9911796707
TMI Blog2013 (1) TMI 316X X X X Extracts X X X X X X X X Extracts X X X X ..... ner-hotel is a private limited company incorporated on 15.7.1972 and regularly assessed to income tax from the assessment year 1974-75. It is engaged in the business of running hotels consisting of five independent units i.e. Rambagh plants, the Sawai Madhopur Lodge, the Rambagh Lodge, the Airport Cafeteria and SMS Hotel. It filed a return of income declaring a loss of Rs.4,29,22,365/-. The return was processed under Section 143(1) and an intimation was issued on 18.3.2004. Thereafter, it was selected for scrutiny and after issuing notices under Sections 143(2) and 142(1) and after examining the details furnished by the petitioner, an assessment order was passed under Section 143(3) in which the loss was computed at Rs.4,12,89,641/-. The order was passed on 27.12.2005. On 12.9.2006 the assessing officer passed a rectification order under Section 154 reducing the loss to Rs.4,01,80,811/-. 3. On 26.3.2010 i.e. after the lapse of four years from the end of the relevant assessment year, the respondent issued a notice under Section 148 of the Act to reopen the assessment on the ground that income chargeable to tax had escaped assessment. The petitioner-hotel filed a return of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. Which comprises of expenses towards repair & maintenance Building 4,50,15,315/- Machinery 45,54,181/- Others 28,39,563/- 5,24,09,060/- 2. Traveling Rs.68,57,669/- 3. Addition to fixed assts Rs.3,16,49,022/- Totaling to Rs.9,09,15,751/- Thus the assessee has failed to disclose all material facts truly and fully that were necessary for assessment. Here it is relevant to mention the explanation 1 in section 147 that states that "production before the AO of account books or other evidence from which material evidence could with the diligence have been discovered by the AO will not necessarily amount to disclosure with the meaning of the foregoing proviso. In view of above facts, I have reason to believe that income chargeable to tax amounting to Rs.9,09,15,751/- has escaped assessment in the case and the same is to be brought to tax under section 147/ 148 of the I.T. Act. Sanction for issue of notice u/s 148 as prescribed u/s 151, to re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently during the course of assessment proceedings, may kindly be accorded. (Signature of Office ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7. As regards full and true disclosure, our attention was drawn to page 117 of the writ petition which sets out Schedule "L" to the profit and loss account for the year ended 31.3.2003 in which repairs and maintenance expenses relating to building, machinery and other assets have been separately shown. At page 120, the petitioner has disclosed the "significant accounting policies and notes to accounts". Under the head "fixed assets", the petitioner has stated that all fixed assets are stated at their original cost of acquisition including incidental expenses related to acquisition and installation of concerned assets and are stated net of accumulated depreciation. 8. On 16.9.2005, the respondent had issued a questionnaire to the petitioner requiring it to submit details in respect of 16 queries; item no.10 of the questionnaire relates to addition of Rs.1,71,85,084/- to fixed assets and the petitioner was asked to "submit details of all assets added along with date of purchase, value and justify liability of depreciation as per IT Rules, produce original bills for verification". Query No.14 relates to details of expenses. The petitioner was called upon to provide details of sever ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions would show that at least in respect of the foreign travel expenses, no details were furnished by the assessee at the time of the original assessment, except a bare noting that a part of such expenditure was incurred in foreign currency. No details of the place visited and the purpose of the visit and how the visit was connected to the business of the petitioner were furnished. The assessee was under a duty to disclose these particulars fully and truly at the time of the original assessment; this is particularly so because under the arrangement with the Taj Group of Hotels it would appear that the petitioner was not under any obligation to incur the expenditure. Our attention was not drawn by the ld. counsel for the petitioner to any particular document or record in which the full and true particulars of the foreign travel expenses were submitted by the petitioner at the time of the original assessment; nor was it disputed that there was such a clause in the agreement with Taj group. There was thus a failure on the part of the petitioner which would attract the first proviso to Section 147 of the Act. The contention that the reopening was prompted by a mere allegation of irregu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 30th September, 2003 and after that date, etc. There were no details furnished in this letter regarding the foreign tour expenses. By letter dated 31.10.2006 the petitioner submitted, inter alia, details of repairs and maintenance expenses of building, machinery and other assets as well as the details of the foreign travel expenses of the directors and staff and stated that the foreign travel was undertaken for the purpose of business and out of commercial expediency. This letter was followed up by another letter dated 22.11.2006 in which it was stated that the copies of the resolutions passed in the board meeting authorizing the foreign travel for the purpose of the business and approving the incurring of the expenses were being submitted, along with the visa details of the persons who undertook the foreign travel as well as the letter to the money changer for release of the foreign exchange for the purpose of the travel. 14. We are concerned with the assessment year 2004-05 and the period of four years from the end of that assessment year expired on 31.3.2009. The notice under Section 148 was issued on 30.3.2011 i.e., beyond the period of four years. This is therefore a case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... latter as to why certain items of expenditure on account of repairs and maintenance of building, plant and furniture should not be disallowed as capital in nature. These queries related to R & M Building amounting to Rs.7,74,302/-, details relating to R & M Sanitary Fittings amounting to Rs.2,56,572/- and details relating to R & M Electricals amounting to a sum of Rs.6.87 lakhs. 15. It is thus seen that in respect of the assessment year 2004-05, not only did the petitioner furnish all the relevant details relating to the purchase of fixed assets, repairs and maintenance of buildings but also the details relating to the foreign travel expenses. The proceedings relating to the original assessment also show that the assessing officer had raised queries regarding repairs and maintenance of building, plant and furniture which were answered by the petitioner. No query would appear to have been raised in relation to the foreign travel expenses in regard to which the petitioner had furnished the relevant details. In these circumstances, it cannot be said that there was any failure on the part of the petitioner to submit full and true particulars at the time of the original assessment. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill fetch higher than what assessee has shown as income in the A.Y. 2005-2006. In view of the above facts, I have reasons to believe that an amount of Rs.12,11,86,357/- has escaped assessment in the AY 2005-06. In view of above facts, I have reason to believe that income chargeable to tax amounting to Rs.12,11,86,357/- has escaped assessment in the case and the same is to be brought to tax under section 147 of the I.T. Act as there has been a failure on the part of the assessee to disclosed fully and truly all material facts necessary for its assessment in the AY 2005-06. Section for issue of notice u/s 148 as prescribed u/s 151, to re-assessee such income which has escaped assessment, may kindly be accorded." After carefully considering the rival submissions, we are of the view that the assessing officer has properly assumed jurisdiction to reopen the assessment. There was no scrutiny assessment under Section 143(3) in the first instance; the return filed by the petitioner was merely processed under Section 143(1). Even so, it is necessary that the assessing officer must have "reasons to believe" that income chargeable to tax had escaped assessment. There must be tangible materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The objections filed by the petitioners to the reassessment notices were rejected on 12.10.2010 (in both the cases) and it is against those orders and the notices issued under Section 148 that the present petitions have been filed. 18. The reasons recorded for reopening the assessments are common in both the cases and are as under : "A complaint against the assessee company has been filed by Shri Raj Kumar Devraj, one of the Directors of the assessee company vide which it has been pointed out that more than Rs.100 crores of rupees has been siphoned by Maharaja Prithvi Raj & Maharaja Jai Singh out of the companies accounts which require the proper investigation & scrutiny of accounts of the company for the last 6 years. It has further been alleged by the complainant before the company law board in petition that Maharaja Prithviraj and Maharaja Jai Singh in the year 2002-03, 2003-04, 2004-05, 2006-07, 2007-08 and 2008-09 had debited of Rs.50 crores approx. under the head repairs and maintenance of bldg. and Rs.50 crores approx. towards addition to the fixed assets and this sum has been withdrawn and siphoned by illegal withdrawals with the connivance of the contractors appointed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 147/ 148 of the I.T. Act. Sanction for issue of notice u/s 148 as prescribed u/s 151, to re-assess such income and also any other income chargeable to tax which has escaped assessment and which comes to the notice subsequently during the course of assessment proceedings, may kindly be accorded." 19. We have no hesitation in upholding the jurisdiction of the respondent in issuing the notices under Section 148. We have already held in the writ petitions filed by M/s Rambagh Palace Hotels Pvt. Ltd. that the complaint filed by one of the directors of the hotel, i.e. Raj Kumar Devraj in the Company Law Board alleging irregularities in the accounts of the hotel constitutes tangible and valid material on the basis of which the assessing officer can reasonably form a prima facie belief that income chargeable to tax had escaped assessment. One of the allegations in the complaint is that funds of the hotel were being siphoned off by the present petitioners in the guise of purchase of fixed assets, repairs and maintenance expenses and foreign travel expenses. The reasons recorded referred to the allegations in the complaint from which the respondent has arrived at a tentative belief that 50% ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
