TaxTMI 
TaxTMI 
2011 (11) TMI 242
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...., (2002) 256 ITR 1 (Del.), which has been approved by the Supreme Court in (2010) 320 ITR 561 (SC). (3) In the decision, the Court has relied upon the records produced by the Revenue but the said records were not made available to the petitioner. The petitioner was not aware of the audit objections. Audit objections cannot be a ground to reopen assessments as held in CIT versus Simbhaoli Sugar Mills Limited, (2011) 333 ITR 470 (Del). 2. The first and the third contention for the sake of convenience can be taken up together. The matter was heard on 13th September, 2011 in the morning and then was taken up and heard in the afternoon. Order dated 13th September, 2011 specifically records that the counsel for the respondent had produced the requisite records. By an earlier order dated 18th July, 2011, the Revenue was directed to produce the relevant assessment records at the time of hearing. The records were examined by the Court at the time of hearing and were retained for examination and consideration to decide the writ petition. At the time of hearing on 13th September, 2011, the petitioner did not pray and ask that the records should be shown to them. ....
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....xplanation in Consolidated Photo and Finvest Ltd. vs. Assistant Commissioner of Income Tax, (2006) 281 ITR 394 (Del) it has been held:- "9. The above would show that cases falling in clause (c) of Explanation 2 in which income chargeable to tax has been underassessed or assessed at too low a rate or cases in which income has been made the subject of excessive relief under the Act or where excessive loss or depreciation allowance or any other allowance under the Act has been computed, would constitute cases of income escaping assessment. There is considerable authority for the proposition that the jurisdiction of the Assessing Officer to initiate proceedings would depend upon whether he has reasons to believe that any income chargeable to tax has escaped assessment. A long string of decisions rendered by the Supreme Court have emphasized that the belief of the Assessing Officer must be in good faith and must not be a mere pretence. The apex court has further held that there must be a nexus between the material before the Assessing Officer and the belief which he forms regarding the escapement of the assessee's income. A writ court, therefore, is entitled to examine whether....
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....etax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income-tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escaped assessment." 15. To the same effect is the decision of the Supreme Court in Malegaon Electricity Co. P. Ltd. v. CIT [1970] 78 ITR 466 where the court observed (page 471): "It is true that if the Income-tax Officer had made some investigation, particularly if he had looked into the previous assessment records, he would have been able to find out what the written down value of the assets sold was and consequently he would have been able to find out the price in excess of their written down value realised by the assessee. It can be said that the Income-tax Officer if he had been diligent could have got all the necessary information from his records. But that is not the same thing as saying that the assessee had placed before the Income-tax Officer truly and fully all material facts necessary for the purpose of asses....
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....e Revenue has submitted that special leave was granted against the decision in Consolidated Photo and Finvest Limited (supra) but the civil appeal has been dismissed. We need not examine the said aspect because we are convinced that in the present case what has weighed with the Court is the factual findings recorded in the paragraphs 8 and 9, which read as under:- "8. We have examined the original records of the case which have been produced before us. Reassessment proceedings have been initiated after examining and considering the audit note. The note records that the auditor's scrutiny revealed that the Assessing Officer had asked the assessee to furnish complete details/confirmations in respect of the sundry creditors amounting to Rs. 1,66,37,402/-. Out of the said amount, the assessee could submit confirmations in respect of the creditors amounting to Rs. 1,13,53,344/- and the balance amount of Rs. 52,84,058/- remained unconfirmed. The Assessing Officer in the original assessment order has held that the provisions of Section 41(1) were attracted as liability had remained unpaid and the assessee had failed to explain nexus of these expenses with its business activities....