TaxTMI 
TaxTMI 
2021 (12) TMI 532
X X X X Extracts X X X X
X X X X Extracts X X X X
....ns : "In this case return of income was filed on 27.10.2007 declaring an income of Rs. 4.36,49.450/- and the assessment was completed u/s 143(3) of the I T. Act on 15.12.2009 at an income of Rs. 4,83,43,450/-. From the perusal of assessment records it was observed that revenue subsidy amounting to Rs. 1,07,00,000/- given to the assessee for assisting him in carrying out the business operations was not taxed as revenue receipts. The same resulted in underassessment of income involving short levy of tax of Rs. 48,15,702/- including interest. Hence, assessee has not disclosed fully and truly all material facts before A.O. necessary for completion of its assessment and income has escaped assessment by reason of failure on part of the assessee. Hence, the sum of Rs. 1,07,00,000/- has escaped escapement within the meaning of clause c(i) of Explanation 2 below 2nd Proviso appended to Section 147 of the I.T. Act. It is obvious from the above discussion that the assessee has not disclosed fully and truly all material facts necessary for its assessment before the A.O. which resulted in under assessment of income of Rs. 1,07,00.000/- by reason of failure on....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n appeal before the Tribunal by raising the following grounds : "1. That on the facts and in the circumstances of the case, the Commissioner of Income tax, (Appeals) has erred facts that the amount granted to the appellant for certain capacity building and enhancement of the appellant company aggregating to Rs. 1,07,00,OOO (of which only Rs One Crore Seven Lakhs was received by the company). 2. That the on the facts and circumstances of the case, the Commissioner of Income tax, (Appeals) has also erred in not directing the Assessing officer in allowing the expenditure incurred by the assessee company as well by its sponsor, while treating the grant provided as income. 3. That on the facts and in the circumstances of the case, the Commissioner of Income tax, Appeals has erred in law, holding that the Assessing officer was correct in invoking the provisions of section 148 of the Act, while all the facts were provided at the time of regular assessment under section 143(3) of the Act, and was considered and allowed while framing the assessment under section 143(3) of the Act. 4. That the Commissioner of Income tax has erred on facts, in not directing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....erring to the following decisions, he submitted that it is held in all these decisions that where an assessment has been completed u/s 143(3) and where there is no allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment, then initiation of re-assessment proceedings after a period of four years is invalid. 1. DCIT vs. Dakshin Haryana Bijli Vitran Nigam Ltd. & ANR. (2019) 57 CCH 0444 (Del) (Trib) "B" Bench. 2. BPTP Limited & Anr. vs. Pr. CIT (2019) 106 CCH 0360 (Del) (HC). 3. Gita Education Society vs. ITO (2019) 56 CCH 0064 (D3I) (Trib.) "G" Bench. 4. Bharti Infratel Limited vs. DCIT (2019) 411 ITR 0403 (Delhi) (HC) 5. Lok Housing and Construction Limited v. Deputy Commissioner of Income-tax (OSD) (2012) 348 ITR 335 (Bom) (HC). 6. Sun Investment Pvt. Ltd. v. Assistant Commissioner of Income-tax (2012) 344 ITR 0001 (Del) (HC). 7. Haryana Acrylic Manufacturing Co. vs. CIT (2009) 308 ITR 38 (Delhi). 8. CIT vs. Purolator India Ltd. [2012] 343 ITR 155 (Del) (HC). 9. BLB Limited vs. ACIT [2012] 343 ITR 129 (Del) (HC). ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....1 and the assessee has not disclosed fully and truly all material facts necessary for its assessment before the A.O. The reasons so recorded by the A.O. for reopening of the assessment has already been reproduced in the preceding paragraph. It is the submission of the Learned Counsel for the Assessee that since the assessment year involved is A.Y. 2007-2008 and the original assessment was completed under section 143(3) of the I.T. Act, 1961 on 15.12.2009 and since there was full disclosure of all material facts necessary for completion of the assessment in the Notes to Accounts, therefore, in the absence of allegation of any failure on the part of the assessee to disclose fully and truly all material facts necessary for completion of the assessment and in the absence of any tangible material available before the A.O. for the belief that income had escaped assessment, the reassessment proceedings initiated by the A.O. and upheld by the Ld. CIT(A) are not in accordance with Law. 6.1. We find sufficient force in the above arguments of the Learned Counsel for the Assessee. We find the assessment in the instant case was completed under section 143(3) on 15.12.2009 and the assessment ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....at assessment year. Condition (a) is admittedly satisfied inasmuch as the original assessment was completed under section 143(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 section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148. 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 section 147 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 disclosure of all material facts. In the reasons supplied....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on the part of the assessee to disclose fully and truly all material facts relating to accommodation entries'. This being the case, it was submitted, the bar of taking action within four years would not apply and, consequently, the notice under section 148 was valid. This argument suffers from several infirmities. First of all, the respondents cannot be permitted to gloss over the fact that the reasons which were supplied to the petitioner were different from the reasons purportedly recorded in the said form on which they now seek to rely. If the reasons in the said form were the 'actual' reasons, why were they not communicated to the petitioner? Why was nothing said about these reasons (noted in the form) when the petitioner filed its objections to the reasons which were supplied to it? It must be remembered that in its objections, the petitioner took the specific plea that in the absence of any allegation that the petitioner had failed to disclose fully and truly all material facts necessary for assessment, the Assessing Officer had no jurisdiction to issue the notice under section 148 and initiate action under section 147 after four years from the end of the relevant as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the reasons which are recorded be communicated to the assessee within a reasonable period of time so that at that stage itself the assessee may point out any objections that he may have with regard to the initiation of action under section 147 of the said Act. The requirement of recording the reasons, communicating the same to the assessee, enabling the assessee to file objections and the requirement of passing a speaking order are all designed to ensure that the Assessing Officer does not reopen assessments which have been finalized on his mere whim or fancy and that he does so only on the basis of lawful reasons. These steps are also designed to ensure complete transparency and adherence to the principles of natural justice. Thus, a deviation from these directions would entail the nullifying of the proceedings. Assuming as we have done that the 'actual' reasons were those as noted in the said form, it is obvious that the reasons were never communicated to the petitioner and it is only for the first time in the course of the present writ petition that those 'reasons' have surfaced. Therefore, if he proceeded on the assumption that the 'actual' reasons were those as noted in t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....g Officer has reason to believe that income has escaped assessment, confers jurisdiction to re-open the assessment. Therefore, post-1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... full and true disclosure of material facts i.e. all primary facts which are mentioned and stated in the reasons to believe'. Nothing was concealed, withheld and nothing was left to be factually discovered in the form of 'material' mentioned in detail in accounts and other evidence, that was not disclosed/stated but could have been discovered by due diligence. In fact as noted above, reading of the reasons to believe' i.e. evidence and material in form of facts and figures were duly stated and mentioned in the affidavit sworn by Mr. Raghuveer Singh Dagur on 12th February, 2010, opposing the second scheme of demerger and transfer of infrastructure assets in 12 circles by BIL to M/s Bharti Infratel Ventures Ltd. and language, facts and figures in the reasons to believe' are similar, if not identical. 32. In view of the aforesaid discussion, the writ petition has to be allowed as the jurisdictional preconditions in the form of proviso to Section 147 is not satisfied in the facts of the present case. Explanation 1 would not apply as all primary facts were disclosed, stated and were known and in knowledge of the Assessing Officer. Further, this would be a ca....