TMI Blog2021 (10) TMI 465X X X X Extracts X X X X X X X X Extracts X X X X ..... er view. Petitioner has filed the annual returns with the required documents as provided for under Section 139 - There was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. One cannot be expected to disclose a thing or said to have failed to disclose it unless it is a matter which he knows or knows of. In this case, except for a general statement in the reasons for re-opening, the Assessing Officer has not disclosed what was the material fact that petitioner had failed to disclose. Petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for reopening, AO has infact relied upon the audited report accounts to say that the claim of petitioner of 1/5th of the construction period interest was double deduction or that it has resulted in irregular allowance of construction period interest or that petitioner was not entitled for deduction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per. It is petitioner s case that its books are regularly audited under Section 44 AB of the Act and is also assessed to income tax. During the previous year pertaining to the assessment year 2012-13, petitioner declared income from house property, business and profession, capital gains and income from other sources. Petitioner s income from house property after deduction under Section 24 of the Act had resulted into loss of ₹ 2,91,39,714/-. Petitioner was eligible for deduction of ₹ 139,36,10,974/- under Section 80 IB of the Act. But as available taxable income after set off of losses under Section 71 of the Act was only ₹ 78,47,26,016/-, petitioner restricted the claim under Section 80 IB of the Act to taxable business income of ₹ 78,47,26,016/-. As per the provisions of Section 71 of the Act, petitioner set off loss from the house property against short term capital gain, income from other sources and business income. The taxable business income, after set off of said losses, is of ₹ 78,47,26,016/- on which petitioner has claimed deduction under section 80 IB (10) of the Act. Petitioner filed its return of income for the assessment year 2012-13 on 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 80 IB of the Act on total income instead of claiming on the business income and has wrongly claimed deduction under Section 80 IB of the Act on capital gain and income from other sources and thus petitioner has failed to disclose true and full material facts before Respondent No.1. 7. This was followed by a notice dated 14th June, 2019 issued under Section 142 (1) of the Act by which Respondent No.1 sought further details. By its letter dated 20th June, 2019, petitioner furnished its objections to the proposed reassessment. Petitioner pointed out that (a) it had provided for all details, reassessment proceedings were based on change of opinion and hence jurisdictional conditions are not complied with and (b) reassessment is based on reappraisal of the same material facts and therefore, there cannot be any failure to fully and truly disclose of the material facts. 8. Respondent No.1 passed an order dated 30th September, 2019 rejecting petitioner s objections. According to Respondent No.1 : (a) As per the amended provisions of Section 147 with effect from 01/04/1989 irrespective of the fact that there is full and true disclosure made by the assessee if there is reason to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruly disclosed. (d) No fresh or tangible material on record has been disclosed for initiating reassessment. (e) Reassessment cannot be reopened on a mere change of opinion etc. 10. Mr. Suresh Kumar submitted that mere production of documents is not a ground to dispute the re-opening of the assessment. It would also not amount to disclosure in respect of the escaped assessment. As per Explanation 1 to Section 147 of the Act even in case where petitioner had produced the document showing the income which was not assessed earlier is also a ground for re-opening of the assessed return. Therefore, petitioner cannot state that it had already produced the documents alongwith returns and hence the Assessing Officer cannot reopen the assessment which had attained finality. Mr. Suresh Kumar submits that even if any mistake went unnoticed by the Assessing Officer during the course of original assessment proceedings, the assessee cannot take this ground to object the re-opening. Mr. Suresh Kumar s submissions were basically reiteration of the views stated in the order disposing the objections raised by petitioner and the averments in the affidavit in reply of one Mr.Ankit Verma a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cate what was the material fact that was not truly and fully disclosed to him. 13. In this regard, it will be useful to reproduce paragraph nos.10, 13 to 17 of the recent judgment of this court in Ananta Landmark Pvt. Ltd. Vs. Deputy Commissioner of Income Tax Central Circle 5 (3) and Ors. WP NO. 2814 of 2019 dated 14th September, 2021 (Unreported). 10. Coming to the ground no.(i) for rejection that for issuing notice to reopen assessment, the Assessing Officer must only be satisfied that he had reasons to believe that income, profits and gains chargeable to income tax has escaped assessment and the second condition that such escapement has occurred by reason of either omission or failure on the part of the assessee to disclose fully or truly all material facts necessary for his assessment is not required, Mr.Suresh Kumar in fairness agreed that that view of the Assessing Officer was incorrect. Mr. Suresh Kumar, as an Officer of the Court, agreed that both these are preconditions which are required to be fulfilled when assessment is sought to be reopened after four years. A Division Bench of this Court in Sesa Goa Limited V/s. Joint Commissioner of Income Tax and Ors., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as stated: I am satisfied that due to furnishing the false particulars of the income by way of incorrect certificate which means failure on the part of the assessee to disclose fully and truly all material facts required for the assessment, income of ₹ 6,10,10,272 had escaped assessment. The said statement is clearly made only as an attempt to take the case out of the restriction imposed by the proviso to Section 147 of the Act. (emphasis supplied) 13. As regards ground nos.(iv) to (vi) that the disclosure of material facts with respect to the setting off of the interest expenses under Section 57 of the Act might be full but it cannot be considered as true and hence, it is failure on the part of the assessee, mere production of books of accounts or other documents are not enough in view of explanation 1 to Section 147 etc., these can be dealt with together. The Apex Court in Calcutta Discount Co. Ltd. V/s. Income Tax Officer, [ (1961) 41 ITR 191 (SC) ] relied upon by Mr. Pardiwalla, has held that there can be no doubt that the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material facts, as mentioned in the section, it is necessary to examine the precise scope of disclosure which the section demands. The words used are omission or failure to disclose fully and truly all material facts necessary for his assessment for that year . It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. 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 the proper legal inferences, and ascertain on a correct interpretation of the taxing enactment, the proper tax leviable. Thus, when a question arises whether certain incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to be drawn. It is not for somebody else-far less the assessee--to tell the assessing authority what inferences-whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or law-he would draw from the primary facts. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn? It may be pointed out that the Explanation to the sub- section has nothing to do with inferences and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income-tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a duty on the assessee to disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r was wholly irrelevant, and failure to furnish particulars in that behalf cannot assist the case of the Department. Observation relating to the failure to disclose the price of ghee supplied is not strictly accurate, for, it was disclosed by the assessee's representative that the cheques were delivered for payment of the dues for ghee supplied at Porbandar and that they were subsequently transferred to Porbandar . It was again no duty of the assessee to disclose to or instruct the Income-tax Officer that there were profits embedded in the receipt of the money at Bombay. Section 34(1) (a) does not cast any duty upon the assessee to instruct the Income-tax Officer on questions of law. The assessee had disclosed that ghee was delivered at Porbandar by him and the price in respect of those supplied was received in Bombay which was subsequently transferred to Porbandar. We are unable to accept the view of the Tribunal that the question of receipt of sale proceeds in British India was thus by-passed . The assessee's representative had expressly stated that the assessee had maintained a Bank account in British India in which for recovering from merchants dues in respect of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portions in this judgment of the Apex Court reads as under : . In the case before us the assessee did not disclose the transactions evidenced by the drafts which the Income-Tax Officer discovered. After this discovery the Income-tax Officer had in his possession all the primary facts, and it was for him to make necessary enquiries and draw proper inferences as to whether the amounts invested in the purchase of the drafts could be treated as part of the total income of the assessee during the relevant year. This the Income-tax officer did not do. It was plainly a case of oversight, and it cannot be said that the income chargeable to tax for the relevant assessment year had escaped assessment by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts. The Income tax officer had all the material facts before him when he made the original assessment. He cannot now take recourse to Section 147 (a) to remedy the error resulting from his own oversight. 16. Whether it is a disclosure or not within the meaning of Section 147 of the Act would depend on the facts and circumstances of each case and nature of document and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. As noted earlier, petitioner has filed the annual returns with the required documents as provided for under Section 139 of the Act. As held by the Calcutta High Court in Income Tax Officer V/s. Calcutta Chromotype (P.) Ltd. [ (1974) 97 ITR 55 (Calcutta) ] relied upon by Mr.Pardiwalla, there was nothing more to disclose and a person cannot be said to have omitted or failed to disclose something when, of such thing, he had no knowledge. One cannot be expected to disclose a thing or said to have failed to disclose it unless it is a matter which he knows or knows of. In this case, except for a general statement in the reasons for reopening, the Assessing Officer has not disclosed what was the material fact that petitioner had failed to disclose. 17. We are satisfied that petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court has observed that where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to the Assessing Officer to re-open the assessment based on the very same material with a view to take another view. The principal which has been enunciated in Cartini must apply to the facts of a case such as the present. The assessee had during the course of the assessment proceedings made a complete disclosure of material facts. The Assessing Officer had called for a disclosure on which a specific disclosure on the issue in question was made. In such a case, it cannot be postulated that the condition precedent to the re-opening of an assessment beyond a period of four years has been fulfilled. 14. Therefore, though it is correct that explanation 1 to Section 147 of the Act says mere production of books of accounts or other documents are not enough, and the duty of disclosing all the primary facts relevant to the decision of the question before the assessing authority lies on the assessee, this duty does not extend beyond the full and truthful disclosure of all primary facts. Once all the primary facts are before the assessing au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d notes to accounts, annual tax statement in Form 26AS under Section 203AA of the Act in response to the notices received under Section 142 (1) and 143 (2) of the Act. Petitioner has also explained how it had computed income from house property after deducting interest for construction period of ₹ 3,90,71,980/- and why 1/5th of construction period interest was deductable. Petitioner has also given its justification of eligible claim under Section 80 IB (10) of the Act for ₹ 139,36,10,974/- and also submitted duly certified Audit Report and Architect certificate together with detailed profitability workings under Section 80 IB (10) of the Act vide its letter dated 3rd February, 2015. 17. The Assessing Officer had in his possession all primary facts and it was for him to make necessary inquiries and draw proper inference as to whether the interest of ₹ 3,90,71,980/- was allowable as a deduction. Based on the primary facts and after necessary inquiries the Assessing Officer was also satisfied that petitioner had complied with all the justification specified in Section 80 IB (10) of the Act and was duly entitled/ eligible for deduction in respect of the profits fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts that were necessary for computation of income but this is a case wherein the assessment is sought to be re-opened on account of change of opinion of the Assessing Officer about the manner of computation of the deduction. 20. The notice to re-open the assessment was found entirely on the assessment records. The entire basis for re-opening the assessment is the disclosure which has been made by the assessee in the course of the assessment proceedings. It is settled law that where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to the Assessing Officer to re-open the assessment based on the very same material with a view to take another view. Petitioner had during the course of the assessment proceedings made a complete disclosure of material facts. The Assessing Officer had called for disclosure on which a specific disclosure on the issue in question was made. In such a case, it cannot be stated that condition precedent to the re-opening of an assessment beyond a period of four years has been fulfilled. The statement in the reasons for reopening I have reasons to believe that income of above 1 Lakh which was ..... X X X X Extracts X X X X X X X X Extracts X X X X
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