9911796707
TMI Blog2012 (7) TMI 800X X X X Extracts X X X X X X X X Extracts X X X X ..... d company. In respect of the assessment year 2003-04 it filed a return of income declaring income of Rs.2,21,43,438/- computed under the provisions of the Act. The return was accompanied by the audited profit and loss account and balance sheet as also the tax audit report dated 20.08.2003 under Section 44AB of the Act. In the computation of the income appended to the return the petitioner also computed its "book profit" for the purpose of Section 115JB of the Act. While computing the total income under the normal provisions of the Act, the petitioner did not include the amount of Rs.66.6 crores received as settlement amount from M/s. Meturit AG on settlement of a dispute subsisting between the parties concerning the power of another company by name M/s. Milacrom INC, US to dispose of the share holding in Widia India Ltd. which was jointly owned by the petitioner and Milacrom INC. The amount was not included in the computation as income on the ground that it represented capital receipts in the assessee‟s hands. However, the petitioner had filed the balance sheet as on 31.03.2003 in which that amount received by it was shown as capital reserve and Note No.10 attached to the bal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te debit had been shown in Schedule 8 to the profit and loss account which contained details for administrative and other expenses debited to the profit and loss account and this was as per the requirement of Accounting Standard 13. Note No.6 in Schedule 9 to the balance sheet stated that "long term investment are carried at loss less provision, if any, for diminution in value". In the Chartered Accountant‟s report dated 20.08.2003 issued in Form No.29B, in Annexure-A thereto, the details of book profit were shown in point No.10 and therein it was stated that no adjustment in terms of the Explanation to sub-section 2 of Section 115JB was made. 5. The first respondent completed the assessment of the petitioner under Section 143 (3) of the Act after making various disallowances and additions. This order was passed on 20.10.2005. In the assessment order, however, no disallowance of the provision for gratuity and the provision for diminution in the value of the investment was made, even though the assessment was made on the book profit as per Section 115JB of the Act. The Assessing Officer had also computed the taxable income under the normal provision of the Act for purposes of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luding interest under section 234B." The above reasons show that the Assessing Officer proposed to add back the provision for gratuity and the provision for diminution in the value of investment in mutual funds as also the amount of Rs.66,44,20,487/- claimed to represent capital receipt, to the book profit under Section 115JB. 7. The petitioner filed a revised computation of the income under protest and requested the first respondent to furnish the reasons recorded for reopening the assessment in terms of the judgment of the Supreme Court in GKN Drivershaft India Ltd., (2003) 259 ITR 19. The petitioner also filed objections to the reassessment proceedings on 26.10.2010 after getting the reasons recorded from the first respondent and in these objections it was contended that all the three issues on which the assessment was proposed to be reopened had been examined by the respondent in the original assessment proceedings and that no fresh information or facts had come to his possession after the completion of the original assessment and therefore the reassessment proceedings were invalid, being based on a mere change of opinion. Objection was also taken to the reopening on the grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year." Since the proviso has been invoked, it is the duty of the Assessing Officer to show that income chargeable to tax has escaped assessment by reason of failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Section 142 (1) or Section 148 or to disclose fully and truly all material facts necessary for his assessment for the relevant assessment year. We have already referred to the particulars furnished by the petitioner along with the return of income in respect of the three items which according to the first respondent ought to have been added back to the book profit, but were omitted to be added back in the original assessment. In the leading case of Calcutta Discount Company Ltd. v. ITO, (1961) 41 ITR 191, K. C. Das Gupta, J. speaking for the Constitution Bench of the Supreme court stated that the duty of the assessee is limited to the disclosure of primary facts and that the duty does not extend to advising the Assessing Officer as to what inferences, factual or legal, he should draw from the disclosed facts. It is not for the assessee or someone else to tell the assessing authority what inference of facts o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been set out above. In view of the Explanation, it will not be open to the assessee to say, for example - "I have produced the account books and the documents : You, the assessing officer, examine them, and find out the facts necessary for your purpose : My duty is done with disclosing these account books and the documents." His omission to bring to the assessing authority‟s attention those particular items in the account books, or the particular portions of the documents, which are relevant, will amount to "omission to disclose fully and truly all material facts necessary for his assessment." Nor will he be able to contend to have disclosed other evidence, which might have been discovered by the assessing authority if he had pursued investigation on the basis of what has been disclosed. The Explanation to the section gives a quietus to all such contentions; and the position remains that so far as primary facts are concerned, it is the assessee‟s duty to disclose all of them - including particular entries in account books, particular portions of documents, and documents and other evidence which could have been discovered by the assessing authority, from the documents an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sure of primary facts and there can be other cases where it may not amount to complete disclosure. This aspect has been considered by this court in Rakesh Aggarwal v. Assistant Commissioner of Income Tax, (1996) 221 ITR 492. D. K. Jain, J. (as he then was) explained the position in the following manner: - "At this stage we may notice the significance of the words "not necessarily" as appearing in Explanation 2. In our view, these words only indicate that whether there is a disclosure or not within the meaning of section 147 (a) of the Act would depend on the facts and circumstances of each case. To put it differently it would be the nature of documents and the circumstances in which these are produced before the Assessing Officer that will determine the question. For instance, if material evidence is not writ large on the document but is embedded in some voluminous records/ books of account requiring a careful scrutiny and delving deep into it to notice the necessary material, it is quite possible that having regard to the nature of the documents, material evidence cannot be discovered from such records despite due diligence and the case would attract application of Explanat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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