TaxTMI 
TaxTMI 
2013 (8) TMI 287
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.... on August 3, 2004, seeking to reopen the assessment of the petitioner for the year 2000-01. At the request of the petitioner, reasons for reopening were supplied which read as under : "Reasons for reopening are as under : (1) The amount of Rs. 3,90,700 on account of penalty for non-fulfilment of export obligation to be disallowed in view of the decision of the Delhi High Court in the case of CIT v. Orissa Cement Ltd. [2002] 258 ITR 365 (Delhi). (2) The "A" has income of insurance claim of Rs. 14,72,186 during the year under consideration but while working the deduction under section 80HHC, 90 per cent. of the insurance claim has not been reduced from the profit of the business. (3) The "A" has invested Rs. 10 crores in the units of Prudential ICICI Growth Plan and earned 4.27 crores as dividend income which is exempted. On a perusal of the records it has been seen that the units has been purchased on 16th March and sold on 28th March and incurring a huge loss of Rs. 3.51 crores. This transaction entered by "A" is beyond the ambit of the tax planning and indeed falls under the category of colourable devices. The decision of McDowells ratio is squarely applicable here." ....
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.... and consequence of the law mentioned in the audit note. On the other hand, learned counsel, Shri Parikh, for the Department opposed the petition contending that the Assessing Officer had recorded proper reasons before issuing notice. Such notice was issued within a period of four years from the end of the relevant assessment year. He further submitted that the Assessing Officer being satisfied that income chargeable to tax had escaped assessment, had issued such notice. Even if certain aspects were brought to her notice by the audit party, that by itself would not vitiate the notice to reopen the assessment. Having thus heard learned counsel for the parties and having perused the documents on record, we may examine the two principal contentions raised by the counsel for the petitioner. Firstly, we may advert to the question of recording of reasons before issuing notice. The learned counsel for the Revenue has made available the original files pertaining to the reopening of the assessment. Such file starts with a document recording reasons by the then Assessing Officer. She has placed the date of August 3, 2004, on such document. Right next to such document, we find origin....
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....re, the impugned notice came to be issued. It has further come to the knowledge of the petitioner that the respondent has, as a matter of fact, not accepted the objections taken by the audit party and asked them to withdraw the same. In other words, when the impugned notice was issued the respondent did not hold any belief that the income of the petitioner has escaped assessment for any reason. Legally it is well settled that in case of reopening 'the reason to believe' must be that of an Assessing Officer and it cannot be substituted with anyone else's belief, be it the superior authority of the Assessing Officer." The Assessing Officer in her affidavit dated January 23, 2005, in reply to such averments stated as under : "E With reference to para. 2.8 it is submitted that the allegation in this para. is totally unfounded and baseless. At this juncture the deponent wants to place on record its apprehension about the possible source of the so-called information claimed to be with the assessee Inter Departmental correspondences, if any, are strictly official and does not have any bearing on the proceedings under consideration in the current case as on date. In this regard the depo....
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....nts for this purpose. As a last chance, S. O. to July 30, 2012. If on such date, files are not produced, we may proceed to hear the matter on the basis of the documents on record." Even thereafter, this petition was adjourned on a couple of occasions. Today the learned counsel, Shri Parikh, for the Revenue made a candid statement that such file containing exchanges between the Assessing Officer and the audit party was not traceable. We were, therefore, left with no alternative but to proceed on the basis of the averments made by the two sides on oath. On the basis of such pleadings we have not the slightest hesitation in coming to the conclusion that the petitioner's firm assertion that the Assessing Officer did not agree with the audit objection and stuck to her position that she was right in law as well as in the facts while framing the original assessment and that, therefore, the audit objection should be dropped, has not been denied by the Assessing Officer though she herself filed an affidavit before this court in response to such averments made in the petition. All that she had to state was that she was surprised that the petitioner could claim access to inter-departmen....