TaxTMI 
TaxTMI 
2025 (5) TMI 830
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....e Act and a final assessment order came to be passed on 02 January 2014 whereby the Assessing Officer (AO) computed the total taxable income at INR 20,71,04,18,575/-. 2. Undisputedly, 31 March 2016 constituted the last date by which a reassessment action for AY 2009-10 could have been initiated in terms of the timelines provided in Section 149. It is the case of the writ petitioner that the notice under Section 148, however, came to be issued only on 01 April 2016. It is in the aforesaid backdrop that one of the principal grounds on which the reassessment exercise is assailed is of the same being barred by limitation as prescribed. According to the writ petitioner, the aforenoted challenge is no longer res integra and stands conclusively answered by this Court in Suman Jeet Agarwal v. ITO (2022 SCC OnLine Del 3141). 3. We are in the present case concerned with a reassessment exercise which was governed by the erstwhile statutory regime and the respondents thus appear to have followed the procedure as it existed prior to Finance Act, 2021. A copy of the reasons on the basis of which the AO had formed the opinion that income liable to tax had escaped assessment was thus provide....
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....s. 2071,04,18,575/- vide order dated 02.01.2004. 4.3 Directions from office of Addl. CIT has been received to examine the assessment orders of earlier years in view of the following new issues raised in the assessment order for AY 2010-11 and to take remedial measures if deemed fit. (i) Non deduction of tax at source amounting to Rs. 195 crore on payments to M/s Suzuki Motor Corporation (ii) Taxation of share transactions as business income amounting to Rs. 129 crore (iii) Disallowance of claim u/s 35(2AB) amounting to Rs. 247 crore (iv) Disallowance of provision for warranty amounting to Rs. 21 crore. 4.4 The above mentioned issues have not been examined in the assessment order for A.Y. 2009-10. Reason for belief 5. In view of the above, I have reasons to believe that the above mentioned issues have not been examined in the assessment order of A.Y. 2009-10. Sd/- (Sanyam Joshi) Deputy Commissioner of Income Tax Circle 16(1), Delhi" 5. As is manifest from the above, the respondent had essentially flagged four issues which had been identified in the course of the assessment undertaken for AY 2010-1....
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.... that the e-mails attaching the impugned notices dated March 31, 2021, were despatched by the Income Tax Business Application servers on April 1, 2021, or thereafter. 25.2. Faced with the aforesaid factual position, it has been contended by the Department that since generation of impugned notices on the Income Tax Business Application portal on March 31, 2021, is undisputed, the singular act of generation of notice by the jurisdictional Assessing Officer satisfies the requirement of "issued" for the purpose of section 149 of the Act of 1961 and despatch of the notice on March 31, 2021 is not a mandatory requirement. 25.3. The Department contends that since each of the impugned notices bear a document identification number, its generation as on March 31, 2021, is beyond doubt. It is further contended that since, on the Income Tax Business Application portal, after generation of notice the jurisdictional Assessing Officer is left with no power to amend, alter, cancel or ante-date the notice, the said act of generation conclusively establishes that the notice has been issued. 25.4. The petitioners as noted above have opposed this contention of the Department....
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....te the act of issuance. The court clarified that service on the recipient was not a condition precedent for satisfying the act of issuance. 25.6. It would also be useful to refer to the judgment of the Supreme Court in the case of R. K. Upadhyaya (supra). In the said case, the Supreme Court was concerned with the controversy of the validity of a notice with reference to sections 148 and 149 of the Act of 1961. In the said case, the notice under section 148 of the Act of 1961, was despatched by registered post on March 31, 1970, but the same was received by the assessee on April 3, 1970 ; and therefore, the Gujarat High Court after observing that the expression "issued" and "served" in sections 148 and 149 have the same meaning, held that the notice was time barred. In appeal, the Supreme Court after taking note that the notice was despatched by registered post on March 31, 1970, set aside the judgment of the High Court. The Supreme Court held that the service of notice is not a condition precedent for satisfying the condition of "issued". The date of despatch of the notice was taken into consideration by the Supreme Court as the relevant date for determining that the notic....
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....lf of the Revenue. In the circumstances, the impugned notices under section 148 in relation to assessment year 2003-04, having been issued on April 7, 2010 which is clearly beyond the period of six years from the end of the relevant assessment year, are clearly barred by limitation and as such, cannot be sustained..." (emphasis supplied) The Gujarat High Court categorically held that it is on the date of despatch of the section 148 notice that the same will be held to be issued for the purpose of section 149 of the Act of 1961. 25.8. The Madras High Court in Smt. Parveen Amin Bhathara (supra), after approving the dicta of Kanubhai M. Patel (supra) and considering section 282 of the Act of 1961 and rule 127 of the Income-tax Rules, held as under (page 205 of 446 ITR) : "In the present case, the respondent reopened the assessment of the appellant for the assessment year 201112, through notice dated March 31, 2018 under section 148 of the Act. Admittedly, the limitation period of six years for reopening the assessment, came to an end on March 31, 2018. The main plank of contention of the learned counsel for the appellant is that the notice under section 148 ....
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....d that drawing up a notice on March 31, 2021, and digitally signing the same, in the absence of despatch, does not amount to issuance of notice within the meaning of section 149 of the Act of 1961. The High Court after elaborately discussing the provisions of sections 282 and 282A of the Act of 1961, and the provisions of section 13 of the Act of 2000, held that, since the impugned notice therein though dated March 31, 2021, was issued through e-mail on April 6, 2021, the same was time barred and therefore liable to be quashed. The court at paragraphs 29 and 30 held as under (page 54 of 444 ITR) : "Thus, considering the provisions of sections 282 and 282A of the Act, 1961 and the provisions of section 13 of the Act, 2000 and meaning of the word 'issue" we find that firstly notice shall be signed by the assessing authority and then it has to be issued either in paper form or be communicated in electronic form by delivering or transmitting the copy thereof to the person therein named by modes provided in section 282 which includes transmitting in the form of electronic record. Section 13(1) of the Act, 2000 provides that unless otherwise agreed, the despatch of an electr....
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....or electronic form. In case of paper form, the notice must be despatched by post on or before March 31, 2021 and for communication in electronic form the e-mail should have been despatched on or before March 31, 2021. In the present writ petitions, the despatch by post and e- mail was carried out on or after April 1, 2021 and therefore, we hold that, the impugned notices were not issued on March 31, 2021. 25.14. The Department has not disputed the correctness of the law settled by the Supreme Court in the case of R. K. Upadhyaya (supra) in which the court was concerned with issuance of the section 148 notice in paper form and concluded that, since the date of despatch was within the prescribed period of limitation, the notice was validly issued for the purpose of section 149 of the Act of 1961, and held that the date of service of notice was not relevant. In fact, the Department has relied upon the said judgment. The said judgment squarely applies to the notice classified as category "E". The amendments to the Act of 1961 including section 282A was to enable the Income-tax authority to issue notice either in paper form or electronic form and were made to provide an adequat....
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....er, on a perusal of the judgment in Malavika Enterprises (supra), we find that in the said case the notice had been despatched on March 31, 2021, at 6.42 p. m. by the Income Tax Business Application server, though served on the assessee on April 1, 2021, at 2.00 am and therefore, the Madras High Court concluded that the notice has been validly issued on March 31, 2021. The relevant portion of paragraph 8 of this judgment reads as follows (page 653 of 445 ITR) : "Coming to the facts of the case, it is stated that notice under section 148 of the Act of 1961 is said to have been issued on March 31, 2021 for the assessment year 2013-14, followed by consequential notices. It is the case of the petitioner that the notice is said to have been issued vide email at 6.42 p. m., but was served on April 1, 2021 at 2 am and, therefore, the unamended provisions of section 148 of the Act of 1961 would not be applicable to the case..." We do not find that this judgment takes the case of the Department any further as the section 148 notice in the case was duly despatched on March 31, 2021. 25.17. The Department has not cited any judgment which would support its contention....
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....truction No. 2 (F. No. System/Income Tax Business Application/Instruction/Assessment/ 16-17/177, dated August 1, 2016) issued by the Directorate of Income-tax (System) mentions that : "the Assessing Officer Staff/Assessing Officer Inspector will not be able to generate the notice but will be able to view the notices already generated by the Assessing Officer for taking a printout of the same, for issue to the assessee." (b) The Income Tax Business Application Assessment Instruction No. 3 (F No. System/Income Tax Business Application/Instruction/ Assessment/ 177/16-17/), dated February 3, 2017, also illustrates the same distinction : "Details of the Authority/party from whom information is requisitioned can be entered along with date for compliance and the notice can then be generated and issued." 25.19. The counsel for the Department have also sought to argue that generation of a notice with document identification number on Income Tax Business Application screen conclusively indicates that the notice has been irrevocably issued. The submission of the respondent is not borne out from the applicable circular regarding document identification numbe....
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....d on or after April 1, 2021, unlike in the case of Rajesh Sunderdas Vaswani (supra) where the date of despatch was seriously disputed. This court has only been called upon to determine the legal effect of the despatch of April 1, 2021 and thereafter, on the validity of the notices dated March 31, 2021. 25.22. In this regard, it would be useful to note that, the impugned notice in W. P. (C) No. 5316 of 2022 was classified in category "C". However, during the pendency of the proceedings, the jurisdictional Assessing Officer on July 30, 2022 determined that the said notice though generated and signed on March 31, 2021 was issued through e-mail by the Income Tax Business Application servers on April 6, 2021. It has been brought to this court's attention that the jurisdictional Assessing Officer is now self- determined that the same shall be governed by the judgment of the Supreme Court in Ashish Agarwal (supra) and the jurisdictional Assessing Officer has accordingly proceeded to treat the notice dated March 31, 2021 as notice under section 148A(b). The aforesaid acts of the jurisdictional Assessing Officer belie the submissions of the counsel for the Department t....
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....n the document later, go to 'view/edit despatch register' screen. Select the status as 'pending for signing' and search. Select the document and click sign documents. Ensure digital signature certificate is attached to the system. Select the digital signature certificate of the user. Click sign. Document will be signed successfully. However, this option is required to be very carefully exercised in the case of orders as the date of generation of document and date of digital sign may be different as these will be actual date of generation and digital signing." Finding for notices falling under category "A" We therefore hold that the impugned notices falling under category "A" shall be held to be dated as on the date digital signature certificate was affixed. Since the date of affixation of digital signature certificate on the impugned notices is April 1, 2021 and thereafter they were sent and delivered through the Income Tax Business Application portal on or after April 1, 2021, the impugned notices falling under category "A" can only be said to have been issued on or after April 1, 2021. Illustratively, in W. P. ....
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....ion 143(3) unless it be established that the assessee had failed to make a full and true disclosure of facts. 9. Insofar as TDS payments made to SMC are concerned, Mr. Vohra firstly invited our attention to the notice dated 22 October 2010 issued under Section 143(2) of the Act and where the following queries were raised: " 1. Power of Attorney, Statutory Audit Report and Copy of Tax Audit Report under section 44AB of the IT Act, 1961, copy of Return of Income, Computation of Income, Balance Sheet, Profit and Loss account, cash flow with Schedules for A.Y- 2009-10 (Please give the full address and phone number of Authorized Representative's also) 2. A brief note on business activities and history alongwith the details regarding godowns, branch offices and sister concerns of the company and the method of accounting followed by you. In case of manufacturing activity : (a) Explain the process of manufacturing activity with a flow chart (b) Furnish the quantative details of by product generated as a result of manufacturing activity. Also furnish the manner of disposal and income generated on the same. (c) The manufacturing ac....
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.... the necessary documentary evidence. Also furnish the breakup of expenses for tickets stay and others. (xi) Whether the visit was in connection with the purchase of capital goods and setting up of new project" 10. Mr. Vohra then took us through the detailed replies which were submitted in response to that notice on 25 March 2011, 08 January 2013 and 29 January 2013: "Query No.3: Details regarding Directors of the company along with their residential addresses, other business interests, personal bank accounts and income tax particulars (PAN and Ward/Circle where assessed) and percentage shareholding in the assessee company as on 31/03/2009 along with copy of account of shareholders in the books of your company. Also, furnish the details of all business activity carried on by each of them and computation of their income. The list and details of the Directors of the company is placed in Anneuxre-1 xxx xxx xxx Query No.24: Furnish the list of key management personnel (KMP) as described in AS-18 "Those persons who have authority and responsibility for planning, directing and controlling activities of the reporting enterprises". The key ....
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....mitted by the petitioner and more particularly to Clause 25 of the Notes to Accounts in Schedule 23 in which all related party transactions had been duly disclosed. Mr. Vohra also took us through the relevant parts of the Tax Audit Report which again, according to learned senior counsel, made full and complete disclosures with respect to persons specified in Section 40A(2) of the Act. We were also taken through the Transfer Pricing Report (TP Reports) in Form No. 3CEB in which payments made to SMC had been accounted for. 12. Proceeding along these lines, Mr. Vohra also took us through the assessment order passed in the case of the petitioner for AY 2013-14 as well as the decision taken in the MAP proceedings and where it was declared that SMC had no PE in India. The extract of the MAP proceedings is reproduced herein below: "[TRANSLATION] Kunkvo 2-33 April 6, 2001 Mr. Osamu Suzuki Representative Director Suzuki Motor Corporation Kazuhiko Fushiya Commissioner of National Tax Administration (Seal) Notice Regarding Agreement upon Mutual Consultation With respect to mutual consultation relating to the taxation issu....
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....constituted a reason for reopening was with respect to the deductions claimed under Section 35(2AB) of the Act. Mr. Vohra in this respect firstly relied upon the notice issued under Section 142(1) dated 31 December 2012 and to Query no. 14 which read thus: "14) Complete details regarding the claim of deduction of Z99,92,72,930/- u/s 35(2AB) along with the copies of approval & certificates of DSIR, copy of report and details submitted by you to DSIR, copy of report of M/s PwC and details of the expenditure incurred by you. Kindly also substantiates how all the conditions mentioned in the section 35(2AB) are fulfilled." 17. The petitioner while responding to the said notice had provided the following details along with its reply dated 14 January 2013, relevant parts whereof are reproduced hereinbelow: "In this regard, it is submitted that the assessee company had claimed deduction of Rs. 99,92,72,930/- on account of revenue expenditure u/s 35(2AB) in its original return of income. However, this claim has reduced by Rs 6,26,09,435/- to Rs 93,66,63,495/- in the revised return dated 29.03.2011 filed by assessee. Copy of original and revised return of income....
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....ftware u/s 40(a)(ia) has been made in view of the fact that similar disallowance made in the Draft Order for the A.Y. 2008-09, the Hon'ble DRP had given the relief to the assessee vide its order dated 24.09.2012. • Application section 94(7) has been examined. Assessee has itself disallowed Rs. 2,41,19,646/- from the total Short Term Capital gain claimed by it. • Assessment folders of last several assessment years have been examined." 19. Proceeding then to the issue of warranty, Mr. Vohra submitted that quite apart from the same having been conclusively answered in favour of the petitioner in its own case for AYs' 1994-95 to 1998-99, full and true disclosures were made in Schedules 14 & 19 of the audited financial statements [at pages 614 and 616 of the digital record], as also per Clause 26 of the Notes to Accounts comprised in Schedule 23 to the audited financial statements. 20. It was in the aforesaid backdrop that Mr. Vohra had submitted that the action for reassessment is rendered wholly untenable since it clearly amounted to a change of opinion and was thus liable to be struck down on this score. Mr. Vohra submitted that the copious rec....
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....ar as the various queries are concerned, it was Mr. Chandra's submission that the responses of the petitioner were wholly vague, devoid of material details and consequently, the AO was deprived of complete information at the time when the final assessment order was framed for AY 2009-10. In view of the above, learned counsel submitted that the AO was justified in proceeding on the basis of credible information that had been received after completion of the original assessment and the same cannot possibly be said to constitute a change of opinion. 25. The first issue which arises for determination is whether the reassessment notice which was dispatched on 01 April 2016 would survive in light of what our Court held in Suman Jeet Agarwal. One of the primary questions which arose for consideration in Suman Jeet Agarwal was whether a notice, though generated on 31 March 2021 and yet issued after the said date, would survive the rigorous timeframes which are erected by Section 149 of the Act. The Court in Suman Jeet Agarwal held that mere generation of a notice would not suffice and that for the purposes of evaluating whether a reassessment action had been initiated within the tim....
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.... aspects pertaining to short and long term capital gains, Section 35(2AB) and the claim of warrant provision. It was in the aforesaid backdrop that Mr. Vohra had submitted that since the original assessment had been completed in terms of Section 143(3), no reassessment proceedings could have been initiated in light of the full and true disclosures that were made. It was in this context that Mr. Vohra had alluded to the proscription of a change of opinion feeding the invocation of Sections 147 and 148 of the Act. 30. Mr. Vohra had submitted that once the petitioner had placed all material facts and documentation on record, it was incumbent upon the AO to draw appropriate inferences if it sought to contest the position as advocated by the assessee. Learned senior counsel argued that in the facts of the present case, the record would reflect that not only was a full and true disclosure made, but the issues which are sought to be picked up now and made the basis for initiation of action under Section 147 were duly noticed, flagged and examined in the course of the original assessment proceedings. According to learned senior counsel, it is for the aforenoted additional reasons that t....
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....t will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons." 33. Proceeding further to explain the second and third situations which were spoken of above, the Court in Usha International pertinently observed that the salutary remedy comprised in Section 263 of the Act was sufficient to protect the interest of the Revenue even though it may be barred in law from invoking the powers conferred by Sections 147 and 148. However, in Usha International, the Court also took into consideration cases where fresh factual information may come to the knowledge of the AO and which may warrant a finalized assessment being reopened. It was in this respect observed as follows: "16. Here we must draw a distinction between erroneous application/interpretation/understanding of law and cases where fresh or new factual information comes to the knowledge of the Assessing Officer subsequent to the passing of the assessment order. If new facts, material or information comes to the knowledge of the Assessing Officer, which was not on record and available at the time of the assessment order, the principle of "change of ....
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....ticing that unconfirmed sundry creditors, of which details, etc., were not furnished, were to the extent of Rs. 52,84,058 and not Rs. 19,86,551. In Indian Hume Pipe Co. Ltd. (supra), after verification the claim under section 54EC was allowed but subsequently on examination it transpired that the second property was purchased prior to the date of sale. The aforesaid decisions/ facts cases must be distinguished from cases where the material facts on record are correct but the Assessing Officer did not draw proper legal inference or did not appreciate the implications or did not apply the correct law. The second category will be a case of "change of opinion" and cannot be reopened for the reason that the assessee, as required, has placed on record primary factual material but on the basis of legal understanding, the Assessing Officer has taken a particular legal view. However, as stated above, an erroneous decision, which is also prejudicial to the interests of the Revenue, can be made subject-matter of adjudication under section 263 of the Act." 35. The Full Bench in Usha International further cleared a misconception which appears to have been harboured with respect to certain ob....
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.... to reassessment proceedings is not permissible but in a given case where an erroneous order prejudicial to the Revenue is passed, option to correct the error is available under section 263 of the Act. 23. The said observations do not mean that even if the Assessing Officer did not examine a particular subject-matter, entry or claim/deduction and, therefore, had not formed any opinion, it must be presumed that he must have formed an opinion. This is not what was argued by the assessee or held and decided. There cannot be deemed formation of opinion even when the particular subject matter, entry or claim/deduction is not examined. 24. Distinction between disclosure/declaration of material facts made by the assessee and the effect thereof and the principle of change of opinion is apparent and recognized. Failure to make full and true disclosure of material facts is a precondition which should be satisfied if the reopening is after four years of the end of the assessment year. The Explanation stipulates that mere production of books of account and other documents, from which the Assessing Officer could have with due diligence inferred facts does not amount to full an....
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....ssment. The observations in Kalyanji Maviji (supra) that reopening would cover a case "where income has escaped assessment due to the oversight, inadvertence or mistake" was too broadly expressed and did not lay down the correct law. It was clarified and observed at page 1004 in Indian and Eastern Newspaper Society (1979) 119 ITR 996 (SC) as: "Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the 'oversight, inadvertence or mistake' of the Income-tax Officer must fall within section 34(1)(b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farth....
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....). This proposition clearly envisages a formation of opinion by the Income-tax Officer on the basis of material already on record provided the formation of such opinion is consequent on 'information' in the shape of some light thrown on aspects of facts or law which the Income-tax Officer had not earlier been conscious of. To give a couple of illustrations ; suppose an Income-tax Officer, in the original assessment, which is a voluminous one involving several contentions, accepts a plea of the assessee in regard to one of the items that the profits realised on the sale of a house is a capital realisation not chargeable to tax. Subsequently, he finds, in the forest of papers filed in connection with the assessment, several instances of earlier sales of house property by the assessee. That would be a case where the Income-tax Officer derives information from the record on an investigation or enquiry into facts not originally undertaken. Again, suppose the Income-tax Officer accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an ....
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.... also reference only to this situation and insists upon the necessity of some information which make the Income-tax Officer realise that he has committed an error in the earlier assessment. This paragraph does not in any way affect the principle enumerated in the two Madras cases cited with approval in Anandji Haridas 21 STC 326. Even making allowances for this limitation placed on the observations in Kalyanji Mavji, the position as summarised by the High Court in the following words represents, in our view, the correct position in law (at page 629 of 102 ITR): The result of these decisions is that the statute does not require that the information must be extraneous to the record. It is enough if the material, on the basis of which the reassessment proceedings are sought to be initiated, came to the notice of the Income-tax Officer subsequent to the original assessment. If the Income-tax Officer had considered and formed an opinion on the said material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income-tax Officer had not considered the material and subsequently came by the material from t....
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....ion that the surplus was not taxable. But, in doing so, he obviously missed to take note of the law laid down in G. R. Ramachari and Co. [1961] 41 ITR 142 (Madras) which there is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under section 147(b). The material which constituted information and on the basis of which the assessment was reopened was the decision in G. R. Ramachari and Co. [1961] 41 ITR 142 (Madras). This material was not considered at the time of the original assessment. Though it was a decision of 1961 and the Income-tax Officer could have known of it had he been diligent, the obvious fact is that he was not aware of the existence of the decision then and, when he came to know about it, he rightly initiated proceedings for reassessment." 39. In view of the above observations we must add one caveat. There may be cases where the Assessing Officer does not and may not raise any written query but still the Assessing Officer in the first round/original proceedings may have examined the subject-matter, claim, etc., because the aspect or question may be too apparent and obvious. To hold t....
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....contingency would not justify the power of reassessment being exercised. 38. That then takes us to the aspect of fresh or new factual information that may come to light pursuant to an order of assessment made subsequently. The Full Bench in Usha International held that if new information comes to the knowledge of the AO in the course of undertaking an assessment for a subsequent period, the same could be validly taken into consideration and would not amount to a change of opinion. It observed that an opinion which may have been formed originally, if established to be based on wrong or incorrect facts, would not stand insulated or rendered immunity from review. It thus held that factual information or material which was either not available at the time of original assessment or which comes to light subsequently may justify the initiation of reassessment proceedings. 39. However, Usha International pertinently observes that it is equally important to bear in consideration the fact that if material facts are duly disclosed by an assessee, it is for the AO to draw appropriate legal inferences and appreciate the implications of those disclosures. It thus held that a failure on the....
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....shows that subsequent facts which come to the knowledge of the Assessing Officer can be taken into account to decide whether the assessment proceedings should be re- opened or not. Information which comes to the notice of the Assessing Officer during proceedings for subsequent assessment years can definitely form tangible material to invoke powers vested with the Assessing Officer under section 147 of the Act. 23. The material disclosed in the assessment proceedings for the subsequent years as well as the material placed on record by the minority shareholders form the basis for taking action under section 147 of the Act. At the stage of issuance of notice, the Assessing Officer is to only form a prima facie view. In our opinion the material disclosed in assessment proceedings for subsequent years was sufficient to form such a view. We accordingly hold that there were reasons to believe that income had escaped assessment in this case. Question No. 1 is answered accordingly. Question No. 2 24. Coming to the second question as to whether there was failure on the part of the assessee to make a full and true disclosure of all the relevant facts. The case of th....
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....the basis for invoking Section 147. The respondents, therefore, cannot justifiably urge that the petitioner had failed to make a full and true disclosure. Whether it be with regard to remittances to SMC, TDS, long or short term capital gains, the petitioner had not only made adequate disclosures, these aspects also appear to have been duly flagged and noticed by the AO in the course of the original assessment. The details of the material placed for the consideration of the AO, the documentation submitted, the nature of the queries that were addressed and the replies submitted leave us in no doubt that all material germane and relevant to the assessment had been duly presented by the writ petitioner. 45. Having thus found that the petitioner has crossed the rubicon of a full and true disclosure, we then proceed forward to consider whether the impugned action constitutes a change of opinion and whether the fresh material could have been validly taken into consideration for the purposes of formation of opinion that reassessment was warranted. From the nature of queries that were addressed in the course of the assessment undertaken initially as well as the material that was placed o....
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....ed tangible material justifying the exercise of powers conferred by Section 147. Concededly, that is not the position which either obtains here or one which was canvassed by the respondents for our consideration. 48. We also find merit in the submission of Mr. Vohra, learned senior counsel, that reopening of an assessment would be invalid if the AO merely relied on a report without independently applying its mind. As is manifest from a reading of the reasons which were assigned in support of invocation of Section 147, the AO has merely referred to the communication received from the ACIT and the obligation to review. The reasons fail to demonstrate the AO having even prima facie examined whether there was any fresh information which had been discovered in the subsequent AY and which may have led it to believe that the information which formed the basis for the original assessment was rendered false, misleading or incorrect. The AO also does not allude to any material fact placed on the assessment record for AY 2009-10 being either incomplete or insufficient for the purposes of formation of opinion or which may have constituted a reason for an item of income, expenditure or remit....
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....ble Taxation, is a question of fact, that has to be determined separately for each assessment year. * (2010) 327 ITR 456 (SC)." 19. In order to appreciate what the Supreme Court held in National Petroleum, it would be apposite to notice the more elaborate discussion which appears in the judgment of this Court in National Petroleum Con. Co. v. Deputy CIT, the relevant parts whereof are extracted hereunder:- "24. The respondents have granted the impugned certificate for deduction at 4 per cent. of the gross receipts. The assessment for the above noted contracts would be undertaken in the future, viz., the assessment years 20192020 and 2017-2018 respectively. As of now, we are not concerned with a regular assessment proceeding but, with determination of rate of tax deduction. On perusal of reasons, it becomes manifest that during the course of enquiry under section 197 of the Act, the petitioner was asked to furnish the details regarding the scope and nature of the aforenoted contracts. The Revenue contends that for the R-series contracts, the petitioner has made contradictory statement regarding commissioning period and period of as-built documentation etc. The peti....
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....ehangir Vakil Mills Co. Ltd. v. CIT, (1963) 49 ITR 137 (SC)]. -It is well settled that in matters of taxation there is no question of res judicata because each year's assessment is final only for that year and does not govern later years, because it determines only the tax for a particular period". [Ref : Installment Supply P. Ltd. v. Union of India [1962] AIR 1962 SC 53 (Constitution Bench)]. 25. The petitioner has argued that the need for consistency and certainty requires that there must exist strong and compelling reasons for a departure from a settled position, which must be spelt out and they are conspicuously absent in the present case. Mr. Balbir Singh has strongly argued that the stand taken by the respondents in the previous year should have been followed and in this regard, he relies upon the decision of the Supreme Court in the case of Radhasoami Satsang v. CIT, (1992) 193 ITR 321 (SC). Besides, Mr. Singh, as quoted earlier has also led considerable emphasis on the decision of this court dated May 9, 2017, wherein this court directed the respondents to issue certificate under section 197 of the Act, accepting the alternative plea of the petitioner that the ....
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....mination is presently against the petitioner. We cannot accept the petitioner's contention that the assessment proceedings for the assessment years 20072008, 2008-2009 and 2009-2010 have already determined this question in favour of the petitioner and there is no change in any circumstances. This question would require to be determined and finding of the fact would have to be arrived at, by a careful consideration of terms of contract, determination whereof cannot be undertaken in the proceedings under section 197 of the Act." 20. The interplay between the principle of consistency and the facts of each year of assessment was lucidly explained by our Court in Galileo Nederland BV v. Assistant Director of Income Tax (International Taxation) as under:- "19. We are aware that each assessment year is separate and distinct and principle of res judicata does not apply to proceedings for subsequent or other years. However, the decision on an issue or question though not binding should be followed and not ignored unless there are good and sufficient reasons to take a different view. Thus, it was/is possible for the Assessing Officer to depart from the finding ....
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....d not those applicable during a past or future period, such as a period preceding the adoption of new arrangements that modified the way in which business is carried on." 23. It is in the aforesaid backdrop that the observations of the Supreme Court in CIT v. Gupta Abhushan (P) Ltd. also assume significance and where it was unambiguously held that a survey report pertaining to a particular tax period cannot ipso facto be read or countenanced as being relevant and binding for independent assessment years as is evidenced from paragraph 6 of the report which is extracted hereinbelow: "6. The second part of the reasons recorded by the Assessing Officer indicate that during the survey, it was noticed that extensive renovation work in the business premises of the assessee had been undertaken and that the renovation in respect of the ground floor had been completed and that the renovation in respect of the first floor was going on. It is further noted that the assessee had not booked any expenses on account of renovation of the said business premises. On the basis of these facts, the Assessing Officer noted that he was satisfied that investments made in the renovation wo....