TaxTMI 
TaxTMI 
2022 (8) TMI 1293
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....f 4 years from the end of relevant assessment year. That apart, the issues that sought to be addressed remain one and the same. 2. Since the veracity or otherwise of the impugned proceedings would have to be tested on the strength of the reasons and as to whether the statutory conditions have been complied/satisfied by the revenue, the reasons for AY 2013-14 are extracted herein: 'Subject: Reasons for Re-opening of Assessment - furnishing of - Reg (i). The assessee during the year relevant to AY 2013-2014 has claimed employee benefit expenses amount to Rs.1952.42 Crore. As noticed from Note 28(e) to the Annual accounts, pending pay revision settlement, a provision of Rs.139.70 crore has been made towards arrears of salaries and other benefits revision in respect of Non-executives. Any expenditure debited to the profit and loss account under the head provision is unascertained liability and not an allowance deduction u/s.37. Omission to disallow the unascertained liability has resulted in under assessment of Rs.139.70 Crores. Excess deduction claimed:Rs.139.70 Crores (ii) The assessee has claimed deduction u/s 35E in respect of the min....
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....here there was not income, the carry forward and claim of expenditure as in the instant case is not permissible. Hence the assessee is eligible for deduction u/s 35E for the AY 2013-14 in respect of Rajasthan Mine amounting to Rs.12.31 crore as against Rs.40.18 crore claimed and allowed . This has resulted in excess allowance of deduction of Rs.27.87 crores. Excess deduction claimed u/s 35E: Rs.27.87 Crores.' Barring the assessment years and the amount in question, the reasons for reassessment for the other assessment years remain one and the same. 3. The facts as are common to the three years in question are: i) Returns of Income (ROI) were filed in time. ii) Returns were accompanied by audited accounts with all required annexures. iii) Notices under Section 143(2) of the Act were issued by the Assessing Authority seeking various particulars from the petitioner. iv) Questionnaires under Section 142(1) were also issued, in compliance to which, responses were filed by the petitioner. v) The reasons for re-assessment are two-fold; in regard to the claim of employee benefit expenses and deduction claimed under Se....
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..../s 35E to the extent of Rs.59,26,09,936/-. Details are enclosed in page number 97 of Tax audit report i.e., (Annexure -5). b. Deduction u/s 801A: During the F.Y 2012-13 the Company claimed deduction u/s 801A to the extent of Rs.254,73,74,736/- and the details are enclosed (page-19 of Annexure-8) The provisions debited in the P&L accounts are offered as income and the details are enclosed. (Annexure-7) xiii) Admittedly, identical questionnaires and responses of the assessee have been filed in respect of the other years as well. xiv) Order of assessment under scrutiny came to be passed by the Assessing Officer under Section 143(3) of the Act. Since no additions were proposed by the Assessing Officer in respect of the two points dealt with in the reasons for re-assessment, though details had been sought for and supplied by the petitioner, evidently, there is no discussion in that regard in the orders themselves. xv) It is in the aforesaid circumstance that notices under Section 148 came to be issued for AY 2013-14 on 03.09.2014, beyond the period of 4 years from the end of relevant assessment year, for AY 2014-15 on 28.09.2016 and ....
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....Chennai Vs. Schwing Stetter India (P.) Limited ([2015] 61 taxmann.com 19 [Madras]) 9.Asianet Star Communications (P.) Limited Vs. Assistant Commissioner of Income-tax ([2019] 106 taxmann.com 293 (Madras) 10.Bharti Infratel Ltd. V. Deputy Commissioner of Income-tax ([2019] 101 taxmann.com 285 (Delhi)) 11.Kaira District Co-operative Milk Producers Union Ltd. Vs. Asst. Commissioner of Income-tax (No.1) ([1995] 216 ITR 371 (Guj.)) 12.State Bank of India Vs. Assistant Commissioner of Income-tax, Circle 2(2)(1), Mumbai ([2019] 103 taxmann.com 164 (Bombay)) 8. Per contra, Mrs.Hema Muralikrishnan, learned Senior Standing Counsel appearing for the respondents, while not very seriously contesting the argument of limitation as far as the impugned proceedings for AY 2013-14 are concerned, puts up a spirited defence in respect of the remaining two AYs. 9. Heard learned counsel and perused the materials placed on record. 10. Before proceeding to the re-assessments initiated within 4 years, I would first deal with the re-assessment for AY 2013-14. The proviso to Section 147 of the Act casts a statutory burden upon the respondents to complete the re-ass....
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....ermining the income of the Petitioner as Rs.27.72 crores. Thereafter the 1st Respondent sought to reopen the assessment and the reasons for reopening the assessment recorded vide his letter dated 27th March, 2006 disclose that it is essentially after having another look at the annual accounts which had been furnished earlier. The officer records that now it is noticed that during that year the assessee company had incurred a loss in trading in share. The officer thereafter discusses the various entries appearing in the opening and closing stocks and purchases and sales of those stocks. Thereafter the officer has concluded that there is a loss of Rs.19.86 crores and that the loss was speculative one. He has therefore come to a conclusion that the income chargeable to tax to the extent of Rs.19.86 crores has escaped the assessment and that is how he has passed the order under section 147 of the Income Tax Act although almost 4 years have gone after the assessment of the concerned year. 4. Mr. Mistry, learned counsel for the Petitioner, points out that the reasons given by the 1st Respondent in his order dated 27th March, 2006 are clearly based on the documents, which the Pet....
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....ome to the conclusion that the income has escaped assessment and he is of course justified in his analysis. In our view, this is not something which is permissible under the proviso to section 147 of the Income Tax Act which speaks about a failure on the part of the assessee to make a proper return. In the present case, no such case is made out on the record. 8. In the circumstances, we allow this petition in terms of prayer (a) and quash and set aside the notice dated 27th March, 2006 directing reopening of the assessment for the year 1999-2000. 15. The above order has been confirmed by the Hon'ble Supreme Court by way of the following order: 'The assessee had disclosed full details in the Return of Income in the matter of its dealing in stocks and shares. According to the assessee, the loss incurred was a business loss, whereas, according to the Revenue, the loss incurred was a speculative loss. Rejection of the objections of the assessee to the re-opening of the assessment by the Assessment Officer vide his Order dated 23rd June, 2006, is clearly a change of opinion. In the circumstances, we are of the view that the order re-opening the assessment was not ma....
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.... the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understand the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. 18. Explanation (1) states that the mere filing of account books and other financial details before the Assessing Authority at the time of original assessment would not, by itself, lead to an inference of full and complete disclosure. The key words are 'due diligence' and 'discovered by the Assessing Officer'. 19. The Explanation addresses a situation where the assessee seeks to take the benefit of the fine print embedded in the books of accounts or other material evidence. The process of assessment necessarily entails filing of material, sometimes voluminous, before the Assessing Officer and it is humanly impossible for the Officer to peruse every number and word on every page. 20. Thus, it is the duty of the Assessing Officer to peruse the primary documents, including the ROI and accompanying statutory documents, such as the financial st....
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.... Taxman 38 (Madras)) 6. Eleganza Jewellery Ltd. Vs. Commissioner of Income-tax ((2014) 52 Taxmann.com 46 (Bombay)) 7.Sumitoma Mitsui Banking Corporation Vs. Deputy Director of Income Tax (IT)-2(1) and Others (2011 SCC Online Bom 1973) 8. Deputy Director of Income-tax Vs. Sumitomo Mitsui Banking Corporation ([2016] 76 taxmann.com 135 (SC)) 9.Deputy Commissioner of Income Tax, Corporate Circle-1(1) and another Vs. M/s.Daimler India Commercial Vehicles Private Ltd. (W.A.No.1616 of 2018 dated 19.08.2021). 25. The judgment in the case of Raymond Woollen Mills Ltd. (supra) is relied upon for the proposition that the sufficiency or correctness of the material, on the basis of which re-assessment was initiated, is not a matter that should concern the Court in Writ jurisdiction and that the appropriate course of action in such case would be to relegate the assessee concerned to statutory appellate remedy. This judgement would not advance the case of the revenue as the issues that have been raised are purely legal in nature, touching upon the validity or otherwise of the proceedings for reassessment. They do not deal with the sufficiency of the reasons ....
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....ll disclosure on its part. 29. This case is distinguishable from the present one for the reason that the information in the present case relating to deduction under Section 35E and employee benefit expenses were not contained in an incongruous private document, but a statutory document mandated to accompany the ROI. In my considered view, Explanation (1) to Section 147 envisages a difference between a document to be compulsorily and mandatorily studied by the Assessing Officer and one which is only supplemental and which may command a lesser degree of his attention. This distinction applies squarely in the present case. 30. The Bombay High Court in the case of Eleganza Jewellery Ltd. (supura) concludes against the assessee relying on an earlier decision of that Court in Export Credit Guarantee Corpn. Of India Ltd. V. Addl. CIT (350 ITR 651) to the effect that re-opening is permissible when the original order of assessment was silent in respect of the issue based on which the re-assessment is premised. 31. It is to be noted, that this decision, though of the year 2014, does not refer to the Full Bench decision of the Delhi High Court in the case of CIT V. Kelvinator (256 IT....
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.... the Department had categorised as pre-commencement expenses, liable to be capitalised. The Division Bench was of the view that the matter requires examination and on the aspect of assumption of jurisdiction, agreed with the Department that since there was nothing on record to indicate that both a full and true disclosure has been made by the petitioner in regard to the commencement of its business, it would be critical to determine whether the expenses incurred were pre-operative or liable to be accepted as revenue. 38. The assessee was thus relegated to alternate remedy and was given opportunity to raise all objections before the Officer. This case is also distinguishable for the reason that the revenue has discharged its obligation of establishing that there was no complete disclosure by that assessee. 39. I have kept for last the decision of the learned single Judge of this Court, (as he then was) upon which substantial reliance has been made by the learned Senior Standing counsel, which is Jayaram Paper Mills (supra). In this case, the re-assessment had been initiated within a period of 4 years and the issue in re-assessment was whether the expenditure unconnected with e....
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....le the Income-tax Officer to reopen the final decision made against the Revenue in respect of questions that directly arose for decision in earlier proceedings. If that were not the legal position it would result in placing an unrestricted power of review in the hands of the assessing authorities depending on their changing moods." It was further held by the Bench that: "Reverting back to the case at hand, it is clear from the reasons placed by the Assessing Officer on record as also from the statement made in the counter affidavit that all that the Income-tax Officer has said is that he was not right in allowing deduction under Section 80I because he had allowed the deductions wrongly and, therefore, he was of the opinion that the income had escaped assessment. Though he has used the phrase "reason to believe" in his order, admittedly, between the date of the orders of assessment sought to be reopened and the date of forming of opinion by the Income- tax Officer nothing new has happened. There is no change of law. No new material has come on record. No information has been received. It is merely a fresh application of mind by the same Assessing Officer to the sam....
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....rder of assessment or even his successor officer only on the slightest pre-text or otherwise would be entitled to reopen the proceeding. Assessment proceedings may be furthermore reopened more than once. It is now trite that where two interpretations are possible, that which fulfils the purpose and object of the Act should be preferred. It is a well settled principle of interpretation of statute that the entire statute should be read as a whole and the same has to be considered thereafter chapter by chapter and then section by section and ultimately word by word. It is not in dispute that the Assessing Officer does not have any jurisdiction to review his own order. His jurisdiction is confined only to rectification of mistakes as contained in Section 154 of the Act. The power of rectification of mistake conferred upon the Income Tax Officer is circumscribed by the provisions of Section 154 of the Act. The said power can be exercised when the mistake is apparent. Even a mistake cannot be rectified where it may be a mere possible view or where the issues are debatable. Even the Income Tax Appellate Tribunal has limited jurisdiction under Section 254(2) of the Act. T....
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...., in my view, be appropriate to test whether such claim, and the methodology adopted for making such a claim, had been placed before the Authority even at the first instance. The answer in this case is in the affirmative. The successor officer has not come into possession any other information to indicate escapement of income but merely relies upon the methodology adopted by the petitioner to apprehend escapement of tax. In such circumstances, resort to Section 147 is, in my view, impermissible. 50. In dealing with re-assessments and challenge there to, Courts have formulated principles over time, one of which is that an assessment being a quasi-judicial proceeding, is expected to have been formulated by an officer after due application to all issues that arise from the ROI. Useful reference may be made to Section 114(e) of the Indian Evidence Act that raises a statutory presumption in this behalf. 51. No doubt, there are situations where errors occur, either on fact or on law. It is for this reason that the Income Tax Act provides for multiple measures that may be resorted to by the revenue to address the situation appropriately. 52. The provisions of Section 154 enable a....