TMI Blog2023 (9) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... been repeatedly held, such reasons cannot be supplemented or substituted belatedly either by affidavits or while disposing of objections of the Petitioner. Thus, it is clear that the crucial jurisdictional parameters prescribed in the proviso to Section 147 of the IT Act i.e. assessee's failure to disclose fully and truly all material facts necessary for assessment, was not fulfilled. The impugned notice, therefore, warrants interference. We are not too sure whether the ratio of SL Lumax Ltd. [ 2021 (9) TMI 249 - MADRAS HIGH COURT] would apply to the facts of the present case when there is no dispute that the Petitioner had furnished reference Court's award determining the market rate at ₹300/- per square metre. The record discloses that at the time of original assessment proceedings, the Petitioner had filed hardly five documents, out of which one was a copy of the judgment and award of the District Court enhancing base rate for compensation to ₹300/- per square metre. Since the impugned notice warrants interference based upon non-satisfaction with the crucial jurisdictional parameters prescribed in the proviso to Section 147 we do not propose to exa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Petitioner's objections by making a speaking order. Ms. Linhares submitted that the Respondents would dispose of the Petitioner's objections by a speaking order and until then will not proceed with the reassessment. This statement was accepted, and liberty was granted to the Respondents to consider and dispose of the Petitioner's objections on their own merits by passing a speaking order. 8. This Court, in its order dated 04.10.2022, clarified that if the Petitioner's objections were to be overruled or rejected, then the Respondents would refrain from proceeding with reassessment for a period of four weeks from the date of communication of the speaking order to the Petitioner. 9. The Respondents, by order dated 14.04.2023 disposed of the Petitioner's objections. The objections were rejected for the reasons recorded in the order dated 14.04.2023. Accordingly, the Petitioner instituted the present petition to question the notice dated 31.03.2021 seeking to reopen the assessment for Assessment Year 2015-2016 and the order dated 14.04.2023 by which the Petitioner's objections to such reopening came to be rejected. 10. Mr Rao, learned counsel for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me of the original assessment. He submits that capital gains were calculated based on the rate of ₹300/- per square metre awarded by the reference Court and paid to the Petitioner by the appropriate Government. He submits that this is nothing but a case of change of opinion, which cannot be a legitimate basis for reopening the assessment. He relied on Aroni Commercials Limited (supra) and Lintas India Private Limited (supra) to support this proposition. 14. Based on the above grounds, Mr Rao urged that the rule be made absolute in this petition. 15. Ms Linhares, learned Standing Counsel for the Respondents countered Mr Rao's contention by submitting that mere production of reference Court's award by which the Petitioner was awarded compensation at the rate of ₹300/- per square metre was not sufficient. She referred to Explanation - 1 to Section 147 of the IT Act which provides that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the proviso to Section 147 of the IT Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... This notice is being issued after obtaining the necessary satisfaction of the PCIT, Panaji. MAWR GAJANAN KAMBLE CIRCLE 1 (1) PANAJI 21. Admittedly, the impugned notice dated 31.03.2021 which seeks to reopen the assessment for the Assessment Year 2015-2016 is issued after the expiry of four years from the end of the relevant Assessment Year. Accordingly, there was no dispute that proviso to Section 147 of the IT Act would apply. 22. In Aroni Commercials Limited (supra), a coordinate Division Bench of this Court has explained a common jurisdictional requirement for reopening of assessment both within and beyond a period of 4 years from the end of the relevant assessment year must be based on reason to believe that income chargeable to tax has escaped assessment. The reason for issuing such a notice to reopen must be recorded before issuing such a notice. However, there is an additional jurisdictional requirement to be satisfied while seeking to reopen the assessment beyond the period of 4 years from the end of the relevant assessment year viz. that there must have been a failure on the part of the assessee to disclose fully and truly all material facts necess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Petitioner, therefore, applied for reasons based upon which the impugned notice under Section 147/148 of the IT Act was issued to the Petitioner. The reasons were accordingly, furnished to the Petitioner under cover of letter dated 11.08.2021. 26. The reasons furnished to the Petitioner read as follows: - Reasons for the reopening of the assessment in the case of Teofilo Fernando Antonio Pinto A. Y. 2015-16 u/s 147 of the Income Tax Act, 1961. The assessee is an Individual. It has filed a return of income for the assessment year 2015-16 on 28.07.2015, declaring income of Rs. 3,82,42,440/-. The case is selected for scrutiny assessment, which was completed on 07-12-2017 declaring assessed income of Rs. 3,82,42,440/-. During the relevant A Y, the assessee had received enhanced compensation (6,05,09,227) received compulsory acquisition of the assessees' inherited lands, which included enhanced compensation amount of Rs. 2,45,52,900 chargeable u/s 45(5)(b) and accumulated interest thereon to an extent of Rs. 3,59,56,327 chargeable under the head Income from other sources (net of deduction u/s 57(iv). The assessee in his computation of income, offered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o to Section 147 of the IT Act i.e. failure to disclose fully and truly all material facts necessary for assessment was not fulfilled. In the said case, neither notice nor reasons in support of such notice had alleged failure to disclose fully and truly all the material facts. 29. In Commissioner of Income Tax vs. Marhatta Chamber of Commerce Industries and Agriculture - 2019 SCC OnLine Bom 29, neither in the notice nor in the reasons for reopening assessment there was any allegation about failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The Court, therefore, held that it was by now well settled that the reasons which are recorded by the AO for reopening the assessment are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on the reasons not recorded. This being the position in law, and admittedly there being no allegation in the reasons that there was any failure on the part of the assessee to disclose fully and truly any material fact, the Tribunal was not incorrect in upholding CIT (Appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were disposed of cannot be regarded as a valid defence of the impugned notice. The reasons cannot be given for the first time at the stage of disposal of objections filed by the Petitioner objecting to reopen an assessment. The reasons must exist and be recorded at the time of issuing notice under Section 147/148 of the IT Act. The validity or otherwise of the notice under Section 147/148 is required to be determined based on such reasons existing and recorded at the time of issuance of notice. As has been repeatedly held, such reasons cannot be supplemented or substituted belatedly either by affidavits or while disposing of objections of the Petitioner. 32. Thus, it is clear that the crucial jurisdictional parameters prescribed in the proviso to Section 147 of the IT Act i.e. assessee's failure to disclose fully and truly all material facts necessary for assessment, was not fulfilled. The impugned notice, therefore, warrants interference. 33. The issue of whether Explanation - 1 to Section 147 applies or not need not be gone into in the present case because of the absence of even an allegation in the impugned notice or in the reasons furnished to the Petitioner that ..... X X X X Extracts X X X X X X X X Extracts X X X X
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