TMI Blog2024 (5) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... down in Usha International Ltd. ( 2012 (9) TMI 767 - DELHI HIGH COURT] in the instant case, it is clearly seen that not only the aspects relating to the issue at hand had been fully disclosed by the petitioner before the AO but by recording the submissions and comments in the assessment order, it can be reasonably inferred that the AO has formed an opinion on the said issues. Thus, allowing the reassessment proceedings to continue in the present case would be contrary to the mandate expounded in Usha International Ltd. (supra). We are also mindful of the note of caution as articulated in the case of Techspan India P. Ltd. v. Income-tax Officer [ 2006 (2) TMI 88 - DELHI HIGH COURT] whereby, this Court, while relying upon Gruh Finance Ltd. v. [ 2000 (2) TMI 86 - GUJARAT HIGH COURT] has held that every attempt to bring to tax income that has escaped assessment cannot be aborted by judicial intervention on an assumed change of opinion. Thus non-disclosure of full material cannot be attributed to the petitioner in the instant case. Rather, the AO had omitted to make any addition qua the issue at hand, despite noting the submissions and forming an opinion on the same. Reopening notice se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned scheme by the Board of Industrial and Financial Reconstruction [ BIFR ]. The said reliefs included inter alia, waiver of loans from banks, non-taxability of waiver of loans as income, and carry forward of losses beyond eight years. However, after a lapse of more than four years from the date of sanction of the scheme by the BIFR, vide letter dated 14 June 2017, the reliefs sought by the petitioner were denied. The petitioner had challenged the said letter vide W.P.(C) No.10364/2017 before this Court. 6. Subsequently, another notice dated 31 March 2018, issued under Section 148 of the Act, was received by the petitioner on 3 April 2018, seeking reassessment of income pertaining to AY 2011- 12. In response to the said notice, the petitioner sent a letter dated 16 April 2018, while making three-fold submissions i.e., firstly, the original assessment for the concerned AY was already completed vide assessment order dated 8 January 2014; secondly, the impugned notice dated 31 March 2018 was issued beyond the time limit prescribed under Section 147/149 of the Act; and thirdly, reasons for the reopening of assessment be intimated to the petitioner. 7. On 19 September 2018, the petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the issue on which the proceedings are being reopened was very much disclosed in the balance sheet of the petitioner and consequently, reproduced in the reasons recorded therein and thus, it cannot be said that the present case is one where merely the books of account has been produced without any full and true disclosure. 11. He further submitted that there is no fresh material available on record which would warrant issuance of notice, rather the proceedings for the assessment which already stands concluded is purely due to the change of opinion and not on the basis of any new information. He, thus, contended that as per the settled principles of law, the assessments cannot be reopened only on account of change of opinion. 12. He placed reliance on paragraph no.13 of the decision in the case of CIT v. Usha International Ltd. [2012 SCC OnLine Del 4995] to substantiate his arguments. 13. On the other hand, Mr. Vipul Agrawal, learned counsel for the respondents vehemently opposed the submissions advanced by the learned counsel for the petitioner and submitted that there are sufficient reasons to reopen the assessment in the present case. He submitted that at the time of the original ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in Sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of 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: Provided further that nothing contained in the first proviso shall apply in a case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is useful to place reliance on a recent decision of the Hon‟ble Supreme Court in the case of M/S Mangalam Publications, Kottayam v. CIT, Kottayam [2024 SCC OnLine SC 62], wherein, the import of the phrase true and full disclosure has been discussed in the following words:- 31. At this stage, we deem it necessary to expound on the meaning of disclosure. As per the P. Ramanatha Aiyar, Advanced Law Lexicon, Volume 2, Edition 6, to disclose‟ is to expose to view or knowledge, anything which before was secret, hidden or concealed. The word disclosure‟ means to disclose, reveal, unravel or bring to notice, vide CIT Vs. Bimal Kumar Damani, (2003) 261 ITR 87 (Cal). The word true‟ qualifies a fact or averment as correct, exact, actual, genuine or honest. The word full‟ means complete. True disclosure of concealed income must relate to the assessee concerned. Full disclosure, in the context of financial documents, means that all material or significant information should be disclosed. Therefore, the meaning of full and true disclosure‟ is the voluntary filing of a return of income that the assessee earnestly believes to be true. Production of books of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tal in nature and the reversal of the loan is capital in nature and not liable to be added back. The assessee has taken dual stand to deal with the issue as on one side the assessee is accepting that waiver of loan is capital in nature and other side settlement charges to bank are revenue in nature and liable for allowances. The contention of the assessee does not support legal view on the issue. The settlement charges paid to various bank are capital in nature pertaining to waiver of loan, being capital assets and accordingly liable to disallowed. 25. Therefore, it would be erroneous to conclude that the AO did not take into consideration the issue of addition of remission at all. Rather, the recording of the aforesaid submission in the assessment order and the resultant comment would support the view that the AO had apparently formed an opinion and chosen not to bring the said amount in the category of taxable income. It is, thus, seen that the reassessment proceedings in the instant case can, at best, be said to have been based upon a change of opinion of the AO and not precisely on the fulfilment of any reason encapsulated in Section 147 of the Act. 26. Additionally, the fact r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aiver of its loan liability, are very much revenue in nature are clearly allowable u/s 37(1) of the Income Tax Act, 1961. 27. Further, much reliance has been placed by the respondents on the following two paragraphs of the decision in the case of Usha International Ltd. (supra) to strike a distinction between the change of opinion and failure or omission of the AO to form an opinion and to also contend that since the AO has not examined the concerned issue, he cannot be attributed a facet suggesting a mere change in opinion:- 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 and true disclosure. Thus, in cases of reopening after four years as per the proviso, conduct of the assessee and disclosures ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion. (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by the principle of change of opinion . (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. *** 27. The aforesaid observations in paragraphs 23 to 26 have not to be read in isolation but are to be read with caveat s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be construed that the AO has formed the opinion. The relevant paragraphs of the said decision read as under:- 41. It is well-established that an AO need not write a detailed order, as long as the assessment record is indicative of the fact that a query was raised and it was answered; if such an exercise has been undertaken, it would not be open to the AO to reopen the same, unless fresh material comes to light which was not available when the matter was examined in the first instance. 42. We may note that Mr. Maratha, in support of this plea, had relied upon the judgment of a coordinate bench rendered in Commissioner of Income Tax-Vi, New Delhi v. Usha International Ltd., 2012 VII AD (Delhi) 673. 43. The court in paragraph 13 of the said judgment has made the following apposite observations with regard to when would a case be hit by the principle of change of opinion: 13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acts or law should be drawn by the said authority. The relevant paragraph of the said decision reads as under:- 10. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else far less the assessee to tell the assessing authority what inferences whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences whether of facts or law he would draw from the primary facts. [Emphasis supplied] 32. The decision of the Hon‟ble Supreme Court in ITO v. Lakhmani Mewal Das [(1976) 3 SCC 757] further elucidates the scope and extent of the duty cast upon the assessee with regard to a full and true disclosure of the facts at the time of the original a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has been recently followed by the Hon‟ble Supreme Court in the case of M/S Mangalam Publications, Kottayam (supra), which also postulates the stand that once the primary facts are disclosed by the assessee, the burden shifts on the AO. Paragraph no.41 of the said decision reads as under:- 41. It is true that Section 139 places an obligation upon every person to furnish voluntarily a return of his total income if such income during the previous year exceeded the maximum amount which is not chargeable to income tax. The assessee is under further obligation to disclose all material facts necessary for his assessment for that year fully and truly. However, as has been held by the constitution bench of this Court in Calcutta Discount Company Limited (supra), while the duty of the assessee is to disclose fully and truly all primary and relevant facts necessary for assessment, it does not extend beyond this. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration. On the basis of the balance sheet submitted by the assessee before the South Indian Bank for obt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ful of the note of caution as articulated in the case of Techspan India P. Ltd. v. Income-tax Officer [2006 SCC OnLine Del 1754], whereby, this Court, while relying upon Gruh Finance Ltd. v. Joint CIT (Assessment) [(2000) 243 ITR 482], has held that every attempt to bring to tax income that has escaped assessment cannot be aborted by judicial intervention on an assumed change of opinion. The relevant paragraph of the said decision reads as under:- 24. The other aspect regarding which I wish to strike a note of caution is that before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change in opinion, the court ought to verify whether the assessment earlier concluded has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the Assessing Officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax income that has escaped assessment cannot be aborted by judicial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning the same. Application of mind is, in turn, best demonstrated by disclosure of mind, which is best done by giving reasons for the view which the authority is taking. In cases where the order passed by a statutory authority is silent as to the reasons for the conclusion it has drawn, it can well be said that the authority has not applied its mind to the issue before it nor formed any opinion. The principle that a mere change of opinion cannot be a basis for reopening completed assessments would be applicable only to situations where the Assessing Officer has applied his mind and taken a conscious decision on a particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for reopening of the assessment, as is the position in the present case. [Emphasis supplied] 38. Therefore, examining the exposition of law in Techspan India P. Ltd. v. Income-tax Officer (supra) on the edifice of the facts of the present case, we come to the conclusion that the said decision would not hold any relevance in the instant case. The assessment order is neither cryptic nor non-speaking with respect to the issue in consid ..... X X X X Extracts X X X X X X X X Extracts X X X X
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