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TMI Blog2021 (9) TMI 774X X X X Extracts X X X X X X X X Extracts X X X X ..... issuance of notice under Section 148 are untenable, which is based on change of opinion and there is no reason to believe as mandated under Section 147 of the Act. In order to substantiate the said ground, the learned counsel appearing for the petitioner elaborately contended that several circumstances in the present case would establish that it is a case of change of opinion. In fact, similar issues now raised in the impugned proceedings were already adjudicated and a finding in specific was provided. In this regard, the learned counsel appearing for the petitioner contended that the question is about the Business Development Commission. Regarding the Business Development Commission, the petitioner has already provided information, details and documents even during the original assessment and the assessment order was passed with a specific finding in this regard. Thus, the facts as well as the informations and the documents provided with reference to the Business Development Commission which is raised as grounds for reopening assessment were adjudicated in depth by the Assessing Officer and a finding was also given. Thus, there is no reason to believe for invoking Section 147 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The learned counsel appearing for the petitioner made a submission that the case of the petitioner falls beyond four years and within six years. Thus, under proviso to Section 147 of the Act, the Authority must state in clear terms that the assessee has not made full and true disclosure. Only in such circumstances, the initiation of notice under Section 148 may be validated and in the present case, there is no such mentioning in the impugned order and non-mentioning of the mandatory term "true and full disclosure" would vitiate the entire proceedings. 6. The petitioner referred the impugned notice which merely states that the Authority has reason to believe that "the income chargeable to tax for the assessment year 2007-08 has escaped assessment". However, there is no mentioning even in 148 notice or in respect of order dated 11.04.2014, providing reasons for reopening, regarding mandatory requirement and true and full disclosure as contemplated under proviso to Section 147 of the Act. Thus, the order impugned is void as the mandatory conditions stipulated for invoking Section 147 remain absent. Thus, the writ petition is to be allowed. 7. The learned counsel appearing for th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 and 148 of the Act. 9. It is reiterated that with reference to the facts and circumstances of the case on hand, the provisions are to be considered as the petitioner has raised a ground that the mandatory requirement under proviso to Section 147 is missing in the impugned order. Therefore, the order is liable to be set aside. Mere non-quoting the word "true and full disclosure" would not vitiate the entire proceedings. Whether the requirement of non-disclosure of true and full income is established or not is the fact, which is to be considered for the purpose of arriving a decision. Thus, the very argument in this regard deserves to be rejected. 10. The learned Senior Standing Counsel further made a submission that the scope of Section itself is self-explanatory and it is sufficient, if the Authorities are able to find a reason to believe and such a reason to believe must be based on evidence or new materials not considered earlier. However, if all such materials, informations, documents are identified for initiation of proceedings by reopening the assessment, it is for the Assessee to submit his returns explaining the stand taken and to defend his case by availing the opportu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s development commission paid to a non-resident was not looked into. This matter was not discussed in the Assessment Order. Therefore, there is no change of opinion but clearly there was an escapement of income to be brought to tax. The said provision indicates that the matter of non-deduction on the business development Commission paid to a non-resident was not even considered in the original assessment order and therefore, it is a new material to be considered for the purpose of tax. Thus, the reopening of assessment is necessary, which resulted initiation of proceedings under Section 147. Thus, there is no infirmity as such. Consequently, the writ petition is liable to be dismissed. 13. In reply, the learned counsel appearing for the petitioner referred another Circular No.786 dated 07.02.2000 issued by the CBDT, wherein deduction of tax u/s 195 and the taxability of export commission payable to non-resident agents rendering services abroad was considered and a clarification was issued in detail by the CBDT. The learned counsel appearing for the petitioner in this regard relied on the judgment of the Hon'ble Supreme Court of India in the case of Commissioner of Income Tax v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tances of those cases, which all are not comparable. Thus, this Court has to consider the facts and circumstances as well as the reasonings furnished for reopening of assessment in the context of Sections 147 and 148 of the Income Tax Act. Thus, the facts and circumstances raised on merits by the petitioner need not be considered by this Court for the purpose of Section 147 of the Act. 15. Considering the arguments, this Court would prefer to look into the effect of Sections 147 and 148 of the Income Tax Act. The case of the petitioner is falling under proviso clause as the reopening of assessment is made beyond four years but within 6 years. Thus, the Authorities have to satisfy the requirements contemplated in proviso to Section 147. 16. In this context, Section 147 stipulates that "if the Assessing Officer has reason to 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f proceedings under Section 147 of the Act, if the Assessing Officer identified that any other income chargeable to tax has escaped assessment, and such informations, comes to his notice, subsequently during the course of the proceedings, then also, the authority is empowered to exercise the powers. Thus, the provision contemplates that during the course of the proceedings, if any other information is identified regarding the tax, which has escaped assessment, then also, he can recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. The language employed in Section 147 of the Income Tax Act would provide not only wider meaning and power to the competent authority, but the provision adopts a holistic approach, so as to confer powers to the Assessing Officer to cull out the truth with reference to certain informations, documents, evidences, which were either provided by the assessee or not provided by the assessee or not considered during the original assessment. Various complex circumstances prevailing can be fit in with the provision, in view of the wider concept contemplated under Section 147 of the Act. 23. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contended by the writ petitioner that the notice issued under Section 148 as well as the reasons furnished for reopening did not speak anything about non-disclosure of true and full disclosure of materials. Therefore, there is no specific search mentioning and the order impugned cannot be sustained. It is contended that the non-disclosure of fully and truly all material facts is not established. Therefore, there cannot be any reason to believe for reopening beyond the period of four years. 26. This Court is of the considered opinion that mere non-quoting of provision of law would not vitiate the entire proceedings. Undoubtedly, the Authorities Competent are expected to quote the provisions of law. However, by mistake or omission, if the provisions or statute are mentioned in the order of notice, per se would not vitiate the entire proceedings. Thus, it is to be established whether there is a true and full disclosure of all materials by the assessee or not. Such an adjudication cannot be done in entirety in a writ proceedings under Article 226 of the Constitution of India. The power of the High Court is to scrutinize the process through which a decision is taken by the Authorities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the tax has escaped assessment, then also, the power under Section 147 shall be invoked. Therefore, an assessee cannot raise a contention that the facts resulted in initiation of reopening proceedings were already adjudicated in the original assessment order and cannot be a valid ground per se for the purpose of quashing the entire proceedings initiated under Section 147 of the Act. 29. Explanation 2 contemplates various circumstances which are all considered as deemed cases where income chargeable to tax has escaped assessment. Circumstances are self-explanatory and even sub-clause (c)(i) to Explanation 2 contemplates income chargeable to tax has been under- assessed. Thus, even under-assessment is a ground for reopening of the assessment. Various circumstances contemplated under the Deemed accruing clause are also to be taken into consideration, while dealing with the cases for reopening of assessment. 30. Therefore, an assessee cannot come forward by stating that the materials, which are all forming part and parcel of reopening of assessment are already adjudicated in the original assessment. Therefore, the reopening of assessment is impermissible. Such a ground cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome tax chargeable to the tax has escaped assessment. Once the Assessing Officer satisfies himself regarding the ingredients contemplated under Section 147, then he is empowered to issue notice under Section 148 of the Act. Once a notice under Section 148 is served on the assessee, then he is bound to cooperate for reassessment in respect of reasons to be furnished by the Competent Authority. In this context, the principles laid down by the Hon'ble Supreme Court of India in the case of DKN Driveshafts (India) Limited vs. ITR and others, [2003] 259 ITR 19(SC), are to be followed. The reasons are to be furnished to the assessee and the assessee must be provided with an opportunity to submit their objections and such objections submitted are to be disposed of and all such procedures are to be completed by following the principles laid down in the case cited supra and in compliance with the mandatory requirements of the provision of the Act. 34. Considering the scope of Sections 147 and 148 of the Act, it is to be borne in mind that interference by the High Court at the initiation stage without any strong and acceptable ground, would create a situation, wherein the Income Tax Depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same would cause prejudice to the interest of the Revenue and the Department is loosing its opportunity from probing the issues further. This exactly is the reason, where the High Court is expected to exercise restraint in the matter of reopening of assessment by the Department when they could able to establish that there is a prima facie material available on record for such reopening. 36. It is needless to state that High Court under Article 226 of the Constitution of India, cannot adjudicate the facts and circumstances with reference to the documents and evidences. This apart, the High Court is not an expert body, so as to go deeper into the intricacies of the accounting system and the manner, in which, the returns are filed and the materials are taken out by the Department for the purpose of reopening of assessment. In the event of establishing a prima facie case that some materials are made available on record for reopening of the assessment, then High Court must allow the authority to go on with such materials by following the procedures as contemplated and the assessee will get an opportunity to defend his case and establish his innocence or otherwise. Thus, only on excep ..... X X X X Extracts X X X X X X X X Extracts X X X X
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