TaxTMI 
TaxTMI 
2022 (12) TMI 459
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....issued the impugned notice dated 29.03.2019 under Section 148 of the Income Tax Act, 1961 (IT Act), seeking to re-open the assessment for AY 2012-13. Thus, admittedly, the impugned notice was issued after the expiry of four years from the end of the relevant AY. 5. Upon receipt of the impugned notice, the Petitioner sought reasons and filed objections after obtaining the reasons. However, the objections were rejected by the AO by Order dated 02.11.2019. Hence, the present petition. 6. Mr Jain, the learned Senior Advocate for the Petitioner, submitted that the impugned notice and the reasons do not disclose the material facts which the Petitioner allegedly failed to disclose for assessment during the relevant year. He submitted that the Petitioner had disclosed fully and truly all facts necessary for assessment. Such material facts were inter alia disclosed in the audit report, annual accounts and tax audit report that were required to be and were, in fact, filed along with the return of income. Additionally, he pointed out that the Petitioner had expressly disclosed information about the Supreme Court proceedings and the effect of such proceedings on the Petitioner's iron ore....
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....ned Petitioner's ore and recovered an amount of Rs. 129.716 crores. She submits that neither was this material fact disclosed in the returns filed for the relevant AY but further, even though this amount was accrued to the Petitioner, the same was not brought to tax. Therefore, she submitted that this was an apparent failure to disclose all material facts necessary for assessment during the relevant AY. She relied on Calcutta Discount Co. Ltd. V/s. Income Tax Officer (1961) 41 ITR 191 in support of her contention that the merits of the matter cannot be gone into at this stage because the Assessee will have a full opportunity to raise issues on merits during the reassessment proceedings. 10. Mr Jain, by way of rejoinder, pointed out that complete disclosures were made, and the amount of Rs.129.716 crores neither accrued nor was received during the relevant AY. He submitted that the Monitoring Committee disbursed this amount only in the next AY. Upon receipt, this amount was promptly offered to tax in the following AY, and the same was taxed at a higher rate of 34% compared to the tax rate of 32% for AY 2013-14. He, therefore, submitted that since only the issue of the year of t....
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.... Assessee had filed its return of income for the AY 2012-13 on 30.09.2012 declaring an income of Rs.2,61,81,690/-. The Assessee has shown sales of Rs.24,69,335/in the Income-tax return as against the e-auction receipts of Rs.1,29,71,60,000/-. Thus, the Assessee has accounted for less receipt to the extent of Rs.1,29,46,90,665/ (Rs. 1,29,71, 60,000/- - Rs.24,69,335/-). Therefore, it is clear that the Assessee has not accounted for the receipts fully in the books of account. 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 e-auctioned amount of Rs.1,29,46,90,665/- determined by the monitoring committee appointed by the Hon'ble Supreme Court of India is taxable in the year of e-auctioned took pace and amount determined ie. FY 2011-12 (A.Y. 2012-13). 4. In view of the above, to examine the e-auction of iron ore took place in the various years and amount determined were offered for tax by the Assessee or not, in addition to regular income in respective years, it is proposed to re-open the case by issue of notice u/s 147 of the I.T....
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....cting provisions of Explanation 1 of section 147 of the Act. It is important to highlight here that material facts relevant for the assessment on the issue(s) under consideration were not filed during the course of assessment proceeding and the same may be embedded in annual report, audited P&L A/c and balance sheet and books of account in such a manner that it would require due diligence by the AO to extract these information. For aforestated reasons, it is not a case of change of opinion by the AO." Yours faithfully, Sd/- (Harshini Gopal G. R.) Asst. Commissioner of Income Tax Circle-2(1), Panaji." 14. From the reasons furnished to the Petitioner, it is evident that the AO, based on the brief details of the Assessee, brief details of the information received and collected by the AO and the analysis of the information collected/received purported to record satisfaction that the Assessee had failed to fully and truly disclose "the following material facts" necessary for his assessment for the year under consideration : 15. However, after recording the above-emboldened portion in paragraph 4 of the reasons transcribed above, the AO omitted to disclose what were the material....
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..... No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. it is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the Assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the Assessee guessing for 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 m....
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....ught to be plugged by filing an affidavit before this Court. 23. Again, it is well settled that the reasons recorded by the AO cannot be supplemented by filing an affidavit or making oral submissions. Otherwise, the reasons lacking in material particulars would get augmented by the time the matter reached the Court on the strength of affidavit or oral submissions advanced. Further, the Division Bench has held that the AO must put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. The reasons are the manifestation of the mind of the Assessing Officer./ The reasons recorded should be self-explanatory and should not keep the Assessee guessing about the reasons. The Division Bench explained that the reasons provide the link between the conclusion and the evidence; therefore, clear disclosure of the reasons was vital in such matters. 24. Therefore, following the law in Hindustan Lever Ltd. (supra) in the context of reasons furnished by the AO to the Petitioner on 01.05.2019, the impugned notice will have to be quashed because there is no disclosure in the ....
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....ayable to the Company, if any, will be done only on determination and under the directions of the Hon'ble Supreme Court. Pending such final determination by the Hon'ble Supreme Court of the amount due, if any, the Company has continued to show such ore stocks in its Books of Accounts at Cost. 28. Similarly, in the context of an Audit Report certified by the Chartered Accountant, there is again reference to the above Note no.26 while reporting on the closing stock valuation. Thus, the position about the Petitioner's iron ore being e-auctioned by the MC subject to further orders of the Hon'ble Supreme Court was disclosed along with the returns. 29. On 20.08.2013, the AO issued a notice under Section 143(2) of the IT Act to the Petitioner along with a questionnaire seeking annual accounts, tax audit reports, details of purchase/sale, etc. On 29.12.2014, the Petitioner filed a detailed response together with the annual accounts and tax audit report. Further, details were also supplied by the Petitioner on 23.03.2015. 30. Finally, the AO, on 28.03.2015, assessed the Petitioner's return for AY 2012-13 by making an order under Section 143(3) of the IT Act. 31. Mr J....
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....ment for AY 2012-13. In the reasons furnished to the Petitioner, the AO omitted to point out the material facts, which according to him, the Petitioner had failed to disclose fully and truly. Since the disclosures were made in the annual accounts and audit reports, Explanation (1) to Section 147 of IT Act was not attracted. Besides, there is no dispute that the amount which the AO claims has escaped assessment during AY 2012-13 was eventually received by the Petitioner in the subsequent year, and the same was offered to tax in AY 2013-14. Therefore, this income was duly assessed and taxed at a higher rate of 34%. 35. Ms Razaq, however, contended that the income that the Petitioner may have actually received in the subsequent year was accrued to the Petitioner during AY 2012-13. Therefore, she contended that this amount should have been offered to tax in AY 2012-13 itself. Mr Jain advanced several contentions to support his contention that the amount had not accrued during AY 2012-13. However, we need not go into this issue as long as there was disclosure of the material facts necessary for the Petitioner's assessment during AY 2012-13. Additionally, even if Mr Jain's accru....