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TMI Blog2023 (4) TMI 370X X X X Extracts X X X X X X X X Extracts X X X X ..... e case and in law, the Id. CIT(A) failed to appreciate that the notice u/s 143(2) and 142(1) has been issued prior to furnishing the reason to believe and disposal of objection against the reason to believe which is in violation of principal laid down by the apex court in the case of G K N Driveshaft. 4. That on the facts and circumstances of the case and in law Ld. AO erred in reopening the assessment without there being any failure on the part of the assessee. Hence, such order of reassessment is bad in law and liable to be quashed." 3. Since the assessee has raised the legal issue challenging the validity of the reopening of the assessment for AY 2012-13, first we will adjudicate the same. 4. Brief facts relating to the legal issue are that the assessee has filed its return of income for AY. 2012-13 on 29.09.2012 declaring income of Rs.46,66,360/- which was selected for scrutiny (complete scrutiny), and the AO was pleased to accept the income returned by the assessee vide assessment order passed u/s 143(3) of the Income Tax Act, 1961 (hereinafter "the Act") vide order dated 20.03.2015. Later, the assessee received a notice dated 14.03.2010 u/s 148 of the Act from the AO prop ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same time, we have to bear in mind that it is not any and every material, howsoever vague and indefinite or distant or remote and far--fetched, which would warrant the formation of belief relating to escapement of income. It is well settled in law that reasons as recorded by AO for re--opening the assessment, are to be examined on a stand--alone basis. Neither anything can be added to the reasons so recorded, nor can anything be deleted from the reason so recorded. The Hon'ble Bombay High Court in the case of Hindustan Lever Ltd. (2004) 268 ITR 332 (Bom) has inter alia observed that "......it is needless to mention that the reasons are required to be read as they were recorded by the AO. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn on the basis of reasons not recorded by him. He has to speak through the reasons". Their Lordship added "The reasons recorded should be self--explanatory and should not keep the assessee guessing for reason. Reason provide link between conclusion and the evidence...". So as held by the jurisdictional High Court that while examining the jurisdiction of AO to have re--opened ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed loan amounting to Rs.1,42,10,931/i.e. Rs.(3,53,14,785 - 2,11,03, 854). The detail scrutiny of ledger of interest paid on unsecured loan revealed that out of total interest paid Rs.1,42,10, 931/-, interest of Rs.1,01,15,309/- was paid to Urban Kshetra Infrastructure Pvt Ltd at the rate of 10%. However, it is seen from the schedule 2 of Balance Sheet that as on. 1st April 2011, the loan from Urban Kshetra Infrastructure Pvt Lte is Rs.2,15,00, 000/-. and as on 31st March 2012 Nil. The loan has been repaid on August 2011 and Assessee has not taken any further loan during the year from the Urban Kshetra Infrastructure Pvt Ltd: Thus the interest @ 10% on Rs.2,15,00,000/- works out to be Rs.8,95,833/- (for 5 months from April 17 to August 2011). The excess payment of interest of Rs.92,19,206/- i.e. Rs.(1,01,15,039 - 8,95,833) resulted is under assessment of income to such an extent. Hence, I have reason to believe that the assessee has not disclosed its real income in its books of accounts, to the extent of Rs.92,19,206/- and income chargeable to tax to such an extent has escaped assessment within the meaning of sec 147 of the IT Act, 1961. Such escapement has occurred due to ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... And other details of payment of interest also AO admits of taking note from ledger of interest paid. Therefore, it is seen that there was no tangible material from outside source which triggered the reopening of the assessment, [after original scrutiny assessment was framed u/s 143(3) of the Act dated 20.03.2015]. Even though the AO in the reasons recorded has made a bald statement at the last para that there was failure on the part of the assessee to disclose true and complete facts in the return filed by the assessee is not per-se wrong and incorrect as noted (supra). And as we noted the aforesaid information has been culled out by him (AO) from the balance-sheet/TAR of the assessee which has been furnished along with return of income during the complete scrutiny of the assessee. Moreover, we note that the AO during the original assessment proceedings had asked for the details of interest paid at Rs.3.35 crores vide notice dated 22.08.2014 (refer question no. 10 page 24 of PB); and pursuant to which the assessee had furnished reply dated 04.09.2014 wherein it has been clearly shown that the assessee has paid Rs.1,01,15,039/- to M/s. UKIPL which is found placed at page no. 20-23 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t expenditure. However, we note that Hon'ble Bombay High Court in the case of M/s. Godrej & Boyce Mfg. Co. LTD Vs. ACIT [2022 (4) TMI 639] held that petitioner cannot be stated to have not disclosed material facts after having filed balance-sheet along with computation of income with its Annual return u/s 139 of the Act. The Hon'ble High Court observed ".........there was nothing more to disclose and a person cannot be said to have omitted to disclose or failed to disclose when he had no knowledge.' And therefore it was held that Explanation-1 to Section 147 of the Act would not come to rescue of the revenue; and Hon'ble High Court has held as under:- "3. We have to note that reasons as quoted above clearly provides that information regarding first item, i.e., WIP has been obtained from the balance-sheet of the Company and 2nd item, ground rent, has been obtained from Profit and Loss account and computation of income of Petitioner. Therefore, information has been obtained from the primary facts and documents filed by Petitioner. 4] This not a case where Petitioner can be accused as having merely produced its books of accounts or other evidence during the course of assessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... years from the end of relevant assessment year, as provided in the proviso of Section 147 of the Act, onus is on Respondent to show that income has escaped assessment due to failure on the part of assessee to disclose truly and fully material acts required for assessment. 6) Mr. Pardiwalla submitted and rightly stated that reasons do not indicate anywhere that there has been failure to disclose. Use of expression ".....it is quite clear that assessee company has failed to disclose fully truly all material facts necessary for assessment....." is only a bald statement used to get out of the restrictions imposed in Section 147 of the Act. 7) Mr. Pinto relied upon a judgment of this Court in Crompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax, Circle 6 (2) (2015) 55 taxmann.com 59 (Bombay) to submit that even if the reason for reopening does not specifically state that there was any failure on the part of petition, disclose fully and truly all material facts necessary for its assessment for the relevant assessment yea, will not be fatal to the assumption of jurisdiction under sections 147 and 148 of the Act. We would certain, agree with Mr. Pinto but as held in Crompton ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supra). Therefore assessee cannot be said to have failed to disclose truly and fully the material/information regarding this issue. The Hon'ble Bombay High Court in the case of Mangalore Refinery & Petro Chemicals Ltd. Vs. DCIT (W.P. No. 1160 of 2014 dated 18.202.2009) reported in 2022 (2) TMI 1038 had an occasion to deal with such a situation and their Lordship observed as under: - "12. The situation which is obvious is that during the course of the scrutiny assessment under section 143(3) of the Act, 1961, the Assessing Officer had made specific query as regards leased assets repurchase expenses and solicited explanation and documents. In compliance thereto, the petitioner furnished the requisite information and documents. It is true that in the assessment order dated 18th December, 2008, the Assessing Officer did not specifically advert to the said aspect of the matter and in terms record that the explanation so furnished was accepted and allowance upheld. However, this factor is not of decisive significance. 13. It is trite law that once a query is raised and the assessee furnishes explanation thereto, the Assessing Officer is presumed to have applied his mind to the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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