TaxTMI 
TaxTMI 
2013 (1) TMI 207
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....on and otherwise ought to have been cancelled. 1.3 The Appellant prays that the ACIT be directed accordingly. Ground No.2 - Addition on account of sales made to Johnson & Johnson Exports Limited ("JJEL") 2.1 On the facts and circumstances of the case and in law, the CIT(A) erred in directing the ACIT to add Rs. 50,96,991 after reducing advertisement expenses and freight charges, to the total income, on the ground that the Appellant has deliberately incurred a net loss by making sale to JJEL at a consideration lower than the cost of production. 2.2 The Appellant prays that the ACIT be directed to delete the addition of Rs. 50,96,991. Grounds of Appeal: A.Y. 1994-95 Ground No.1 -Validity of reassessment proceedings: 1.1 On the facts and circumstances of the case and in law, the Commissioner of Income Tax (Appeals)-V ("CIT(A)") erred in upholding the validity of re-assessment proceedings initiated by the Assistant Commissioner of Income-tax, Range 5(2) ("ACIT") u/s.147 of the Income-tax Act, 1961 ("the Act"). 1.2 The Appellant submits that the re-assessment is void, b....
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....es of all the appeals are same. Details of dates of original returns filed, assessed income and date of 148 notices etc., are as under: A.Y. Dt. of filing of Return Returned Income (Rs.) Assessed Income (Rs.) Dt.-issue of 148-notice. Dt. of 148return 1993-94 31.12.93 18.11Crores 21.64 Crores 30.05.2001 26.06.2001 1994-95 03.11.94 30.37 Crores 30.40 Crores 25.05.2001 26.06.2001 1995-96 30.11.95 38.84 Crores 49.24 Crores 30.05.2001 26.06.2001 2.1. Vide letter dt.26.06.2001 Assessee requested the AO to supply a copy of the reasons recorded for re-opening the assessments for respective AYs. Re-assessments were completed u/s.143(3) r.w.s.147on 10.01.2003, 10.01.2003 and 31.10.2002 for the AYs.1993-94, 1994-95, 1995-96 making additions to the tune of Rs.50,96,991/-, Rs.1,21,82,084/-, Rs.94,20,905/- to the income of the assessee-company for the respective AYs. Assessee-company preferred appeals before the First Appellate Authority (FAA). He partly allowed the appeal of the assessee-he gave relief to the extent of advertisement, freight and transport expenses. 2.2. Challenging the order of the FAA, assessee-co....
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....f income, that the AO came to know about this fact while completing assessment proceedings of the 1997-98, that the fact found by the AO in 1997-98 was existing in A.Ys. 1993-94, 1994-95 and 1995-96 also, that the said facts were not disclosed by the appellant either in the return of income filed or in the details furnished during the course of assessment proceedings, that it could not be said that the appellant had disclosed fully and truly of the facts necessary for assessments. He relied upon the case of Jeskaran Bhuvalka (76 ITR 128) and he finally held that there was failure on the part of the assessee and hence re-assessment proceedings were in accordance with the provisions of law.He further held that the proposal for re-opening for was approved by CIT-V,Mumbai by recording the finding "Yes, I am satisfied that it is a fit case for issue of notice u/s. 148", that CIT had applied his mind to the facts of the case, that the CIT had raised a query to how for the A.Ys. 1993-94, 1994-95 and 1995-96 it could be said that there was omission of failure on the part of the assessee that CIT accorded sanction to issue notice for the relevant Assessment Years after taking into considera....
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....ion 40A(2)(b), which mostly relates to purchases from the assessee company.The above issue, therefore, needs to be examined in the light of the assessment order for A. Y. 1997-98 as discussed above. I have therefore, reason to believe that income chargeable to tax to the extent of the above mentioned under pricing of transfer of products by the assessee company, has escaped assessment for AY 1993-94. It is, therefore, a fit case for reopening under the I.T.Act." 3.1. Similar reasons were recorded for the remaining two AYs also. Before us,AR submitted that copy of the reasons recorded by the AO for reopening the assessment were not supplied to the assessee-company, though a request was made to the AO, that the assessee had disclosed all relevant facts to the AO, that there was no failure on part of the assessee that warranted invocation of provisions of section147/48, that reopening was done after four years,that provisio to section 147 was applicable in the case under consideration. He relied upon the orders of the Hon'ble Jurisdictional High Court in the cases of Videsh Sanchar Nigam Ltd (IT Appeal No. 4235 of 2010). and Fomento Resorts & Hotels Ltd. (Tax Appeal no 71 of 2006).....
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....henever reopenings have been challenged by the assessees. A notice u/s.148 can be quashed by the courts, if the belief is not bona fide, or one based on vague, irrelevant and non-specific information. There should be a live link between the reasons and the evidence/material available with the AO.The reasons to believe would mean cause or justification of the AO to believe that the income has escaped assessment and not that the AO should have finally ascertained the fact by legal evidence or reached a conclusion. ii). Section 148 of the Act has a definite purpose and has to be undertaken with a specific object of netting escaped income. The foundation of such exercise has to be in the shape of information or materials which are definite in nature and not presumeptuous or imaginary. It is not designed for correction of errors Sec.147-148 are not substitute for the provisions that deal with rectification of mistakes i.e. Sec.154. iii). 'Escaped income'includes not only the income escaped because of non-filing of return of income but also the taxable income that is under assessed / not assessed because of mistake of the assessee.In addition t....
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....quent to the original assessment orders. Even from materials which are already available on record, if the subsequent officer finds reason to believe that there has been escapement of income from assessment, he can issue notice u/s.148. vii). An assessment can be reopened on the basis of an order of assessment for a subsequent assessment year. viii). In order to fall within the proviso to section 147 of the Act, apart from stating that there were reasons for the AO to believe that there had been escapement of chargeable income, it is also to be recorded that such escapement was due to the failure of the assessee to disclose fully and truly all material particulars necessary for his assessment for that assessment year. Such a recording is absolutely mandatory. ix). A full disclosure is a disclosure which provides a complete statement of all material facts. A true disclosure is a disclosure which does not suppress material facts from the AO and does not contain any taint of falsehood. In other words Act casts a duty upon the assessee in this regard and assessee is expected not only to disclose all material facts, but t....
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....t was sought to be inferred that there was a failure to disclose all material facts had not been set out in the reasons. We are of the opinion that the primary jurisdictional requirement for reopening the assessment beyond a period of four years had not been fulfilled in the assessee's case. In other words AO had failed to establish that there was a failure on the part of the assessee to disclose all material facts for the assessment years in question. In these circumstances, basic requirement for invoking the provisions of section 147, after the expiry of a period of four years from the end of the relevant assessment year, is not satisfied. Hence, the AO could not have assumed valid jurisdiction u/s.147 of the Act. The notice issued u/s.148 of the Act for reopening the assessment, therefore, cannot be sustained. We have perused, more than once, the reasons recorded by the AO and have found that except for the statement that there was omission on the part of the assessee to furnish the true and correct affairs of the company, there is nothing whatsoever in the reasons recorded to indicate the nature of the omission and as to which facts had not been truly and fully disclosed. Hence....
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....s was not a case where the entries in question were imbedded in the account books and required more diligence than a cursory look at the accounts to find it out. Assessee had furnished required details to the AO in earlier AYs. It is not the case of the AO that information about earlier years' sale-price was furnished, for the first time, during the assessment proceedings of 1997-98. Thus, there was no ambiguity or doubt about the primary facts which were disclosed by the assessee at the time of the original assessments. Considering the above facts we are of the opinion that reopining of cases under consideration was not as per the established principles of law related with reassessment. 4.1.3. The second issue with regard to re-opening is non-supply of reasons recorded by the AO to the assessee-company. FAA in his order passed in pursuance of order of the ITAT directions, has held that the assessee was aware of the reasons recorded by the AO. Awareness about the reasons recorded is totally different from supplying the copies of reasons to the assessee. FAA has admitted that "it is no doubt true that appellant had requested vide letter dt. 26-06-2001 for copy of the reasons reco....