2021 (8) TMI 281

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....urance Act 1938, the IRDA Act (Preparation of Financial Statements and Auditor's Report of Insurance Companies) Regulations 2002, the IRDA (Assets, Liabilities and Solvency Margin of Insurers) Regulations 2000. 3. However when the case came up for hearing, learned counsel for the assessee invited our attention to the fact that by way of letter dated 28th December 2020 the assessee has made an application for admission of the following grounds of appeal:- 1. The reassessment order dated 26.11.2014 passed by the DCIT circle 1(2)(1), Mumbai; [the DCIT"] is without jurisdiction, invalid, illegal, void and bad in law inter-alia, as it does not fulfil the jurisdictional preconditions specified in Section 147, 148 and 151 of the Income Tax Act, 1961. 2. The Commissioner of Income Tax (Appeal)-9, Mumbai ["the CIT(A)'] ought to have held that the above reassessment order was without jurisdiction, invalid, illegal, void, and bad in law. 4. It is also submitted that as these additional grounds raise is fundamental jurisdictional issue going to the very root of the legality of the reassessment order, as the adjudication of these grounds of appeal does not require any in....

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.... amounting to Rs. 25.00 crore. The department assessed the income of the assessee at Rs. 26809.96 crore in the original scrutiny completed on 22-12-2009, where in the deduction u/s 80G was not disallowed. While giving effect to CIT(A) 's order in April 2012 revising income to Rs. 16914.08 crore. The deduction u/s 80G was not disallowed. In this connection it is revealed to point out that the assessee while arriving valuation surplus, which offered to tax, included all income and expenses including the donations made to trust, once it was claimed in arriving valuation surplus, again allowing u/s 80G of such donation, tantamount to allowing double deduction of amount equivalent to 50% of donation. This incorrect allowance of deduction resulted in under assessment of income by Rs. 25.00 crore. It is also observed that the department further given effect to second appeal in August 2013, revising income to Rs. 12802.75 crore, however, no disallowance was made of deduction u/s 80G. In view of the above, I have reason to belief that there is an escapement of income of Rs. 25 crores. This is a fit case for reopening u/s.147 of the I.T.Act, 1961, if approved the case may be reo....

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....icer. In fact there is no change of opinion in the matter as no opinion whatsoever was formed by the Assessing Officer. The Gujarat High Court in the case of Praful C Patel vs. ACIT 236 ITR 832 observed as under:- The cases of underassessment or excessive relief which are deemed cases of escapement of income leave no scope for an argument that they are not cases of income having escaped assessment. If the Assessing Officer prima facie finds or discovers that the case falls in any of the clauses of Explanation 2, then those cases will be deemed cases of income that has escaped assessment and without anything more beyond such finding or discovery, he can initiate the proceedings under section 147 of the Act. On a proper interpretation of section 147 of the Act, it would appear that the power to make assessment or reassessment within four years of the end of the relevant assessment year would be attracted even in cases where there has been a complete disclosure of all relevant facts upon which a correct assessment might have been based in the first instance, and whether it is an error of fact or law that has been discovered or found out justifying the belief required to initi....

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.... Rs. 50 Crores in its return of income is evident from the records. 4.14 Thus, there was omission and failure on appellant's part to disclose fully and truly facts material to the claim of deduction u/s. 80G of the Act. Therefore, the reopening of assessment was as per provisions of section 1474 of the Act. Reliance is place in this regard on the decision of hon'ble Supreme Court in the case of Honda Siel Power Products Ltd. Dy. CIT, [2012] 20 taxamann.com 5 (SC)/[2012] 206 Taxman 33 and Hon'ble Bombay High Court in the case of Indian Hume Pipe Co. Ltd. vs Assistant Commissioner of Income-tax, Central Circle-22, 16 taxmann.com 190. Therefore, the reopening of assessment by the AO is upheld. The grounds are dismissed. 8. For the reasons set out in short while, it is not necessary at this stage to go any deeper into the facts of the case. What is to be seen on these facts is the validity of reopening of the assessment, which is to be examined by us. 9. Aggrieved by the stand so taken by the learned Commissioner (Appeals) as well, the assessee is in further appeal before us. ' 10. Learned counsel for the assessee begins by pointing out that in the reasons recorded fo....

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....ecessary material information. It was contended that in any case this reopening is based on a revenue audit objection but then the revenue audit objection is on point of legal interpretation-something which is impermissible in the light of Hon'ble Supreme Court judgment in the case of Indian and Eastern Newspaper Society vs. CIT (1979)119 ITR 996 (SC). He points out that the revenue audit objection can at best be on the question of fact and not on the question of legal interpretation. Learned counsel also raised some other points such as the plea that the reasons recorded is undated and that the Commissioner's approval is not on record but we see no necessity to set out these arguments or deal with the same at this stage. 11. Learned Departmental Representative on the other hand invites our attention to a judgment of Hon'ble Delhi High Court in the case of CIT vs Deepak Knit Texturise Pvt. Ltd (2012) 81 CCH 48 (Del) which according to him is the authority proposition that it has to be examined whether the Assessing Officer had drawn an inference or given a finding, with respect to failure or omission on the part of the assessee, not only on the basis of what is recorded but on t....

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.... It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event....