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TMI Blog2022 (2) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... is a general insurance service provider and had filed its return of income for the A.Y. 2008-09 on 25/09/2008 declaring total loss of Rs. 16,38,13,477/-. The original assessment was completed u/s. 143(3) of the Act on 18/11/2010 determining total loss at Rs. 16,01,07,118/- after making addition on account of profit on sale of investments of Rs. 27,85,238/- and disallowance on account of Amortization of debt securities of Rs. 9,21,121/-. In the said assessment, loss including unabsorbed depreciation of Rs. 16,01,07,118/- of the current year and loss including unabsorbed depreciation of Rs. 9,22,14,754/- of the earlier years was allowed to be carried forward to subsequent years. Subsequently based on the information available with the ld. AO, it revealed that M/s. Paramount Healthcare Services P. Ltd., (PHSPL) who was a notified Third Party Administrator (TPA) for settling the medical claims of the insured clients on behalf of the assessee company, had helped the assessee company in settlement of claims of reimbursement to various hospitals and of insured persons. During the year under consideration, it was observed that as against the claims settled by PHSPL, the assessee company m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. In the instant case, the payments mentioned supra have been made by M/s. HDFC ERGO General Insurance Company Limited to various Hospital/Insured person without deducting any TDS. In view of the above, I have reason to believe that the income of Rs. 3,05,59,943/- for A.Y. 2008-09 has escaped assessment u/s. 147 of the I.T. Act, 1961 for this year. Therefore this case is proposed to be reopened u/s. 147 of the Act Issue notice u/s. 148 of the IT. Act. 3.2. From the perusal of the aforesaid reasons we find that the ld. AO had not recorded anywhere regarding the failure on the part of the assessee to make full and true disclosure of material facts in the original assessment proceedings. This is a mandatory requirement of law as held by the Hon'ble Jurisdictional High Court in the case of Hindustan Lever Ltd., vs. ITO reported in 268 ITR 332 wherein it was held as under:- "20. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment in this case was made u/s. 143(3) of the Act on 18.11.2010, determining the total loss at Rs. 16,01,07,118/-. The AO has not stated in the reasons recorded that the income had escaped assessment due to failure on the part of the appellant to disclose, fully and truly all material facts necessary for the assessment for that assessment year. However, the AO has stated in the remand report that non-deduction of TDS on payments made to hospitals has not been reflected in the Tax Audit Report and even the AO did not apply his mind on the issue in the first assessment. On going through the assessment record, it is apparent that the material facts regarding non-deduction of TDS in respect of payments made to the hospitals, in the nature of professional fees, was not disclosed either in the return or during the assessment proceedings. However, the reasons as recorded by the AO, when read as a whole do not indicate even remotely any failure on the part of the appellant to disclose fully and truly any material facts necessary for assessment. The only reason recorded in this case by the AO for reopening is that certain payments have been made through the TPA to various hospitals a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to tax has escaped assessment. Therefore, in the present facts, the reasons as recorded for issuing the impugned notice do not satisfy the jurisdiction requirement in case of notice issued beyond a period of four years from the end of the relevant assessment year, le., 1998 - 99. (Para 9] * In the result, impugned notice is quashed and petition filed by assessee is allowed". 4.3.3 Further, it is now well settled that the reasons which are recorded by the AO for reopening an assessment are the only reasons which could be considered and no addition could be made to those reasons and no inference could be drawn based on reasons not recorded. In this regard, reliance is also placed on the decision of Hon'ble Bombay High Court in the case of Nirmal Bang Securities Pvt. Ltd. Vs. ACIT (2016) 382 ITR 93 (Bom) wherein it was held as under: 22. It is now well settled that the reasons which are recorded by the Assessing Officer for re-opening an assessment are the only reasons which could be considered. No substitution or deletion is permissible. No addition can be made to those reasons and no inference can be allowed to be drawn based on reasons not recorded. The reasons which are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish the vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing an affidavit or making an oral submission, whereas, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches the court, on the strength of the affidavit or oral submissions advanced." 4.3.4 In view of the above discussion, I am of the considered opinion that the AO has failed to fulfil the jurisdictional requirement of the conditions provided in the first proviso to Sec. 147 since there is no allegation in the reasons recorded that any income chargeable to tax had escaped assessment for such assessment year by reason the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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