TaxTMI 
TaxTMI 
2022 (11) TMI 253
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.... up for scrutiny and the statutory notices under Sections 143(2) and 142(1) of the Act were issued. The Petitioner with the return submitted his balance sheet as of 31st March 2014, and trading and profit & loss account accompanied by the audit report in Form-3CB. 4. During the course of regular assessment proceedings, the Assessing Officer (AO) called for an explanation as regards the low net profit. After examining the books of accounts and explanation offered by the Assessee, the ITO passed an Assessment Order under Section 143(3) of the Act by an order dated 29th July, 2016 raising a demand of Rs.21,070/-. 5. Four years after the expiry of the AY in question, the impugned notice dated 30th March, 2021 under Section 148 of the Act was issued seeking to reopen the assessment for AY 2014-15. On 30th June 2021, a notice under Section 143(2) read with Section 147 of the Act was issued setting out the reason recorded for reopening as "non-deduction of TDS from the hiring charges paid to the service provider." The Assessee on 8th July, 2021 had filed its objection and requested for communication of the reasons. On 26th July 2021, the ITO communicated the reasons again saying that th....
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....oceedings for AY 2014-15 was initiated after expiry of four years but before expire of six years and was duly approved by the Principal CIT, Sambalpur. It was submitted that the record containing the proposal for initiation of proceedings under Section 147 of the Act was submitted before the Principal, CIT, Sambalpur on 22nd October, 2020 and approval was obtained on 26th March, 2021. Thereafter, on 30th March 2021, notice under Section 148 of the Act was issued to the Petitioner. Thereafter, on 30th June 2021, notice under Section 143 (2) read with Section 147 of the Act was issued. Therefore, the date for recording of reasons was not 30th June, 2021 as projected by the Petitioner. 11. On merits, it was submitted by the Department that the perusal of the record revealed that the assessee had shown expenses of Rs.55,95,700/- under the head "vehicle expenses and hire charges". His P&L Account revealed that the "assessee failed to deduct tax at source u/s. 194-1 of the I.T. Act, as certified by tax auditor in form No. 3 CD Clause No.34(a) containing the provision of deduction of Chapter-XVII-BB. Accordingly, the said amount is to be disallowed u/s. 40 a (ia) and to be considered as ....
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....t call for interference. 17. The above submissions have been considered. As regards the submission that the PCIT had accorded sanction for reopening of the assessment without application of mind only because the date of approval is 26th March, 2021, while the date of communication of the reasons to the Petitioner is 30th June, 2021, the Court is inclined to accept the plea of the Department that the date of communication of reasons was later to the date on which reasons were recorded. The reasons were perhaps recorded earlier i.e. prior to the sanction for the reopening of the assessment by the PCIT on 26th March, 2021. 18. On merits, however, it is seen that the original assessment was a scrutiny assessment under Section 143 (3) of the Act. The assessee had produced the complete books of accounts, which were perused by the ITO. The order of assessment notes that "the books of accounts and other documents as called for are produced for examination" and the case was discussed with the authorized representative of the Assessee. It is further noted in the original assessment order as under: "An explanation was called for low Net Profit or Loss shown from Large Gross Receipts. The ....
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....My duty is done with disclosing these account-books and the documents". His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, amount to "omission to disclose fully and truly all material facts necessary for his assessment". Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section, gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee's duty to disclose all of them - including particular entries in account books, particular portions of documents and documents, and other evidence, which could have been discovered by the assessing authority, from the documents and other evidence disclosed." 23. Notwithstanding the explanation to Section 147 of the Act that production of books of accounts by itself will not amount to a full disclosure, the reasons com....
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....ing 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." (emphasis supplied) 25. Again in S. Ganga Saran and Sons (Pvt.) Ltd., Calcutta (supra), it was explained with reference to Section 147(a) of the Act as it then stood as under: "6. It is well-settled as a result of several decisions of this Court that two distinct conditions must be satisfied before the Income Tax Officer can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that the income of the assessee has escaped assessment and secondly, he must have reason to believe that such escapement is by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts necessary....
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....the grab of reopening the assessment, review would take place. One must treat the concept of "change of opinion" as an inbuilt test to check abuse of power by the Assessing Officer." 27. In Oryx Fisheries v. Union of India (2010) 13 SCC 427, the Supreme Court, while explaining what in administrative law the principles of natural justice generally require, and in that context of what a show cause notice must contain, observed as under: "31. It is of course true that the show cause notice cannot be read hyper-technically and it is well settled that it is to be read reasonably. But one thing is clear that while reading a show-cause notice the person who is subject to it must get an impression that he will get an effective opportunity to rebut the allegations contained in the show cause notice and prove his innocence. If on a reasonable reading of a show-cause notice a person of ordinary prudence gets the feeling that his reply to the show cause notice will be an empty ceremony and he will merely knock his head against the impenetrable wall of prejudged opinion, such a show cause notice does not commence a fair procedure especially when it is issued in a quasi- judicial proceeding u....