TMI Blog2022 (2) TMI 485X X X X Extracts X X X X X X X X Extracts X X X X ..... itha Nair For the Respondents : Madhur Agarwal ORDER Per M. Balaganesh , AM This appeal in ITA No. 14/Mum/2020 CO No. 75/Mum/2021 for A.Y. 2008-09 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-2, Mumbai in appeal No. CIT(A)-2/IT/10226/2016-17 dated 29/10/2019 (ld. CIT(A) in short) against the order of assessment passed u/s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 28/03/2016 18/10/2010 respectively by the ld. Dy. Commissioner of Income Tax-1(1) (hereinafter referred to as ld. AO). 2. The only ground raised by the Revenue in their appeal is challenging the validity of action of the ld. CIT(A) quashing re-assessment proceedings. 3. We have heard the rival submissions and perused the materials available on record. We find that assessee company 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 ₹ 16,38,13,477/-. The original assessment was completed u/s. 143(3) of the Act on 18/11/2010 determining total loss at ₹ 16,01,07,118/- after making addition on account of profit on sale of investments of ₹ 27,85 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents to Insured Persons (Reimbursement Claims) Total payments from Float accounts ₹ 1,80,29,609/- ₹ 1,25,30,334 ₹ 3,05,59,943 3. The provisions of Section 194J(1) of the I.T. Act cast a liability on the person responsible for paying to a resident any sum by way of fees for professional services. The inescapable provisions based on sound commercial principles is that the person who avails the professional services will be the person responsible for paying fees towards the same. Further, in the Explanation of Section 40(a), 'Professional Services' have been defined to have the same meaning as in Section 191J. Therefore if for the purpose of Section 194J the assessee has availed professional services from the Hospitals it naturally follows that he has availed professional services of setting claim of insurances from the Hospitals for the purpose of Section 40(a)(ia) also. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar, so as to establish 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 affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. 3.3. We find that the ld. CIT(A) had quashed re-assessment proceedings on the mere fact that the ld. AO in the reasons recorded for reopening the assessment had not indicated any failure on the part of the assessee to make full and true disclosure of material facts during the original assessment proceedings. We find that the ld. CIT(A) had also placed reliance on various decisions of the Hon'ble High Court in support of his contentions. The relevant operative portion of the CIT(A) order is reproduced hereinbelow:- 4.3.2 Further, I find that assessment in this case was made u/s. 143(3) of the Act on 18.11.2010, determining the total loss at ₹ 16,01,07,118/-. The AO has not stated in the reasons record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reassess. If on reading of the reasons recorded as a whole implies/points/evidences a failure on the part of the assessee to disclose fully and truly All material facts necessary for assessment, then the exercise of jurisdiction cannot be faulted. Therefore, the submission that the absence of the words ''failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment' would make the issue of notice under section 148 without jurisdiction cannot be accepted. [Para 8] However, in the facts of the present case, the reasons as recorded, when read as a whole do not indicate even remotely any failure on the part of the assessee to disclose fully and truly any material facts necessary for assessment. The only reason recorded in this case by the Assessing Officer for reopening the subsequent decisions of Tribunal and Courts. There is no whisper of any facts indicating that the assessee had not having disclosed any fact which led to a reasonable belief that income chargeable to tax has escaped assessment. Therefore, in the present facts, the reasons as recorded for issuing the impugned notice do not satisfy the jurisdiction ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide the link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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