TaxTMI 
TaxTMI 
2013 (1) TMI 19
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.... The petitioner upon receipt of the above notice requested the respondent to furnish a copy of the reasons recorded. After some correspondence, such reasons came to be furnished which read as under:- Reasons for Re-Opening Reg: Shri Bipinkumar P. Khandheria A.Y. 1995-96 In this case search action u/s.132 was conducted on 21.4.1995 at residence cum office premises of the assessee at Gondal. During the search in the statement recorded on oath u/s.132(4) of the I.T. Act, 1961 on 21.4.1995, in reply to question No.23 assessee made disclosure of unaccounted income of A.Y. 1995-96 and declaration in the prescribed form disclosing concealed income of Rs. 25,15,753/- duly signed by the assessee is also filed. As per the same, assessee has made in his individual capacity a disclosure of following: Rs. 2000000/- Consideration received on account of sale of factory. Rs. 200000/- Marriage expenses of his daughter. Rs. 54000/- On account of construction of shop known as Panchshil. Rs. 20000/- Difference of cash found during search. Rs. 30000/- Gold ornaments (four bangles) made during marriage. ....
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....counsel for the petitioner submitted that the search had taken place on 21st April, 1995. During the course of search, the petitioner had made a statement that he would disclose income in the assessment year 1995-96. However, on the same day, he had made an affidavit retracting his disclosure. The assessment for the assessment year 1994-95 came to be completed on 27th March, 1997 and the return of income in relation to the year under consideration was filed on 26th March, 1997. While filing such return, there was no duty cast upon the assessee to incorporate in the return the fact that this was a search case. In support of such submission, the learned counsel placed reliance upon the decision of the Calcutta High Court in the case of CIT v. Laxmidebi Mehta, wherein the court in the context of the failure on the part of the assessee to disclose fully and truly all material facts had observed that admittedly there was no column in the return showing the number of bonus shares. Once the sale of the shares was disclosed, it was for the ITO to check up the correctness of the assessees' claim. 4.1 Referring to the reasons recorded, it was pointed out that according to the respondent, th....
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....96, more so, when the revenue authorities themselves say that it is taxable in assessment year 1996-97. In support of his submission, the learned counsel placed reliance on the decision of this High Court in the case of Ahmedabad Cotton Mfg. Co. Ltd. v. Union of India [1974] 95 ITR 639 (Guj.). Reliance was also placed upon the decision of the Supreme Court in the case of Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1, for the proposition that any remissness on the part of the Assessing Officer can only be at the cost of the national exchequer and must necessarily result in loss of revenue. However, so far as income-tax assessment orders are concerned, they cannot be reopened on the score of income escaping assessment under section 147 of the Act after the expiry of four years from the end of the assessment year unless there be omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. Adverting to the reasons recorded, it was pointed out that according to the respondent, the return of income filed by the petitioner for assessment year 1995-96 as well as the order passed under section 143(3) of the Act are ....
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...., it was urged that the reopening of assessment beyond a period of four years from the end of the relevant assessment year without there being any failure on the part of the petitioner to disclose fully and truly all material facts is without authority of law. 5. Vehemently opposing the petition, Mrs. Mauna Bhatt, learned senior standing counsel for the respondent submitted that at the time when the return for assessment year 1995-96 came to be filed by the petitioner, the proceedings in relation to the previous assessment year, that is, 1994-95 were already pending before the Investigation Circle and the petitioner was well aware of the change in jurisdiction. The petitioner, therefore, ought to have filed the subsequent returns with the Investigation Circle whereas, the petitioner deliberately kept on filing the returns of income with the Income Tax Officer, Ward 1(2). 5.1 Next, it was submitted that the disclosure of income made by the assessee should be full and true and not a pretence. During the course of search proceedings which had taken place on 21st April, 1995, the petitioner had declared undisclosed income of Rs. 25,15,753/- and had stated that tax payable on the inco....
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....turn before an Assessing Officer, who had no jurisdiction, therefore, also amounts to non-filing of a return. In support of her submissions, the learned counsel placed reliance upon the decision of the Gauhati High court in the case of Sanwarmal Agarwal v. Asstt. CIT [1998] 229 ITR 783, as well as the decision of the Delhi High Court in the case of B.R. Industries Ltd. v. CIT [2002] 255 ITR 593. 6. The undisputed facts of the case are that there was a search on the premises of the petitioner on 21st April, 1995. During the course of the search, the petitioner made disclosure of unaccounted income for assessment year 1995-96 and declared concealed income of Rs. 25,15,753/-. On the same day, the petitioner made an affidavit retracting such disclosure, which does not appear to have been given to the Income Tax authorities at the relevant time. However, by a letter dated 8th May, 1995, the petitioner retracted his disclosure made during the course of search. Subsequently, the petitioner filed his return of income for assessment year 1994-95 on 26th March, 1996 and the assessment came to be framed on 27th January, 1997. The return of income for the year under consideration, that is, as....
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....sessment year 1995-96, it is seen that the assessee has not shown the undisclosed income as per the statement recorded on oath on 21st April, 1995 and as such, the assessment framed under section 143(3) does not include the income disclosed during the course of search. 8. Dealing with the second part of the reasons recorded, viz., that the return filed by the petitioner as well as the assessment order passed under section 143(3) of the Act for assessment year 1995-96 are without jurisdiction, it may be pertinent to note that in his affidavit dated 31st August, 2001, the respondent has categorically averred that it is not the case of the Department that the order passed by ITO, Ward 1(2) is bad in law. The only point is that income has escaped assessment. Thus, the Assessing Officer appears to have given up the said contention recorded in the reasons. Insofar as the say of the respondent that filing the return of income before the wrong Assessing Officer amounts to non-filing of return, this court in the petitioner's own case in Special Civil Application No.6557 of 2001 and other cognate matters, by a judgment and order dated 13th August, 2012 has in relation to assessment years 19....
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.... his normal Assessing Officer? 13. Even if we proceed on the basis that the petitioner filed the returns before his original Assessing Officer who was a wrong officer, can the Department now take a stand that such returns were non est and therefore, the assessments subjected to reopening on the premise that no returns were filed? 14. In the facts of the present case, we are unable to accept such a stand of the Department. On the basis of the returns filed by the petitioner, and the intimation sent by the Department under section 143(1) of the Act, the assessee discharged his tax liabilities. The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. 15. It is not reflected from the record that the petitioner was ever made aware about the change of jurisdiction of the Assessing Officer. It may be that for the assessment year 1994-95, the return was processed under section 143(3) of the Act by the A.C.I.T. (Investigation), Rajkot. However, the fact that being subjected to search,....
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.... the interim relief granted in the present petition wherein it has been categorically stated that insofar as items No.2 and 5 are concerned, the same have been taxed in assessment year 1994-95, item No.6 pertains to assessment year 1993-94, and item No.4 has been taxed in assessment year 1996-97. It has also been categorically averred in the said application that three items now remain namely, items No.1, 3 and 7. 10. It may be recalled that the learned counsel for the petitioner has contended that in relation to assessment year 1996-97, notice dated 20th December, 2002 had been issued calling upon the petitioner to provide information in relation to various items which included the remaining three items also. It has been submitted that as the Assessing Officer after considering the explanation of the petitioner has not taxed the said items, it was no longer open for the Assessing Officer to once again consider the said items in relation to the year under consideration. To test the aforesaid contention, it may be pertinent to refer to the reply dated 16th January, 2003 filed by the petitioner in response to the notice dated 20th December, 2002 issued under section 142(2) of the Ac....
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....etter dated 8th May, 1995, the petitioner had subsequently retracted the statement made during the course of search. However, while filing the return of income for assessment year 1995-96, the petitioner had not disclosed to the Assessing Officer that he had made such disclosure which he had subsequently retracted as according to him, there is no duty cast upon him to make such disclosure while filing his return of income. In the opinion of this court, the fact regarding the search having taken place and the petitioner having made a disclosure was relevant material and was a primary fact which ought to have been disclosed during the course of assessment proceedings. It is true that the petitioner had subsequently retracted the said statement. However, the petitioner in his statement recorded during the course of search having stated that the said income would be disclosed while filing the return for assessment year 1995-96 ought to have brought such fact to the notice of the Assessing Officer. The contention that there was no obligation cast upon the petitioner to make such disclosure while filing the return of income, does not merit acceptance. The Supreme Court in Calcutta Discou....
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.... are relevant, amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed." 13. In Malegaon Electricity Co. (P) Ltd. v. CIT [1970] 78 ITR 466, the Supreme Court held thus: 8. In our judgment the tribunal erred in declining to decide the question whether any portion of the sale price came within the scope of Section 10(2)(vii). That question should have been examined at the very outset for the purpose of considering whether the assessee had placed before the Income Tax ....
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.... Income Tax Officer the price realised as well as the written down value of the assets sold, then it could have been said that the assessee had done its duty and it was for the Income Tax Officer to draw any inference on the facts placed before him. But the failure of the assessee to disclose to the Income Tax Officer the fact that the price realised by it by sale of its assets was more than the written down value of those assets or at least the written down value of those assets amounts, in our opinion, to a failure on its part to disclose fully and truly the material facts necessary for its assessment. From the cryptic statement of the Income Tax Officer in the original assessment order that "no adjustment is necessary" the tribunal was not justified in drawing the inference that the Income Tax Officer had considered all the relevant facts. 14. In the facts of the present case also, it may be that if the Assessing Officer had made some efforts and examined the record of the previous assessment year, he may have come to know that this was a search and could have taken consequent action thereon. However, that by itself would not absolve the petitioner from the duty to disclose all....