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TMI Blog2019 (1) TMI 1345X X X X Extracts X X X X X X X X Extracts X X X X ..... hich was duly offered to tax. AO had in the order of assessment actually erroneously taxed a sum of ₹ 44.68 crores which was clearly an error. The assessee brought this error to the notice of the Assessing Officer by filing an application for rectification. AO had made contradictory statements. In the first part, he has recorded that the assessee had offered such sum to tax on short term capital gain. In the later part, he contradicts himself by saying that the assessee had not offered it to tax. AO now cannot contend that this issue is debatable or is a factual aspect. The material on record would clearly suggest that on this ground, he had proceeded on erroneous footing. AO has proceeded solely on the basis of material already on record clearly debarring his jurisdiction for issuing notice of reassessment beyond the period of four years from the end of relevant assessment year. In that view of the matter, it is not necessary for us to decide the contention of the assessee's counsel that such income was not taxable at all. In the result, impugned notice is quashed. - Decided in favour of assessee. - WRIT PETITION NO. 3588 OF 2018 - - - Dated:- 17-1-2019 - AKIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee that this short term capital gain totaling to ₹ 4,68,87,311/- was not offered to tax by the assessee. Not disclosing this capital gains in the return of income filed amounts to failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment and hence, I have reason to believe that income to the extent of ₹ 46.88 crore, has escaped assessment. 3. It is further noticed vide note No. 24 to revised return of income for A.Y. 2011-12 claimed reduction in respect of divident received during A.Y. 2009-10 2010-11 u/S. 1150(1A)(i) of ₹ 6,46,06,47,635/- and consequently claimed refund of DDT of ₹ 46,91,80,180/- as detailed below. Particulars Amount Total Dividend paid during F.Y. 2010-11 12,69,76,52,880 12,69,76,52,880 Final Dividend of F.Y. 2009-10 Less: Dividend Received during the F.Y. 2009-10 and 2010-11 from the subsidiarity deductible under Sec. 1150(1A)(i) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded by the Assessing Officer, learned counsel for the petitioner raised following contentions:- i. Notice of reopening of assessment was issued beyond the period of four years from the end of relevant assessment year. There was no failure on the part of the assessee to disclose truly and fully all material facts. The Assessing Officer has proceeded on materials already on record which was available during the original assessment. The notice of reopening, therefore, is without jurisdiction. ii. With respect to the ground of capital gain not being offered to tax, the learned counsel took us through the return and the accompanying documents and the order of the assessment passed by the Assessing Officer to contend that there was not only true and full disclosure but capital gain was also officered to tax and which the Assessing Officer had also taxed. iii. Learned counsel lastly contended on the question of distribution of dividend, no income chargeable to tax can be stated to have escaped assessment. 5. On the other hand, learned counsel for the Revenue opposed the petition contending that :- i. There was failure on the part of the assessee to disclose true and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eded 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 material 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 assessment for that year . It postulates a duty on every assessee to disclose fully and truly all material facts necessary for his assessment. What facts are material, and necessary for assessment will differ from case to case. In every assessment proceeding, the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessee, or discovered by him on the basis of the facts disclosed, or otherwise-the assessing authority has to draw inferences as regards certain other facts; and ultimately, from the primary facts and the further facts inferred from them, the authority has to draw the proper legal infe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences-whether of facts or law-he would draw from the primary facts. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn ? It may be pointed out that the Explanation to the sub- section has nothing to do with inferences and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income-tax Officer could h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original assessment proceedings on the basis of which the Assessing Officer has formed a belief that the income chargeable to tax has escaped assessment. In clear terms, the mandatory requirement flown from first proviso to Section 147 of the Act is not established. The beginning portion of the reasons itself which is in the nature of preamble referred that, In this case, on verification of the case record, it is noticed that ...... . Thus, entire reasons proceed on verification of the case records. Even, with respect to each individual ground raised by the Assessing Officer, he has referred to the documents, material and information already on record during the assessment proceedings. 8. We have also perused the documents which form part of the original assessment proceedings and find that the assessee had made all necessary disclosures. We notice that in the computation of income along with return filed, the assessee had shown amount of outstanding debit / credit interest in inter-branch account transferred to Profit Loss A/c as per R.B.I. instructions a sum of ₹ 42.90 crores. Along with this entry, the assessee had referred to a note No. 32. This note No. 32 reads as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the later part, he contradicts himself by saying that the assessee had not offered it to tax. The Assessing Officer now cannot contend that this issue is debatable or is a factual aspect. The material on record would clearly suggest that on this ground, he had proceeded on erroneous footing. 10. With respect to the third ground raised by him also, we find that the Assessing Officer has proceeded solely on the basis of material already on record clearly debarring his jurisdiction for issuing notice of reassessment beyond the period of four years from the end of relevant assessment year. In that view of the matter, it is not necessary for us to decide the contention of the assessee's counsel that such income was not taxable at all. 11. We may now refer to the judgments cited by Mr. Chhotaray for respondents. In the case of M/s. T.V. Sundaram Iyengar Sons (supra), the Supreme Court had considered an entirely different issue which has no connection with question of reopening of assessment. 12. In the case of Raymond Woollen Mills Ltd (supra) and Rajesh Jhaveri Stock Brokers P. Ltd (supra), the Supreme Court held and observed that at the stage of reopening of a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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