2023 (7) TMI 865

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....t"], in the absence of an allegation that the respondent/assessee had failed to disclose, fully and truly, all material facts necessary for carrying out the assessment, given the fact that the reassessment was triggered after the expiry of four (4) years from the end of relevant AY, i.e., AY 2006-07. 4. The factual backdrop in which the instant appeal has arisen, is as follows: 4.1 The respondent/assessee had electronically filed its Return of Income (ROI) on 02.02.2007. In the ROI, the respondent/assessee declared an income amounting to Rs. 54,14,79,842/-. The respondent/assessee was subjected to scrutiny, and an assessment order under Section 143(3) of the Act was passed on 15.10.2008, pegging the income at Rs. 54,16,13,061/-. 4.2 The record shows that on 28.08.2012, a search was carried out concerning the DSC Group of Companies by the Assistant Director of Income Tax (ADIT), i.e., the Investigation Wing. The search revealed that bogus purchases had been made by the respondent/assessee, via unexplained sources. 4.3 Consequently, on 28.03.2013, the Assessing Officer (AO) issued a notice under Section 148 of the Act, calling upon the respondent/assessee to file a return....

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....ated to dividend income earned which was exempt from tax was disallowed. The disallowance was added back, by taking recourse to Section 14A of the Act, read with Rule 8D of the Income Tax Rules, 1962 [in short, "the Rules"]. 10.1 Thus, the reassessed income was enhanced from Rs. 54,16,13,061/- to Rs. 57,19,15,422/-. 11. Against the assessment order dated 30.03.2014, the respondent/assessee preferred an appeal with the CIT(A). In the said appeal, one of the grounds that the respondent/assessee raised was that the AO had wrongly assumed jurisdiction in the matter, as there was no allegation made that the respondent/assessee had failed to disclose, fully and truly, all material facts necessary for assessing the income for the AY in issue. 12. The CIT(A), however, was not impressed with the contentions raised on behalf of the respondent/assessee and, accordingly, dismissed the appeal. 13. Resultantly, the respondent/assessee preferred an appeal with the Tribunal. As alluded to hereinabove, the Tribunal, via the impugned order dated 31.10.2018, allowed the appeal of the respondent/assessee. 14. It is in these circumstances that the appellant/revenue has preferred the inst....

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.... escaped assessment. The AO had triggered the reassessment proceeding for the AY in issue, only on the ground that a search action had been trigged against the DSC Group of Companies, although there was nothing found by way of material evidence, which would bring to the fore the fact that the respondent/assessee had failed to disclose, fully and truly, all material facts necessary for assessment. (iii) Given the fact that more than four (4) years had passed since the end of the relevant AY, it was incumbent on the AO to allege that because the respondent/assessee had failed to disclose, fully and truly, all material facts necessary for assessment, income otherwise chargeable to tax had escaped assessment. In support of this argument, Mr Aggarwal relied on the following judgments of this Court: a) JSRS Udyog Ltd. v. ITO, 313 ITR 321 (Del)  b) Wel Intertrade Pvt. LTd. v. ITO, 308 ITR 22 (Del) c) Haryana Acrylic Manufacturing Company v. CIT, 308 ITR 38 (Del) d) Atma Ram Properties Pvt. Ltd. v. DCIT, 343 ITR 141 (Del) e) Shivalik Bimetal Controls Ltd. v. ITO, 215 Taxman 441 (Del)  f) CIT v. Suren International Pvt....

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....rchases worth Rs. 3,01,69,142/-, to the records of JMD being seized by the DGCEI. Significantly, the argument of prejudice raised by Mr Kumar, i.e., that two (2) employees of the respondent/assessee were partners of JMD, did not come in the way of AO accepting part of the purchase worth Rs. 92,34,545/- as being genuine. This submission of Mr Kumar, thus, does not impress us. 25. The record shows that the CIT(A) has merely observed that because some part of the record could be produced, the respondent/assessee should have been able to produce the entire record. There, perhaps, may have been some weight in this observation, if only a specific allegation had been made by the AO while triggering reassessment, that because the respondent/assessee failed to disclose, fully and truly, all material facts necessary for carrying out the assessment, income otherwise chargeable to tax had escaped assessment. Furthermore, in our opinion, the AO could have called the bluff of the respondent/assessee [if it was construed to be one] by addressing an appropriate communication to the DGCEI. 26. In other words, the reasons recorded by the AO should not only have made such an assertion but shoul....

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....f section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:" 2. "In the reasons supplied to the petitioner, there is no whisper, what to speak of any allegation, that the petitioner had failed to disclose fully and truly all material facts necessary for assessment and that because of this failure there has been an escapement of income chargeable to tax. Merely having a reason to believe that income had escaped assessment, is not sufficient to reopen assessments beyond the four year period indicated above. The escapement of income from assessment must also be occasioned by the failure on the part of the assessee to disclose material facts, fully and truly. This is a necessary condition ....