2022 (8) TMI 587 - HC - Income Tax

Reopening of assessment u/s 147 - petitioner had received payments u/s 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 - 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 amounting to Rs.1,07,24,386/- 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. 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. Moreover, while deciding the writ petition, we have referred to and relied upon the relevant case laws and it is not been submitted by the petitioner that in the judgment sought to be reviewed, the law applicable to the facts of the case has not been taken into consideration. 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 dated 18-04-2022 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. Scope and grounds for review of the judgment.

Detailed Analysis:

1. Validity of the Notice Issued under Section 148 of the Income Tax Act, 1961:

The petitioner challenged the validity of a notice dated 26-03-2021 issued under Section 148 of the Income Tax Act, 1961, which was dismissed by the court on 18-04-2022. The Assessing Officer (A.O.) initiated re-assessment proceedings based on the discovery that the petitioner received payments under Section 194 J but did not show these receipts in its Profit and Loss Account. Additionally, the petitioner failed to disclose the amount of reimbursement of expenses claimed and the actual amount received, and did not produce ledgers, bills, and vouchers for verification. The A.O. concluded that the petitioner did not make a “full and true” disclosure of all material facts, leading to an income of Rs. 1,07,24,386/- escaping assessment. The court held that there was prima facie material available for issuing the notice under Section 148, and thus, dismissed the writ petition.

2. Scope and Grounds for Review of the Judgment:

The petitioner filed for a review of the judgment, arguing that the payments under Section 194 J were reflected in 26 AS and reconciled during the original assessment, and the difference explained through a letter dated 12-02-2015. The court emphasized that review cannot be treated as an appeal and is limited to correcting errors apparent on the face of the record, which do not require long-drawn reasoning or where there can be no two opinions.

The court cited several Supreme Court judgments, including Meera Bhanja v. Nirmala Kumari Choudhury and Perry Kansagra v. Smriti Madan Kansagra, to explain that an error apparent on the face of the record must be self-evident and not require lengthy arguments.

The petitioner’s contention that it had disclosed all material facts and provided necessary documents was deemed a disputed question of fact, unsuitable for resolution in a review petition. The court reiterated that the petitioner was seeking a re-hearing, which is impermissible in a review. The petitioner will have the opportunity to present its case during re-assessment proceedings.

The petitioner also argued that the judgment in Raymond Woolen Mills Ltd. was case-specific and not applicable to its case. The court disagreed, stating that the ratio of the judgment, which allows for re-assessment based on prima facie material, applies universally unless specific peculiar facts are demonstrated.

Regarding the judgment in Phool Chand Bajrang Lal, the court noted that reassessment can be initiated based on fresh facts or information exposing the untruthfulness of previously disclosed facts. The A.O. had valid reasons to believe that the petitioner did not fully disclose material facts, justifying the reassessment.

The petitioner’s claim that various case laws were not considered was also rejected. The court clarified that it referred to and relied upon relevant case laws, and was not obliged to address every judgment cited in post-submission compilations.

Conclusion:

The court found no “error apparent on the face of the record” in the judgment dated 18-04-2022, and thus, dismissed the review application. There was no order as to costs.