2020 (2) TMI 1144 - AT - Income Tax

Reopening of assessment u/s 147- suppression of export sale of iron ore - HELD THAT - Factum as well as quantum of suppression of production of iron ore was noticed by the AO from the information received by him in the form of report of Justice M.B. Shah Commission on illegal mining and keeping in view that the production of iron ore to that extent had remained undisclosed by the assessee in its books of account, a belief was found by the Assessing Officer that income of the assessee had escaped assessment and the assessment was reopened by him after recording the reasons. The failure on the part of the assessee to disclose fully and truly the actual quantity of production of iron ore, which was a material fact necessary for its assessment for the year under consideration thus was clearly pointed out by the Assessing Officer in the reasons recorded and since the escapement of income chargeable to tax for the year under consideration was by reason of such failure on the part of the assessee, we are of the view that the reopening of assessment by the AO after the expiry of four years from the end of the assessment year under consideration was in accordance with the relevant provisions of the Act including the 1st Proviso to Section 147. We, therefore, find no infirmity in the reopening of assessment as made by the Assessing Officer on the basis of reasons recorded by him and upholding the validity of the same, we dismiss the Cross Objection filed by the assessee. Suppression of export sales - matter of appreciated by the ld. CIT(Appeals) in the right perspective and he deleted the addition made by the Assessing Officer on this issue by placing the onus wrongly on the Assessing Officer by observing that the Assessing Officer should have obtained the details of figures reported by Paradeep Port Trust and furnished the same to the assessee so as to enable the assessee to reconcile the difference. In our opinion, the said details ought to have been obtained by the assessee so as to support and substantiate its explanation that the export of iron ore to the extent of 8,000 Metric Ton actually pertaining to the immediately succeeding year was included by Paradeep Port Trust in the export figure of the year under consideration as reported to the Assessing Officer. Having regard to all these facts and circumstances of the case, we set aside the impugned order passed by the ld. CIT(Appeals) giving relief to the assessee on this issue and restore the matter to the file of the Assessing Officer for giving the assessee one more opportunity to support and substantiate its explanation regarding the difference of 8,000 Metric Ton in the export of iron ore by bringing on record the relevant details of export as reported by Paradeep Port Trust to the Assessing Officer. The appeal of the Revenue is accordingly treated as allowed for statistical purposes.

Summary

Issues Involved:
1. Validity of the assessment made under section 147/143(3)/153A of the Income Tax Act, 1961.
2. Addition of ?2,93,18,510/- on account of alleged suppression of export sale.

Issue-wise Detailed Analysis:

1. Validity of the Assessment Made Under Section 147/143(3)/153A:

The assessee challenged the validity of the assessment made under section 147/143(3)/153A, arguing that the notice issued under section 148 was invalid as it was issued after the expiry of four years from the end of the relevant assessment year without any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The ld. CIT(Appeals) rejected this contention, stating that the reopening was based on fresh tangible material from the Justice M.B. Shah Commission’s report, which constituted credible information for the Assessing Officer to form a belief that income had escaped assessment. The Tribunal upheld this view, noting that the Assessing Officer had a live and direct nexus with the information in the report and that the statutory requirement in terms of the first proviso to section 147 was satisfied. Consequently, the Tribunal dismissed the Cross Objection filed by the assessee, affirming the validity of the assessment.

2. Addition of ?2,93,18,510/- on Account of Alleged Suppression of Export Sale:

The Assessing Officer added ?2,93,18,510/- to the assessee’s total income, alleging suppression of export sales based on a discrepancy in the quantity of iron ore exported as reported by Paradeep Port Trust and the quantity shown in the assessee’s books. The ld. CIT(Appeals) deleted this addition, reasoning that the figures from Paradeep Port Trust were not reliable and that the Assessing Officer had selectively used the figures to suit his convenience. The ld. CIT(Appeals) also noted that the production figures of iron ore as disclosed in the assessee’s audited books were accepted by the Assessing Officer, and there was no evidence of unreported production.

The Tribunal, however, found that the explanation provided by the assessee was insufficient to reconcile the difference of 8,000 Metric Ton in export quantity. The Tribunal emphasized that the onus was on the assessee to obtain relevant details from Paradeep Port Trust to reconcile the discrepancy. Since the assessee failed to satisfactorily discharge this onus, the Tribunal set aside the order of the ld. CIT(Appeals) and restored the matter to the Assessing Officer for further examination, giving the assessee another opportunity to substantiate its explanation regarding the difference in export quantity.

Conclusion:

The Tribunal dismissed the Cross Objection of the assessee challenging the validity of the assessment, affirming that the reopening of the assessment was in accordance with the law. On the issue of the addition of ?2,93,18,510/- for alleged suppression of export sales, the Tribunal set aside the order of the ld. CIT(Appeals) and remanded the matter to the Assessing Officer for further verification, thereby treating the Revenue’s appeal as allowed for statistical purposes.