9911796707
TMI Blog2004 (2) TMI 41X X X X Extracts X X X X X X X X Extracts X X X X ..... ccompanied by a specific note reading as under: ". . . . in accordance with the practice followed for the earlier years, the company has not made a provision for excise duty and customs duty on stocks lying at the year end in bonded warehouse estimated at Rs.5,85,71,968 (1994-95 Rs. 11,25,02,531) and accordingly not included the said amount in the valuation of inventories. This has no effect on the profits for the year." The accounts which accompanied the return of income also made a specific reference to this accounting policy which was followed. The audit report which was furnished in accordance with the provisions of section 44AB also made a specific reference to the method of accounting adopted by the petitioners in respect of the goods lying in bonded warehouse. The petitioners submit that it had made a full disclosure of all the material facts along with the return of income that was filed with the Department. The aforesaid return of income was revised on March 31,1998, as a result of amalgamation of M/s. Brooke Bond Lipton India Ltd. into the petitioners. The disclosures made in the original return were reiterated in the revised return that was filed. Respondent No.2 comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions claimed by them under sections 80HHC and 80-IA as well as on account of the leave salary that was debited. The petitioners finding failure on the part of the Assessing Officer to disclose the reasons in spite of specific request filed this petition under article 226 of the Constitution of India to challenge notice dated November 5, 2002, issued under section 148 of the Act. On being noticed, the respondents appeared and filed their counter affidavit disclosing the reasons recorded prior to the issuance of the notice under section 148. The said reasons recorded read as under: "From the notes to the audited accounts, it is seen that while valuing closing stock, Central excise and customs duty leviable on stock lying in godown was not considered as forming part of cost of the closing stock. Although no such duty was paid during the relevant previous year, liability to pay such duty arises immediately on manufacture of excisable goods. Also, the Board's Instruction No. 1389 dated March 24,1981, provides for inclusion of Central excise and customs duty in valuation of inventory. In view of this position, I have reason to believe that income chargeable to tax has escaped asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer has no jurisdiction to issue such notice, contends that even if the words "failure to disclose fully and truly all material facts relevant for assessment for the assessment year" are absent in the reasons recorded, still such reasons can be inferred on the text of the reasons recorded. He, therefore, submits that the notice under challenge is well within the scope of section 147 as such this petition is liable to be dismissed being without any substance consideration : Having heard the parties at length, we are of the opinion that the petition can be disposed of on the first contention raised by the petitioner, wherein the petitioner has contended that the notice issued under section 148 is without jurisdiction being hit by the proviso to section 147 of the Act as such not within the prescribed period provided under the proviso to section 147 of the Act. In the circumstances, it would be necessary to turn to section 147 of the Act, which reads as under: "147. Income escaping assessment.- If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee on November 7, 2002. Under these circumstances, the notice is clearly beyond the period of four years. The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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