TaxTMI 
TaxTMI 
2022 (10) TMI 1061
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....the aforesaid notice dated 23.9.2018, it was stated by the Assessing Officer that income of the petitioner- assessee chargeable to tax for the assessment year 2013-14 had escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961 (herein after to be referred to as the 'The Act'). 3. Noticing the facts, the petitioner happens to be private limited company incorporated under the Companies Act, 1956. It is stated that the petitioner maintains regular books of accounts which are subject to statutory and tax audit. The petitioner filed its return on income for the assessment year 2013-14 on 29.9.2013 declaring total income of Rs.8,56,16,970/-. It is further stated that respondent initially issued notice under Section 142(1) of the Act on 21.7.2015 seeking several details and documents. The regular assessment was completed after making detailed scrutiny and after making relevant record, stated the petitioner. 3.1 The petitioner has further stated that in the regular assessment the detail regarding about royalty and surface rent expenses were asked for and by reply dated 5.1.2016, such details were furnished. It was stated that the ledger account relating to royalt....
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.... Officer pursuant to such details having been called for in the notice under Section 142(1) of the Act. 4.2 On the other hand learned advocate for the respondent relied on the affidavit-in-reply and raised contentions on that basis. The facts and aspect weighed for proceeding to reopen the case were stated in affidavit, extracting from para 3. "Assessee filed its return of income for A.Y. 2013-14 on 29.09.2013 declaring income of Rs.8,56,16,970/-. The same was assessed u/s 143(3) and income was determined at Rs.8,56,91,750/- vide order dated 29.02.2016. Subsequently it was noticed that assessee had incurred royalty expenditure of Rs.1,93,45,708/- on marble rubble mined. In form 3CD report, the assessee had stated 2,96,816 MT of marble rubble during the year. It was noticed that as per Gujarat Minor Mineral Concession Rules, 2010 royalty at the rate of Rs.60 per MT is leviable on marble rubble. At this rate marble rubble produced comes to 3,22,428 MT (=1,93,45,708/60) whereas the assessee had shown mining of marble rubble to the extent of 2,96,816 MT only. This shows that the assessee had under reported mining production of marble rubble by 25,61....
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....nder, extracting from the letter of objections. "We enclose herewith a Statement of Monthly and Yearly Quantitative details of Opening Stock, Production, Sales and Closing Stock of Marble Rubbles and Royalty paid thereon during FY 2012-13 alongwith copies of monthly returns in Form H, showing quantities, submitted to Mining Department for payment of royalty. In the said statement, for the sake of convenience, we have given calculation of production and profit derived by AO for recording reasons for re opening of the case. From the said statement and returns, it can be seen that quantity of sales of 322428 M.Tons and production of 296816 M.Tons of Marble Rubbles shown by us in Audit Reports are correct. Instead of taking production of Marble Rubbles at 296816 M.Tons, you have wrongly derived production at 322428 M.Tons. (which in fact is quantity of sales) and held that we have under reported mining production of Marble Rubbles by 25612 M.Tons. Based on this, you have held that we have under reported profit by Rs, 1,90,29,716/- (25612 ML.Tons x Rs. 743 average sales rate). We submit that your entire exercise is based on wrong understanding of base for payment of royalty. Royalty p....
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....f 'change of opinion' on part of the Assessing Officer to reopen the assessment does not stand obliterated after substitution of Section 147 of the Act by Direct Tax Laws (Amendment) Acts, 1989. Emphasizing that there must be a 'tangible material' available with the Assessing Officer for to come to the conclusion that there was escapement of income from assessment, reason must have a link with the formation of the belief, the Supreme Court stated, "...prior to Direct Tax Laws (Amendment) Act, 1987, re-opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from 1st April, 1989], they are given a go-by and only one condition has remained, viz., that where the Assessing 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 ....