2022 (5) TMI 1351 - HC - Income Tax

Reopening of assessment u/s 147 - Validity of a notice issued u/s 148 - petitioner had received payments under Sections 194 I and 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same - HELD THAT - As the reassessment has been ordered because the A.O. has recorded his reasons to believe that the petitioner had received payments under Section 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same. The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a full and true disclosure of all the material facts which resulted in an income having escaped assessment. In the instant case, the notice under Section 148 of the Act has been issued by the Assessing Officer after an investigation was carried out and after going through the income tax return and other related documents of the petitioner and after forming reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income has escaped assessment. Thus the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, which came to light after an investigation and, therefore, the judgment in Phool Chand Bajrang Lal 1993 (7) TMI 1 - SUPREME COURT does not support the petitioner and as per the law laid down in Srikrishna 1996 (7) TMI 2 - SUPREME COURT the reassessment proceedings have rightly been initiated. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. In the judgment sought to be reviewed, the judgments of Aventis Pharma Ltd. Versus ACIT 2010 (3) TMI 317 - BOMBAY HIGH COURT and Arun Gupta versus Union of India, 2015 (2) TMI 213 - ALLAHABAD HIGH COURT cited by the learned counsel for the petitioner have been referred to and dealt with. This Court is not obliged to refer to each and every judgment forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions Therefore, this submission also stands rejected. We do not find any error apparent on the face of the record in the judgment and the order sought to be reviewed. The application for review of the judgment and order lacks merit and, is accordingly dismissed.

Summary

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Whether the petitioner made a "full and true" disclosure of all material facts necessary for assessment.
3. Grounds for seeking a review of the judgment.
4. Scope of review jurisdiction.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the validity of the notice issued under Section 148 of the Income Tax Act, 1961. The Court examined the original records of the department and found that the Assessing Officer had recorded reasons for initiating the re-assessment proceedings. The reasons included a discrepancy in the receipts shown by the petitioner, which indicated an income of Rs. 2,62,56,303/- had escaped assessment. The Court held that the Assessing Officer had prima facie material to issue the notice under Section 148, and the notice, along with subsequent proceedings, did not suffer from any illegality warranting interference by the Court.

2. Whether the Petitioner Made a "Full and True" Disclosure of All Material Facts Necessary for Assessment:
The Court found that the petitioner had not disclosed the amount of reimbursement of expenses claimed and the actual amount received towards reimbursement. The petitioner had also not submitted details of expenses incurred for verification during the assessment proceedings. It did not produce any ledger, bills, and vouchers of expenses incurred on behalf of the Principal Companies. Thus, the Court concluded that the petitioner did not make a "full and true" disclosure of all material facts, resulting in an income of Rs. 2,62,56,303/- having escaped assessment.

3. Grounds for Seeking a Review of the Judgment:
The petitioner sought a review of the judgment on several grounds:
- The petitioner claimed it had not received any payments on which TDS had been deducted under Section 194-I and Section 194-J, which was evident from 26 AS.
- The reasons recorded by the Assessing Officer did not mention non-disclosure of the amount of reimbursement of expenses.
- The figures of Rs. 5,23,84,738/- and Rs. 36,13,775/- alleged to have been received through commission and TDS, respectively, were imaginary and did not appear in 26 AS.
- The judgment in Raymond Woolen Mills Ltd. was case-specific and could not be applied to the petitioner's case.
- The judgment in Phool Chand Bajrang Lal supported the petitioner's contention that the Assessing Officer must have tangible material before initiating reassessment proceedings.
- Various case laws relied upon by the petitioner were not considered by the Court.

4. Scope of Review Jurisdiction:
The Court examined the scope of review jurisdiction, emphasizing that review cannot be treated as an appeal and is limited to correcting errors apparent on the face of the record. The Court referred to several Supreme Court judgments explaining the term "error apparent on the face of the record." The Court found that the grounds raised by the petitioner required a re-hearing of the writ petition, which is not permissible in a review. The Court also noted that the petitioner would have the opportunity to place all facts and submissions during the reassessment proceedings.

Conclusion:
The Court concluded that there was no "error apparent on the face of the record" in the judgment and order dated 20-04-2022. The application for review lacked merit and was dismissed. There was no order as to costs.