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TMI Blog2011 (2) TMI 1184X X X X Extracts X X X X X X X X Extracts X X X X ..... nder different heads but was not separately indicated. It is not necessary for an assessee to add back the amounts mentioned in section 41 under a separate heading. Thus the contention of the petitioner that ground for reassessment is factually incorrect. Though there has been a serious lapse and failure on the part of the petitioner to raise a specific and clear cut objection with details before the Assessing Officer and even in the writ petition. However, we are not dwelling further into this aspect as we feel that the notice of reassessment can be sustained on ground No. 2. Rectification proceeding objected - Held that:- Rectification of a mistake apparent from the record cannot be equated with the power of reopening under sections 147 and 148 of the Act, which is conferred on the Assessing Officer to reopen cases underassessment when conditions mentioned in the said section are satisfied - Assessing Officer could not have resorted to section 154 proceedings to disallow expenditure under section 14A of the Act - Appeal is dismissed - 9036 of 2007 - - - Dated:- 14-2-2011 - DIPAK MISRA, SANJIV KHANNA, JJ. JUDGMENT Sanjiv Khanna J.- 1 The petitioner-Honda ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r computing the taxable income instead of reducing the net dividend income after accounting for the expenses related to earning the dividend income and, therefore, the income of the assessee is also underassessed on this account. The above income has escaped taxation by reasons of the failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for the assessment year 2000-01. It is therefore, proposed to reopen the assessment by issue of notice under section 148 after seeking necessary sanction." 3. It is clear from the aforesaid reasons that there were two grounds on the basis of which reassessment notice has been issued, viz., (1) a sum of Rs.107.70 lakhs was shown as taxable income under section 41 of the Act but only Rs. 9.23 lakhs has been shown under the head "Other income" in the profit and loss account, resulting in Rs. 98.46 lakhs escaping assessment ; (2) The petitioner had earned free dividend income of Rs. 188.73 lakhs on the long-term non-trade investment exempt under section 10(33) of the Act but various administrative expenses for earning the dividend income were claimed and allowed as an expenditure. Expenses r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nothing but a mere suspicion or assumption and not a requisite tentative opinion necessary for reopening. Prima facie, there appears to be some merit in the contention of the petitioner in this regard, though there has been a serious lapse and failure on the part of the petitioner to raise a specific and clear cut objection with details before the Assessing Officer and even in the writ petition. However, we are not dwelling further into this aspect as we feel that the notice of reassessment can be sustained on ground No. 2. 6. The contention of the petitioner is that the Assessing Officer seeks to invoke section 14A of the Act to disallow deduction of such expenses which were incurred for earning tax-free income which is exempt. It is submitted that section 14A was introduced in the statute by the Finance Act, 2001, with retrospective effect from April 1, 1962. It is stated that the petitioner had filed their return of income for assessment year 2000-01 on November 30, 2000, and, therefore, it was not obligatory on the part of the petitioner to disclose any fact in respect of the expenditure incurred to earn exempt/tax-free income. It is accordingly submitted that there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7, 2003, has prima facie resulted in escapement of income. The proviso is not intended to apply to the cases of the present nature. The object and purpose of the proviso is to ensure that the retrospective amendment is not made as a tool to reopen past cases, which have attained finality. 9. Whether or not there was omission or failure on the part of the assessee to make full and true disclosure of material facts, the stand of the assessee-petitioner is illusionary and ambiguous. In the written submissions it is stated as under : "It is pertinent to point out that section 14A was introduced in the statute by the Finance Act, 2001, with retrospective effect from April 1, 1962. When the return of income was filed for the relevant assessment year, the provisions of section 14A were not on the statute. There was accordingly no obligation on the assessee to disclose any facts in respect of the said issue. The courts have in the following cases held that where a claim is rendered inadmissible on account of amendment of law introduced subsequently though with retrospective effect (covering the relevant year), it cannot be said that there was any failure on the part of the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t existed. It is not, observed the court, within the province of the High Court to record a final decision about the failure to disclose fully and truly all material facts bearing on the assessment and consequent escapement of income from assessment and tax. The court also held that from a mere production of the books of account, it could not be inferred that there had been full disclosure of the material facts necessary for the purposes of assessment. The terms of the Explanation, declared the court, were too plain to permit an argument that the duty of the assessee to disclose fully and truly all material facts would stand discharged when he produces the books of account or evidence which has a material bearing on the assessment. The court observed (page 644) : 'It is the duty of the assessee to bring to the notice of the Income-tax Officer particular items in the books of account or portions of documents which are relevant. Even if it be assumed that from the books produced, the Income-tax Officer, if he had been circumspect, could have found out the truth, the Income-tax Officer may not on that account be precluded from exercising the power to assess income which had escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovided for reopening the assessment that the reassessment has been initiated on appreciation of the papers/documents furnished along with the return of income. The notice under section 148 of the Act initiating the reassessment proceedings, therefore, could validly be issued till March 31, 2005, in terms of the proviso to section 147 of the Act. In the case of the assessee, none of the requirement of the proviso to section 147 of the Act apply inasmuch as there was no failure to file return of income nor is there any allegation as to failure to disclose fully and truly all material facts necessary for the assessment." 15. It is clear from the aforesaid paragraph the petitioner has accepted that "material particular" referred to in the first proviso not only refers to details in the return but also explanations and details furnished during the course of assessment. The petitioner had not stated anything or given factual matrix to justify and state that the material facts had been fully and truly disclosed in the assessment proceedings and there was no omission or failure on the part of the petitioner. The Explanation to section 147 stipulates that mere production of books of ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act is issued, proceedings under section 147 of the Act on the same ground or reasons cannot be taken. It is not possible to accept the said proposition in broad terms as propounded or as one having universal application. The scope and ambit of sections 154 and 147/148 of the Act are different. Under section 154 of the Act, the Assessing Officer can only rectify mistakes and errors. Section 154 is not a substitute for section 147/148. In a given case, resort to the provisions of section 154 of the Act may be an appropriate remedy but in other cases resort to section 147/148 may be required. The question whether reopening is justified when both the provisions of sections 154 and 147/148 of the Act are attracted, is not urged and argued by the petitioner. It is not the case of the petitioner that section 154 of the Act is applicable and can be invoked to make addition on ground No. 2. 19. Decision of the Bombay High Court in Hindustan Unilever Ltd. v. Deputy CIT [2010] 325 ITR 102 (Bom), which opines that when section 154 applies, reopening under section 147 of the Act should not be resorted to, is not applicable to the facts of the present case. Reliance placed by the learned co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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