TaxTMI 
TaxTMI 
2022 (12) TMI 305
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....he Assessing Officer (AO) issued the impugned notice dated 29.03.2019 under Section 148 of the Income Tax Act, 1961 (IT Act), seeking to reopen the assessment for AY 2012-13. Thus, the impugned notice was issued after the expiry of four years from the end of the relevant AY. Even Ms Razaq did not dispute that for the impugned notice to be sustained, the respondents would have to establish failure on the part of the Petitioner to disclose fully and truly all material facts necessary for its assessment for the relevant AY. Therefore, the main question in this petition is whether there was any such failure. 5. Upon receipt of the impugned notice, the Petitioner sought reasons recorded and such reasons came to be furnished by respondent no.1 to the Petitioner on 23.11.2019. In response, the Petitioner filed detailed objections on 05.12.2019 to reopening the assessment. However, respondent no.1, by order dated 07.12.2019, rejected the objections. Hence, the present petition. 6. As noted earlier, the reasons for reopening the assessment were furnished to the Petitioner on 23.11.2019, and the same read as follows: "GOVERNMENT OF INDIA MINISTRY OF FINANCE INCOME TAX DEPARTME....
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....n 03.12.2011 as stated in Annexure 3. During the FY 2011-12, 20,961 tons were e-auctioned by the MC. However no portion of the sale proceeds were received by the Company during the FY 2011-12. The same were received during FY 2013-14 and accounted in that year. The extract of account of Monitoring Committee for these transaction accounted in FY 2013-14 is enclosed herewith as Annexure-B" 5. Further, as per report in respect of e-auction of iron ore by the monitoring committee appointed the Supreme Court of India that the said e-auction took place in the financial year 2011-12 and the same has to be accounted in the same financial year. As the company maintain its account as per Mercantile system and hence revenue/sales determined (e-auctioned amount) in the FY 2011-12 ( A.Y. 2012-13) has to be accounted in the same year. Hence, the assessee's comments as, "amount were received by us in the year 2013-14 and hence we accounted in AY 2014-15" is not acceptable. 6. Hence, the e-auctioned amount of Rs.64,92,00,000/- determined by the monitoring committee appointed by the Hon'ble Supreme Court of India is taxable in the year of e-auctioned took place and amount dete....
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....r the reasons. Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced." 10. Similarly, in Bajaj Allianz Life Insurance Company Ltd. V/s. Deputy Commissioner of Income Tax, Circle1(1) (2020) 113 taxmann.com 238 (Bombay), another Division Bench quashed the notice issued after the expiry of four years from the end of the relevant AY, inter alia, on the ground that in the reasons furnis....
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.... as detailed in Annexure 3 to the communication. The Petitioner further informed the Revenue that during AY 2012-13, 209,961 tons of ore was E-auctioned by the Monitoring Committee. The Petitioner pointed out that the Petitioner received no portion of the sale proceeds during AY 2012-13. The sale proceeds were ultimately received during AY 2013-14, which was duly accounted for during the said year. Even the extract of the account of the Monitoring Committee for such transactions accounted during AY 2013-14 was enclosed as Annexure 8. 16. The Petitioner also pointed out that the E-auctioned amount of iron ore for AY 2012-13 was of Rs.64.92 crores, but the same was not offered to tax because the Petitioner never received this amount during AY 2012-13. Further, there was uncertainty about the status of this amount, given the orders made by the Hon'ble Supreme Court on this subject from time to time. Finally, the Petitioner pointed out that no sooner than this amount of Rs.64.92 crores was received in the following AY, the same was offered for tax. The Revenue assessed this offer and taxed the Petitioner at a higher rate of 34% when the tax rate for AY 2012-13 would have been only 3....
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....osed, the Revenue would not be entitled to reopen the assessment after four years from the end of the relevant AY. 22. In Titanor Components Ltd. V/s. Assistant Commissioner of Income Tax (2012) 20 taxmann.com 805 (Bombay), the Division Bench of this Court pointed out that there is a well-known difference between a wrong claim by an Assessee after disclosing the true and material facts and the wrong claim made by the Assessee by withholding material facts fully and truly. Only in the latter case would the Assessing Officer be entitled to reopen the assessment after four years. 23. Therefore, the question is not whether the Petitioner was right in not offering the amount of Rs.64.92 crores to tax during AY 2012-13, but the question is whether the Petitioner had disclosed, fully and truly all material facts concerning this amount of Rs.64.92 crores, which, incidentally, was never received by the Petitioner during AY 2012-13. Moreover, the Petitioner disclosed this material fact and explained why this amount was not brought to tax during AY 2012-13. Apparently, this explanation found favour with the Assessing Officer; therefore, this amount was not added to the returned income f....