TaxTMI 
TaxTMI 
2022 (8) TMI 524
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....n was conducted at the premises of the assessee on 02.11.2010 and the return of the assessee was selected for compulsory scrutiny and a notice under section 143(2) was issued 20.09.2012. The assessment was completed under section 143(3) of the Act on 28.03.2013 assessing the total income of the assessee at Rs..14,35,83,005/-. Subsequently, vide order dated 20.06.2017, the ld. CIT(A) has given relief to the assessee as per which the total income of the was revised to Rs..14,12,92,075/- vide giving effect order dated 23.08.2017. Against the order of the ld. CIT(A) dated 20.06.2017, the Department preferred an appeal before the Tribunal. Thereafter, the assessment was reopened under section 147 of the Act by issuing notice under section 148 of the Act on 29.03.2018 on the ground that the income has escaped assessment to the extent of Rs..1,09,07,660/- being accommodation entries for purchase traced in the case of M/s. Millenium Stars and M/s. Pankaj Exports, during the search and seizure proceedings in the case of Shri Bhanwarlal Jain & Others at Mumbai. In response to the notice issued under section 148 of the Act, the assessee filed a return of income on 19.04.2018 admitting a total....
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....ase of the assessee and based on the information from Investigation Wing and the statement of third party cannot be a basis to form reason to believe for reopening assessment and prayed for quashing the reassessment order passed under section 143(3) r.w.s. 153B(1)(b) r.w.s. 147 of the Act for the assessment year 2011-12 as well as section 143(3) r.w.s. 147 of the Act for the assessment year 2012-13 both dated 28.12.2018. 4. On the other hand, the ld. DR strongly supported the orders of authorities below. 5. We have heard both the sides, perused the materials available on record and gone through the orders of authorities below including paper book filed by the assessee. In this case, as search and seizure action was conducted at the premises of the assessee on 02.11.2010 and the return of income filed by the assessee was selected for compulsory scrutiny and notice under section 143(2) of the Act was issued on 20.09.2012. The Assessing Officer has completed the assessment under section 143(3) r.w.s. 153A of the Act dated 28.03.2013. Thereafter, the Assessing Officer reopened the assessment by issuing notice under section 148 of the Act on 29.03.2018, which was served after the expi....
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....er, in the present case, in the reasons furnished for reopening of assessment, the Assessing Officer has not established as to what "material facts" had been suppressed by the assessee. 5.3 Moreover, in this case, vide letter dated 17.12.2018, the assessee has furnished complete details with regard to the transactions taken place with M/s. Millenium Stars and M/s. Pankaj Exports along with copies of the ledger accounts mentioning the payment details. However, by ignoring the details furnished by the assessee, the Assessing Officer has completed the reassessment under section 143(3) r.w.s. 153B(1)(b) r.w.s. 147 of the Act after making disallowances based on third party information gathered in Bhanwarlal Jain Group's case by the DDIT (Inv.) Unit IX(2), Mumbai. In this connection, in the form of paper book, the assessee has filed copy of the judgement of the Hon'ble Supreme Court in the case of CIT v. Odeon Builders Pvt. Ltd. (2019) 105 CCH 392 ISCC, wherein, the Hon'ble Supreme Court has observed and held as under: 3. However, on going through the judgments of the CIT, ITAT and the High Court, we find that on merits a disallowance of Rs.19,39,60,866/- was based solely on third par....
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....sment year and the reassessment order is liable to be quashed. Some of the relevant case law are discussed hereunder: 6.1 In the case of Fenner (India) Ltd. v. DCIT 241 ITR 672, the Hon'ble Jurisdictional High Court has held that the reasons recorded by the Assessing Officer did not establish even prima facie, a failure on the part of the assessee to fully and truly disclose the material fact for the assessment and accordingly quashed the notice. The head-notes of the above judgement are reproduced as under: Mere escape of income is insufficient to justify the initiation of action under section 147 of the Income-tax Act, 1961, after the expiry of four years from the end of the assessment year. Such escapement must be by reason of the failure on the part of the assessee either to file a return referred to in the proviso or to truly and fully disclose the material facts necessary for the assessment. Unless the condition in the proviso to section 147 of the Income tax Act, 1961, is satisfied, the Assessing Officer does not acquire jurisdiction to initiate any proceeding under section 147 of the Act after the expiry of four years from the end of the assessment year. Thus, in cases w....
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....rt of the assessee. (b) a perusal of the statements filed by the assessee in the assessment proceedings showed that the assessee had placed before the Assessing Officer every relevant detail regarding the excise duty paid, the manner in which the payment was effected, the amounts paid through the deposit account, the amount adjusted from the Modvat account, the opening balance in the Modvat accrual account, the extent of the credit taken from that account, the extent of the amount utilised from that account, as also the closing balance as on March 31, 1989. All the information required in relation to the account had been placed before the Assessing Officer. The assessee could not have done anything more. The utilisation of the Modvat credit results in the payment of the excise duty on the final products to the extent of the credit utilised. The description given by the assessee to the payment so made as excise duty paid was the correct and normal term to describe the payment and no fault could be found with the assessee for using that term and not bifurcating that amount into the amount paid through the deposit account and the amount paid by adjustment of the Modvat credit. T....
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....Court has observed and held as under: "The assessments of the assessee for the assessment years 2001-02 and 2002-03 were reopened after four years on the ground that an amendment to section 80HHC of the Income-tax Act, 1961, had been made with retrospective effect from April 1, 1998. The conditions were not there in section 80HHC at the time when the assessee filed the returns or even the original assessments were made. The Commissioner (Appeals) and the Tribunal held that the invocation of the proviso to section 147 to be invalid and set aside the reassessments under section 147/148. On appeal: Held, dismissing the appeals, that the findings of the Tribunal was that all the relevant facts were available on record and that it could not be said that at the time when the assessee filed the returns, he had failed to disclose fully and truly all material facts necessary for the assessments because the amendment which was introduced retrospectively was not there. The law cannot contemplate the performance of an impossible act. Thus, the Tribunal rightly concluded that the proviso to section 147 could not be invoked merely because there was an amendment in the future which was introduc....
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....editors. Thereafter, by a notice under section 148 of the Income-tax Act, 1961, dated March 8, 1967, served on the respondent on March 14, 1967, the Income-tax Officer sought to reopen the assessment. In his report made in February, 1967, to the Commissioner for reopening the assessment of the respondent for the assessment year 1958-59 after four years under section 147(a) of the Income-tax Act, 1961, two reasons were mentioned: (i) that M. K., who was shown to be one of the creditors of the respondent had since confessed that he was doing only name-lending; and (ii) that N.M., D.K.N., B.S. and others, whose names too were mentioned in the list of the creditors of the respondent, were known name-lenders. The respondent thereupon filed a writ petition claiming that there was no material before the Income-tax Officer on which he could have reason to believe that income chargeable to assessment for the year had escaped assessment by reason of the respondent's failure to disclose material facts, and stated that he had produced all books of account, bank statements and other necessary documents in connection with his return. The High Court, by a majority, held that the pre-condition....
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....ence have been discovered by the Incometax Officer will not necessarily amount to disclosure contemplated by law. The duty of the assessee in any case does not extend beyond making a true and full disclosure of primary facts. Once he has done that his duty ends. It is for the Income-tax Officer to draw the correct inference from the primary facts. It is no responsibility of the assessee to advise the Income-tax Officer with regard to the inference which he should draw from the primary facts. If an Income-tax Officer draws an inference which appears subsequently to be erroneous, mere change of opinion with regard to that inference would not justify initiation of action for reopening assessment. The grounds or reasons which lead to the formation of the belief contemplated by section 147(a) of the Act must have a material bearing on the question of escapement of income of the assessee from assessment because of his failure or omission to disclose fully and truly all material facts. Once there exist reasonable grounds for the Income-tax Officer to form the above belief, that would be sufficient to clothe him with jurisdiction to issue notice. Whether the grounds are adequate or not ....