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TMI Blog2013 (10) TMI 284X X X X Extracts X X X X X X X X Extracts X X X X ..... aries. In the present case, it appears that the assessee after dismissal of the writ petition has remitted the refund amount to the Excise Department as per law. The fact that the assessee had refunded the amount does not exonerate his accountability under charging Section 41(1) and 43(B) read with Section 147 of the I.T. Act – Decided in favor of Revenue. - ITA No.1410 of 2006 - - - Dated:- 5-4-2013 - K Sreedhar Rao And B Manohar, JJ. For the Appellant : Sri K V Aravind, Adv. For the Respondents : Sri Percy J Pardiwal, Sr. Adv. M/s King and Partiridge JUDGEMENT:- The respondent assessee for the assessment year 1991-1992 had received the refund of excise duty excess paid to a tune of Rs.1,29,00,924/-. The Central Excise Authorities found that the refund order was improper. Therefore, they issued a notice recalling the order of refund and directed the assessee to remit the amount to the Department. The assessee filed Writ Petition Nos.7962- 7964/1991 challenging the order of recall. However, the assessee remitted a part of the refund amount in a sum of Rs.28.00 lakh and retained the refund amount of Rs.1,01,24,971/- with it. The writ petition was dismissed on 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ise Department had become the subject matter of dispute before the Courts. Until the lis was decided conclusively, the refund could not be considered as an income for the assessment of tax, in view of the Ruling of the Supreme Court in the case of UNION OF INDIA AND ANOTHER v. J.K. SYNTHETICS LTD., reported in (1993) 199 ITR 14 (SC)? 6. Sri Percy J. Pardiwal, learned Senior Counsel appearing for respondents submitted that in view of the provisions contained in Sec. 151(1) of the I.T. Act, the scrutiny assessments are being reopened after a lapse of four years. The approval of Chief Commissioner or Commissioner with the needed satisfaction for the reasons recorded is mandatory. In the instant case, the assessing Officer is the Deputy Commissioner and no approval of the Chief Commissioner or Commissioner is taken preceding the issue of notice. Hence, the notice issued for reopening by the Assessing Officer is without jurisdiction. In this regard the senior counsel relied upon the ruling of the Rajasthan High Court in Commissioner of Income Tax Vs. Uttamchand Nahar (2007) 295 ITR, 403 Rajasthan and also the commentaries in Sampath Iyengar s Law of Income Tax, 11th Edition, page 10 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r sub-section (3) of section 143 or Section 147 has been made for the relevant assessment year, no notice shall be issued under section 148 [by an Assessing Officer, who is below the rank of Assistant Commissioner, unless the Deputy Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice]: Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Deputy Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Deputy Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice.] 11. Upon close reading of the position of law u/s 151 prior to 1.4.1990 and after amendment w.e.f. 1.4.1990 the following salie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thin period of four years, it is by implication such power of reopening the assessment on the part of the Asst. Commissioner is inferable. Insofar as Deputy Commissioner is concerned, he being an approval authority, for reopening assessments by the Assessing officers below the rank of Asst. Commissioner he should necessarily have the power to reopen the assessment within the period of four years if he happens to be the assessing authority. 13. The provision of Sec. 151 has undergone a further amendment, wherein the Deputy Commissioner is also declared as an assessing authority and for reopening the assessments of assessing officer, who is below the rank of Asst. Commissioner or Deputy Commissioner, it is the joint commissioner declared as the approval authority to permit reopening of the assessments. In other words, the change in law is to the effect if the assessing officer is below the rank of Asst. Commissioner or Deputy Commissioner i.e. I.T.O. the Approval authority instead of Deputy Commissioner, it would be the Joint Commissioner w.e.f. 1.10.1998. 14. In the instant case, the Deputy Commissioner is the Assessing authority and the scrutiny assessments are being reopened a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessing Officer would categorically and by irresistible implications disclose the valid reasons as declared in law for reopening the assessment. Mere fact that there is no specific mention of the words failure to disclose all material facts fully and truly is only technical omission cannot defeat the validity of the order. The order if read in toto, it would disclose that all material facts and reasons for reopening the assessment are recorded. The counsel relying upon the decision of the Hon'ble Supreme Court in 1961 (41) ITR 191 in the case of Calcutta Discount Company Limited., V/s. Income Tax Officer, Companies District, And Another in para 5 (unnumbered), the following observations are made: 5. Before we proceed to consider the materials on record to see whether the appellant has succeeded, in showing that the Income tax Officer could have no reason, on the materials before him, to believe that there had been any omission to disclose materials facts, as mentioned in the section, it is necessary to examine the precise scope of disclosure which the section demands. The words used are omission or failure to disclose fully and truly all material facts necessary for his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 and other evidence disclosed. 6. Does the duty however extend beyond the full and truthful disclosure of all primary facts? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure, it is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee - to tell the assessing authority what inferences - whether of facts or law should be drawn. Indeed, when it is remembered that people often differ as regards what inference should be d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... light of the decision of the Hon'ble Supreme Court reported in 41 ITR 191 in the case of Calcutta Discount Co. V/s Income Tax Officer referred to above, the initial burden is on the assessee to mention all the material facts truly and fully in the returns filed. On perusal of the returns, it is impossible to make out the distinct heads of deduction sought. It cannot be said that the Assessing Officer has taken note of the escaped amount. In the present case, the assessee had shown the gross figure under current liabilities, he has not distinctly stated different types of deductions he is claiming under the Head of Current Liabilities. Therefore, there is no disclosure of all the material fully and truthfully as required under law. The order of the Assessing Officer passed under proviso to Section 147, which reads as under: During the year assessee was in receipt of refund from Central Excise Authorities being excess paid. Total amount received was Rs.1,29,00,924/-. Later, Excise Authorities called back the refund 0amount from assessee, but assessee contested and got stay from Karnataka High Court. It paid part amount and Rs.1,01,24,971/-is with assessee. Unless and until the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 199 ITR 14. With reference to the facts, for the purpose of law laid down it is submitted that in the cited case, the liability to pay excise duty was the bone of contention. The assessee in the previous about six returns filed has shown the disputed liability as expenditure and deductions were accordingly allowed. However, for the assessment years 1972-1973, Allahabad High Court held that the amount in dispute pending in litigation before the court cannot be considered as an income in the hand of the assessee for tax. Besides, for the past several years in the previous returns the said amount was allowed as deduction. Therefore, a sudden divergent stand on the part of the Assessing Authority was held to be not correct. The Hon'ble Supreme Court had disposed of the appeal with the following observations in J.K.Synthetic s case, which reads as follows: So far as the third question is concerned, it is not pressed before us on behalf of the Department in view of the fact that the concerned authority has approved of the Institution under section 35(3) of the Act. So far as the second question is concerned, it is obvious that the liability to tax under section 41 of the Act will ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... one of its customers in the year of account. As and when such refund is made, the assessee will be entitled to claim deduction. 22. The decision of the Hon'ble Supreme Court in the case of Polyflex (india) (p) Limited V/s Commissioner Of Income Tax reported in 257 ITR 344 in paragraphs 7 and 12 had made the following observations: 7. We are inclined to think that in a case where a statutory levy in respect of goods dealt in by the assessee is discharged and subsequently the amount paid is refunded, it is the first clause that more appropriately applies. It will not be a case of benefit accruing to him on account of cessation or remission of trading liability. It will be a case which squarely falls under the earlier clause, namely, obtained any amount in respect of such expenditure . In other words, where expenditure is actually incurred by reason of payment of duty on goods and the deduction or allowance had been given in the assessment for earlier period, the assessee is liable to disgorge that benefit as and when he obtains refund of the amount so paid. The consideration whether there is a possibility of the refund being set as naught on a future date will not be a relev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .e., obtained any amount in respect of such loss or expenditure , would be doing violence to the language and structure of the provision. That apart, the operation of the provision which is designed to have widest amplitude will get constricted and truncated by reason of such interpretation. 23. In the first place, when the J.K.SYNTHETIC s case was decided, Mercantile system of accounting was accepted in law. The legal liabilities whether remitted or not could have been claimed as deductions. But with the incorporation of sections 41 to 43(B), the proposition has undergone a thorough change insofar as legal liability is payable to Statutory Authority or the Government. No deduction was permitted until the said amounts are actually paid and remitted, and the accounting on annual basis in Mercantile system in respect of the said liabilities stood expressly excluded by law. In the instant case, for the assessment year in question, Section 43(B) applies. The ratio laid down by the Hon'ble Supreme Court in Thirumalaswamy Naidu and POLYFLEX cases would justify the act of the Assessing Officer in assessing the refund of amount in the hands of the assessee as trade-in-receipts until it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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