AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 730
X X X X Extracts X X X X
X X X X Extracts X X X X
.... its return of income on 11/04/2017 by admitting an income of Rs. 88,07,94,590/-. 2.1 The AO made the addition of Rs. 95,49,67,088/- towards payments made to the sub-contractors on the ground that the assessee could not produce any information nor could produce any sub-contractor. 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A). 4. Before the CIT(A), the assessee filed the objections, which were extracted by the CIT(A) in his order at pages 2 to 6 which are as under: "2. Objections to reopening: Upon receipt of the reasons which were nothing but the reproduction of the information received from the Investigation Wing, the appellant objected to reopening of the completed assessment on various legal grounds. On facts also the appellant made elaborate submissions along with documentary evidences in its possession that the subcontractors were genuine and completed the work. The salient points contained in the objections which were submitted and reiterated from time to time in various submissions and by way of oral submissions are given below for kind consideration of CIT(A). * That the satisfaction recorded is nothing but a reproduction of inf....
X X X X Extracts X X X X
X X X X Extracts X X X X
....O despite repeated requests did not make available the reopening records maintained at Hyderabad at the time of reopening the assessment for inspection (Boards Instruction 17 (XL) - 36 dated 28-06-1965, copy of the approval in the prescribed pro-forma submitted to Pr. CIT and provide a copy of the order sheet for reopening despite the decision of the Hon'ble Supreme Court in the case of Suraj Mall Mohta and Company Vs A V Viswanath Sastri 26 ITR 1, Delhi High Court in the case of SASH Infrastructure Ltd Vs CIT 398 ITR 198 and Orissa High Court in the case of Shankarlal Khaitan Vs ACIT WP(C) 4816 of 2017 as AO was very well conscious of his own act of omission and commission that no reopening is possible without perusing the facts in case records, particularly in a case falling under First Proviso to section 147. (iii) Even AO did not address to the basic issues which were agitated in various submissions filed by appellant while passing the assessment order. There is nothing in the assessment order as to how there was a failure on the part of the appellant to disclose material particulars when the assessment was taken for scrutiny for the precise reason to verify the genuinene....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed. Thirdly the case was taken up for scrutiny to examine the very same issue and the assessee has filed all the details called for, the basis of re-opening amounts to 'change of opinion', which is not allowed as per various judicial pronouncements on the issue. The assessee also raised the contention that the AO did not mention the reasons recorded on body of the notice issued u/s.148, which makes the proceedings void. The assessee also raised the contention that the AO did not apply his own mind to come to the conclusion that income has escaped assessment rather he based his satisfaction solely on information received from Investigation wing. Each of the above issues raised are discussed below: 8.1 In this case, the assessment year involved is 2010-11. The return of income originally was filed on 01.10.2010 and the assessment u/s.143(3) of the I.T. Act was completed on 20.03.2013. The notice u/s.148 is issued on 23.03.2017. It means it is a case where the scrutiny assessment was completed which is sought to be reopened after four years from the end of the assessment year. The provisions applicable to the present case are as under: "147. If the (Assessing) officer ( ha....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to a particular provision of a statute only embraces the field which is covered by the main provision. It carves out an exception to the main provision to which it has been enacted as a proviso and to no other. Lord Macmillan in Madras and Southern Maharatta Railway Co. Vs Bezwada Municipality (1944) LR 71 lA, 113, 122 laid down the sphere of a proviso as follows: The proper function of a proviso is to except and deal with a case which would otherwise fall within the general language of the main enactment, and its effect is confined to that case. Where as in the present case, the language of the main enactment is clear and unambiguous, a proviso can have no repercussion on the interpretation of the main enactment, so as to exclude from it by implication what clearly falls within its express terms. The territory of a proviso therefore is to carve out an exception to the main enactment and exclude something which otherwise would have been within the section, it has to operate in the same field and if the language of the main enactment is clear it cannot be used for the purpose of interpreting the main enactment or to exclude by implication what the enactment clearly says unles....
X X X X Extracts X X X X
X X X X Extracts X X X X
....se fully and truly all material facts necessary for his assessment for that assessment year. Condition (a) is admittedly satisfied in as much as the original assessment was completed under sec.l43(3) of the said act. Condition (b) deals with a special kind of escapement of income chargeable to tax. The escapement must arise out of the failure on the part of the assessee to make a return under sec.139 or in response to a notice issued under sub-section (1) of sec.l42 or sec.l48. This is clearly not the case here because the petitioner did file the return. Since there was no failure to make the return, the escapement of income cannot be attributed to such failure. This leaves us with the escapement of income chargeable to tax which arises out of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. If it is also found that the petitioner had disclosed fully and truly all material facts necessary for its assessment, then no action under sec.l47 could have been taken after the four year period indicated above. So, the key question is whether or not the petitioner had made a full and true disclos....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, in a decision dt.22nd September, 2015 in ITA No.356 of 2013 (CIT Vs Multiplex Trading and Industrial Co. Ltd) clearly stated in cases where reopening of assessment is beyond four years from the end of the relevant assessment year the condition that there has been a failure on the part of the assessee to truly and fully disclose all material facts must be concluded with certain level of certainty." 8.1.7 The legal position emanating from discussion above is that the AO has to conclude that there is failure on part of the assessee to disclose fully and truly all the material relevant for the computation of income. The same has to be specifically recorded. It is found that in the present case no such recording has been done by the AO. In view of the above it is held that the proceedings have not been validly initiated. 8.2 The second aspect raised by the assessee is regarding the absence of assessment records with the AO at the relevant point of time which will enable him to record the failure of the assessee to disclose fully and correctly required by the proviso. It is clear from the factual report submitted by the AO that at the time of recording reasons for reopening on....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... not properly vouched. The above shows that the assessee has produced the details during the assessment proceedings and were examined by the AG. However, certain facts regarding the sub contractors and the expenditure incurred meaning during the Search shows that a new material has come to the possession of the AO which warranted action uls.148. The action taken by the AO based on material unearthed/information obtained during the course of Search proceedings constitute fresh evidence based on which the AD has recorded the reasons. It cannot be said that the recording of reasons is on account of only change of opinion of contending by the assessee. The contentions of the assessee cannot be accepted that the assessments were reopened on account of change of opinion in the facts and circumstances of the case as brought out above. 8.4 In view of the above discussions, the ground nos.4&S raised by the assessee are allowed. Ground no.2,3 & 8 are rejected. Ground no. 1& 10are general in nature which do not require adjudication. The ground nos. 7&9 are not adjudicated as the proceedings are held to be not initiated validly. as contended in ground nos.4& 5. 8.5 The assessee During the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it cannot be doubted. 7. The appellant craves leave to amend or alter any ground(s) or add a new ground which may be necessary." 7. Before us, the ld. CIT-DR submitted that the ld. CIT (A) erred in deciding the proceedings initiated u/s 148/147 of the Act, as invalid on the ground that the case records pertaining to original assessment completed u/s. 143(3) were not available with the AO at the time of recording reasons, whereas the AO was in possession of such assessment details through online computer software maintained by the department. He further submitted that the ld. CIT(A) was wrong in not appreciating the fact that the AO was in possession of information of the conclusive findings of the investigation wing about the bogus nature of the sub-contract expenses found during the course of search & seizure conducted u/s.132 of the Act, in the case of assessee, which led to reopening of the assessment. 7.1 The ld. CIT-DR further submitted that the AO made enquiries with the alleged sub-contactors by issuing notice u/s 133(6) calling for details of their transaction with the assessee and some of the notices issued were returned unserved and all the complete details called for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ects Pvt. Ltd. and M/s. Falcon foundations were identified as bogus sub-contractors and the whereabouts of these concerns remain untraceable. Further, the re of the firms/companies mentioned above have not been filing returns and remain untraceable. Further, notices u/s 153A have already been issued for the AYs 2011-12 and 2012-13 as these years have been covered under the block period prior to the date of search. In view of the aforesaid mentioned reasons I have reason to believe that an income of Rs. 95,49,67,088/ - has escaped assessment within the meaning of section 147 of the I.T. Act 1961." 9.1 From the reasons recorded as above, it is clear that the Assessing Officer has reason to believe that there is an escapement of income, but, the case falls under first proviso of section 147 i.e. earlier the assessment was completed u/s 143(3) of the Act and now it was reopened beyond the four yeas from the Assessment Year. In such a case, we are unable to find in the reasons recorded that there is no allegation on the part of the assessee in disclosing fully and truly all the material facts for completion of assessment. It is well settled by a number of judgments of the Hon'ble S....
X X X X Extracts X X X X
X X X X Extracts X X X X
....son of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for that year. 9.1 In the case on hand, all the information relating to depreciation on investments were there before the AO at the stage of original assessment, as there was no failure on the part of the assessee to disclose fully and truly all material facts that are necessary for completion of the assessment and further we observe in the reasons recorded, there is no reason to believe, allegation on the assessee that the income of the assessee underassessed or had escaped assessment. 9.2 The contention of the assessee is that no new material has been found by the AO in the reassessment proceedings and therefore reopening of assessment is only due to change of opinion and that too beyond the time limit as prescribed in the proviso to section 147 of the Act which is bad in law. 9.3 In this connection, we refer to the following decisions: "(1) In Deputy Commissioner of Income Tax Vs. Manak Shoes Co. P. Limited, (2011) 11 ITR (Trib) 673 (Del), the Tribunal held that where regular assessment had been made under Section 143(3) allowing depreciation....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g stock is multiplied with the quantity of the sales in the year then the value of the sales would be at a higher figure, than declared by the assessee. Clearly, there is no new material which is alleged to have come to the notice of the Assessing Officer which has caused him to seek reopening of the assessment. Admittedly, the reasons given for seeking reopening of the assessment contains the expression 'perusal of the case record reveals' clearly showing that it is on the basis of the same assessment record as was filed by the assessee, during the relevant assessment years and also scrutinised by the Assessing Officer before passing the orders under Section 143(3). Further, the new logic, rationale and opinion which has been formed by the Assessing Officer for seeking reopening of the assessment is nothing but a change of opinion and a new approach to the existing facts and material which the Assessing Officer could well have done during the regular assessment proceedings of the relevant assessment years. (5) In Commissioner of Income Tax Vs. Eicher Limited, (2007) 294 ITR 310 (Del), the High Court has taken a view that since the facts and materials were before the Assessing ....