TaxTMI 
TaxTMI 
2011 (11) TMI 51
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....he Act. This amount reflected the advance given by a group company, i.e. Atma Ram Builders Pvt. Ltd., to the appellant-assessee. On appeal, the Commissioner of Income Tax (Appeals), [CIT (Appeals), for short], rejected the argument of the appellant that the aforesaid amount of Rs.1,56,51,530/- reflected only a current account entry and no loan or advance was taken. However, he restricted the addition to Rs.19,51,725/- as the said amount was advanced to the appellant during the assessment year 2001-02. He deleted the balance addition of Rs.1,36,99,845.14 as the said amount was the opening balance and had not been advanced or given as a loan/advance during the assessment year in question, i.e., assessment year 2001-02. The CIT (Appeals) further observed that the Assessing Officer was free to take remedial action as per law. 3. The Assessing Officer thereupon initiated reassessment proceedings recording identical reasons for the two assessment years in question. The relevant portion of the reasons read as under:- " Appeal order in the case of M/s Atma Ram Properties Pvt. Ltd. for A.Y. 2001-02 was passed by the Ld. CIT(A) vide order No.206/03-04 dated 28.06.2004 wherein addition of R....
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....comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1.--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 fore....
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.... Atma Ram Construction P limited Rs.87,323.77 Debtors: Mrs Archana mamgain Rs.54,29,342.52 ARSD Endowment trust Rs.14,690.00 ARC Cement Ltd. Rs.27,98,461.76 AR Chadha Rs.14,26,761.62 AR Chadha & Co. Rs.75,04,916.62 Atma Ram Trust Rs.7,44,592.37 Mr. CM Chadha Rs.24,11,088.69 Smt. Chuniwati Chadha Rs.16,42,963.63 Smt. Kamlesh Sawhney Rs.11,73,376.87 Yours faithfully, For Atma Ram Properties P limited (C M Chadha) (Director)" 9. The aforesaid letter refers to the discussion with the Assessing Officer and also mentions enclosing a copy of accounts of sister concerns as creditors or debtors. The said letter refers to Atma Ram Builders Private Limited to whom Rs.77,00,182.66 was due and payable. 10. It is not disputed that after this letter was filed, the Assessing Officer passed the assessment order under Section 143(3) dated 15th February, 2002 making some enhancements and assessed the income of the appellant at Rs.1,11,76,124.88 instead of declared return income of Rs.49,89,970/-. However, no addition was made under Section 2(22)(e) of the Act on the ground of deemed dividend. 11. The Revenue has produced the original file before us. Vide order dated 7th F....
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.... on the part of the Assessing Officer cannot be attributed and regarded as a failure on the part of the assessee to make full and true disclosure of the material facts in the original assessment proceedings. The aforesaid error or failure of the assessing officer in not applying Section 2(22)(e) could have been corrected by exercise of power of revision as the original order may have been erroneous and prejudicial to the interest of Revenue, but limitation period for exercise of the said power had expired. The said error in applying a provision cannot be corrected in the present case due to the factual matrix, by exercise of power under Section 147 of the Act. It is not that the Revenue was remediless or the error could not be corrected or rectified. Due to delay and limitation, the remedial action cannot be taken under the applicable provision. Scope and ambit of each provision/remedy available under the Act is circumscribed and stipulated. Sometimes two or more provisions/remedies may be applicable and recourse to any one of the remedy may be proper but scope and ambit of a provision/remedy cannot be expanded beyond the legislative mandate. The jurisdictional preconditions, if st....
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....ee has shown sum of Rs.77,00,18,266/- against M/s. Atmaram Builders Pvt. Ltd. under the head " creditors". The nature of the transaction made with M/s. Atmaram Builders Pvt. Ltd. has nowhere been disclosed. In the said letter, the assessee has nowhere stated that the sum of Rs. 77,00,182/- represents loans and advances taken from sister concerns having specified percentage of holding of shares in the share capital of the assessee company. We, thus find that the ld. CIT(A) has rightly noted that the fact that the assessee has categorized the amount payable to M/s. M/s. Atmaram Builders Pvt. Ltd. under the head "creditors" without indicating that the assessee has taken loans and advances from the sister concern having share holding the share capital of the assessee company. From the details so filed and the assessment order originally made u/s 143(3), it is clear that the issue as to whether the amount shown under the head "creditors" in the name of M/s. Atmaram Builders Pvt. Ltd. was covered by the provisions contained in section 2(22)(e) was never a subject matter of assessment originally made u/s 143(3) of the Act nor any deliberation or discussion was made in that proceedings, an....
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....raised an inference which he may later regard as erroneous. The assessee had disclosed his books of account and evidence from which material facts could be discovered : it was under no obligation to inform the Income-tax Officer about the possible inferences which may be raised against him. It was for the Income-tax Officer to raise such an inference and if he did not do so the income which has escaped assessment cannot be brought to tax under section 34(1)(a)" 20. The aforesaid decision of the Supreme Court was elucidated and explained in Phool Chand Bajral Lal versus I.T.O., [1993] 203 ITR 456 (SC) and it was held that where the Assessing Officer gets fresh information that was not available at the time of original assessment, i.e. after the conclusion of the original assessment proceedings, which enables him to form a reasonable belief that income had escaped assessment because of omission or failure of the assessee to disclose full and true facts, reassessment proceedings could be validly initiated. It has to be, therefore, examined whether the assessing officer had received information from any other external source after conclusion of the first/ original assessment proceeding....
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.... from the jurisdictional Income-tax Officer at Calcutta, learnt that the Calcutta company from whom the assessee claimed to have borrowed the loan of Rs. 50,000 in cash had not really lent any money but only its name to cover up a bogus transaction and, after recording his satisfaction as required by the provisions of section 147 of the Act, proposed to reopen the assessment proceedings. The present is thus not a case where the Income-tax Officer sought to draw any fresh inference which could have been raised at the time of the original assessment on the basis of the material placed before him by the assessee relating to the loan from the Calcutta company and which he failed to draw at that time. Acquiring fresh information, specific in nature and reliable in character, relating to the concluded assessment which goes to expose the falsity of the statement made by the assessee at the time of the original assessment is different from drawing a fresh inference from the same facts and material which were available with the Income-tax Officer at the time of the original assessment proceedings. The two situations are distinct and different. Thus, where the transaction itself, on the basi....