furnished the reasons for reopening. The second respondent stated that it had been seen from the Form 26As downloaded that the petitioner was in receipt of ₹ 419,47,44,777/- as opposed to the total amount credited to the P L account of ₹ 387,30,50,376/- and that therefore the Deputy Commissioner of Income Tax had a reason to believe that income of ₹ 41,59,51,722/- had escaped assessment within the meaning of Section 147 of the Act, that the assessee had claimed less TDS credit in respect of other deductors corresponding to the TDS of ₹ 36,46,935/- claimed by the assessee in its rectification application dated 20.07.2011 and the assessee has suppressed income of ₹ 2,82,22,870/- on the basis that the assessee had not claimed TDS credit of ₹ 6,39,531/- corresponding to the aforesaid income in the return of income. 7.The assessee would contend that the second respondent failed to show any evidence of any failure on the part of the assessee to fully and truly disclose all materials. The assessee filed their objections to the reopening on 22.11.2015, among other things, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted to the Profit and Loss account is ₹ 387,30,50,376/- and in view of the large discrepancy and mismatch, the Assessing Officer had reason to believe that income of ₹ 41,59,51,722/- has escaped assessment within the meaning of Section 147 of the Act due to the failure on the part of the assessee to disclose all and true material facts necessary for the assessment. Further, the Court observed that the rectification application dated 20.07.2011 submitted by the assessee was considered by the Assessing Officer and the information was verified and it was found that there was huge mismatch in the receipts appearing in Form 26AS vis-a-vis receipts credited in P L account. Therefore, the Assessing Officer had reason to believe that the income of the assessee has escaped assessment and decided to reopen the assessment. Further, the learned Writ Court took note of the fact that the Assessing Officer relied on Justice MB Shah Commission report which was constituted by the Governments of India to enquire into the cases of illegal mining in the State of Odisha. The Court pointed out that the assessee was a raising Contractor employed by one KJS Ahulwalia, who was a lessee whose na ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the vigilance inspection was conducted on 24.09.2009 and the period for which production and dispatches analysed and shortage of stock arrived was from May 2008 to September 2009 relevant to the assessment years 2009-2010 and 2010-2011. Further, as per the work order dated 24.02.2008 given by M/s.Indrani Patnaik to the assessee, they were entitled for 35.8% of the net value as its share of income on the value of the ore dispatched which comes to ₹ 65.2 Crores for the period covered under the report. Thus, it was contended that on receipt of new material based on the Commission's report, the Assessing Officer had reason to believe that there was escapement of income and thus initiated proceedings under Section 147 of the Act. 13.Further, it was contended that there was failure on the part of the assessee to disclose fully and truly all materials as envisaged in Section 147 of the Act and the assessment was validly reopened. There are fresh tangible material and there are enough reasons which have been set out for reopening the assessment as contained in the orders which were impugned in the writ petitions. With regard to the writ petition filed by the State of Od ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Assessing Officer has done so and therefore, the reopening is illegal. 15.With regard to the TDS, it was submitted that the reopening is sought to be done on the basis of Form 26AS and the report of the Justice MB Shah Commission. The Form 26AS was available with the Assessing Officer during the original assessment proceedings and it was based on the same, the Assessing Officer granted TDS credit to a certain extent as against the TDS credit claimed by the assessee. Therefore, when the Assessing Officer has acted on the basis of Form 26AS available during the assessment proceedings, the same Form 26AS cannot form the basis for reopening under Section 147 of the Act. In so far as Justice MB Shah Commission's report is concerned, the assessee is neither a party nor referred to in the said report and nothing has been independently brought out to link the assessee to the alleged excess production by KJS Ahulwalia. It is submitted that though the assessee has given a detailed explanation, the same was brushed aside by the Assessing Officer while rejecting the objections to the reopening proceedings. Placing reliance on the decision of the High Court of Bombay in Sesa Sterl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the merits by the assessee in the objections dated 23.11.2015 and the assessee was directed to appear before the Assessing Officer. 18.Subsequently, an order was passed and when the writ petitions were heard on 22.01.2020, the Court noted that two orders have been passed by the Assessing Officer dated 06.12.2019 and 16.01.2020 and it appears that the orders passed by the Court on 21.10.2019 as clarified on 19.11.2019 had not been complied with by the Assessing Officer whereas the revenue took a stand that the directions have been complied with. The Court therefore observed that since there is some area of doubt as to whether the order has been complied with or not, it gave liberty to obtain suitable clarification from the very same Hon'ble Court which passed the order dated 21.10.2019 and 19.11.2019 and the matter was adjourned. Subsequently another order was passed by the Assessing Officer on 11.02.2020. The interim directions issued in the writ petitions were referred to by the learned senior counsel with a view to impress upon the Court that when the rectification application was pending, there is no occasion for the Assessing Officer to reopen the assessment, more par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the conditions that were present earlier are no longer required to be fulfilled post amendment of the said provision. Further, Explanation 1 to third Proviso is abundantly clear to indicate that mere production before the Assessing Officer, the Accounts books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure. Further, it is submitted that the assessee has spelt out as to what opinion was formed by the Assessing Officer initially and how the reasons furnished shown change of opinion. The records show that no opinion was formed by the Assessing Officer during the original assessment proceedings on the issues which have been mentioned in the reasons recorded in the reopening of assessment. In other words, it is submitted no opinion had been formed by the Assessing Officer during the course of original assessment on the issues under consideration. It is further submitted that the information in Form 26AS which is a statement of TDS deducted and deposited by itself was not used as a reason for reopening of the assessment. Rather the information was matched with the details p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... senior counsel that Form 26AS was very much available before the Assessing Officer and based on which TDS credit was given during the course of assessment, it is submitted that the issue for reopening of the assessment is not the TDS credit but the gross receipts received by the assessee and the assessee had not disclosed all the receipts/receivables in his financial statements which they are bound to do, more so because they are following Mercantile System of Accounting, wherein all receipts/receivables are recorded in the financial year itself. Therefore, there should not be any deviation in reporting of the gross receipts as this figure is very much available with the assessee and if the assessee had disclosed fully and truly all material facts before the Assessing Officer, there would not be any deviation between its financial statement and Form 26AS. Further, it is submitted that as per Justice MB Shah Commission report, a tabulated statement has been given which lists out 146 lessees who were involved in illegal and excess production of iron ore during the period 2000-2001 to 2009-2010 and KJS Ahulwalia and other persons are lesseses who employed the assessee as raising cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issue cropped up only after the assessee filed a rectification application under Section 154 of the Act after the assessment was completed. Therefore, it needs to be examined as to whether the details as contained in Form 26AS as filed by the assessee along with the return of income was the sole reason for reopening the assessment. When we look into the facts we find that after the rectification application was filed, the details in Form 26AS was downloaded by the Assessing Officer and while examining the same, they found that there was mismatch of TDS and also the receipts which form the income of the assessee. This undoubtedly is a tangible material to form an opinion that the income has escaped assessment. It is seen that from Form 26AS, the Assessing Officer was able to ascertain that the assessee was in receipt of ₹ 419,47,44777 whereas total amount credited in P L account is ₹ 387,30,50,376. The break-up details were noted and it was pointed out that the income mentioned from sale of boulders, transportation receipts, trailer hire receipts and profit on sale of assets would not form part of receipts appearing in Form 26AS as tax deduction at source is not required ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 105113 Nil 7. Tata Sponge Iron Ltd. 722341 16369 Nil Total 17,81,04,653 40,24,852 27.On receiving such details, the Assessing Officer pointed out that there is a huge mismatch in receipts appearing in Form 26AS vis-a-vis receipts credited in P L account. The receipts and TDS from the above mentioned parties were not appearing in Form 26AS whereas it was claimed by the assessee in the rectification application dated 20.07.2011. The Assessing Officer has recorded that the assessee has claimed less TDS in respect of some other deductors and thereby suppressed corresponding receipts to that extent and during the assessment proceedings, the assessee did not produce the accurate particulars of income and TDS claimed and it is only after the rectification application was filed the issue cropped up. Further the Assessing Officer has noted from the rectification application that the assessee has claimed TDS of ₹ 6,39,531/- which was neither claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lessee whose mining activities were subject matter of scrutiny by the enquiry commission. The revisional authority under the Mines and Minerals [Development and Regulation] Act, 1957 appears to have passed an order in favour of the lessees and the State of Odisha was unsuccessful in the challenge to the said order of the revisional authority as the writ petition filed by the State was dismissed. 30.The writ petition filed by the State of Odisha was dismissed on the technical ground. In any event, it is too early for this Court to rule on the effect on the judgment of State of Odisha qua the assessee and undoubtedly this is a matter which is required to be adjudicated on facts. The specific stand of the revenue is that the assessee who was a raising contractor engaged for extraction of iron ore by the lessee, the contract charges corresponding to the value of the excess production has been believed to have been suppressed. This aspect has to be gone into in the re-assessment proceedings. Therefore, we are of the clear view that the assessee has not made full and true disclosure of all material facts during the original assessment, the reopening of the assessment was not based ..... X X X X Extracts X X X X X X X X Extracts X X X X
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