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TMI Blog2019 (8) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... 2017, issued by the Respondent, Assistant Commissioner of Income Tax, Circle26 (1), New Delhi (hereafter, the Assessing Officer) (AO) seeking to reopen the assessment of the Petitioner for Assessment Year (AY) 2010-2011 under Section 147 of the Income Tax Act, 1961 (the Act). 2. The background facts as stated in the petition are that the erstwhile Sterlite Industries (India) Ltd., which stands amalgamated with Sesa Sterlite Ltd., and now known as Vedanta Ltd., was incorporated in 1975. During the relevant AY, the Petitioner was engaged in the business of manufacturing of copper and other non-ferrous metals, phosphoric acids, sulphuric acid etc, in the AY 2010-2011. The return of income was filed on 8th October, 2010 and was, thereafter, revised on 31st March, 2012. The Petitioner was required to file its audited accounts, tax audit report and Form 3CEB, containing details of the international transactions entered into between the Petitioner and its affiliates. These were duly filed with its return. 3. According to the Petitioner, in the audited accounts filed before the AO, it made disclosures in respect of consultancy and management fees paid to Vedanta Resources PLC (VR PLC). T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mand, by an order dated 20th June, 2014. The said petition is stated to be pending. 9. By way of the notice dated 14th March, 2017, the Deputy Commissioner of Income Tax (International Taxation) (Madurai) [ DCIT (IT)] initiated proceedings against the Petitioner under Section 201(1)/(1A) of the Act for AYs 2010-2011 and 2011-2012. These proceedings culminated in two separate orders dated 31st March, 2017, holding the Petitioner to be an Assessee in default for failure to withhold tax under Section 195 of the Act in respect of the management and consultancy services received by the Petitioner. 10. The Petitioner challenged the said orders of the DCIT (IT), Madurai, in the Madurai bench of the Madras High Court by Writ Petition (MD) Nos. 8269-70/2017. By orders dated 27th April, 2017 and 16th June, 2017, the Madurai Bench of the Madras High Court stayed the recovery of the demand. The said writ petitions are stated to be pending. 11. On the same date that the DCIT (IT) issued the above orders i.e. 31st March, 2017, the impugned notice was issued to the Petitioner by the AO under Section 148 of the Act seeking to reopen the assessment for AY 20102011. The Petitioner states that it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment, within meaning of provision of section 147 of the Income Tax Act, 1961. Accordingly, assessment for A.Y. 2010-11 is proposed to be reopened by issuing notice u/s 148 of the I.T. Act, 1961. Asst. Commissioner of Income Tax Circle-1(1), Panaji" 14. The Petitioner by letter dated 4th December, 2017, raised objections to the reopening of the assessment. These objections were rejected by the Respondent by an order dated 'NIL' received by the Petitioner on 6th December, 2018. 15. Thereafter, the present Petition was filed. On 22nd December, 2017, while directing notice to be issued in the petition, this Court passed the following order: "W.P. (C) No. 11541/2017 & CM No. 47020/2017 Issue notice returnable on 7th March, 2018. Learned counsel for the petitioner has stated that the issue involved in the two writ petitions before the Madras High Court relates to (i) jurisdiction of the Assessing Officer, who had passed the order under Section 143 (3) of the Income Tax Act, 1961 and (ii) whether the order passed under Section 201/201(A) was passed within the limitation period. The submission is that this is a case of change of opinion and secondly the conditions stipulated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of its payment of management consultancy fees to VR PLC in its audited accounts and in the audit report. He also refers to the fact that specific queries were raised by the AO during the course of the assessment proceedings under Section 143 (3) of the Act on this aspect. He submits that this was not a case of failure on the part of the Assessee to make a full and true disclosure of all the material facts. He placed reliance on the decision in Commissioner of Income Tax, Calcutta v. Burlop Dealers Limited, (1971) 79 ITR 609 (SC). 19. Ms. Vibhooti Malhotra, learned senior standing counsel for the Revenue on the other hand referred to the decision in Honda SIEL Power Products Limited vs. Deputy Commissioner of Income Tax (2011) SCC OnLine (Del) 804 and urged that merely because the material evidence was embedded which the Assessing Officer could have uncovered but did not, is not a good ground to invalidate a notice for re-assessment. 20. The reasons for reopening of the assessment in the present case, make it clear that what triggered the reopening of the assessment was the order dated 31st March, 2017 passed by the DCIT (IT) Madurai holding the Assessee to be an Assessee in defa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xplanation to Section 34(1) also do not impose a more onerous obligation. Mere production of the books of account or other evidence from which material facts could with due diligence have been discovered does not necessarily amount to disclosure within the meaning of Section 34(1), but where on the evidence and the materials produced the Income-tax Officer could have reached conclusion other than the one which he has reached, a proceeding under Section 34(1)(a) will not lie merely on the ground that the Income-tax Officer has raised an inference which he may later regard as erroneous." 25. In this context, the following observations in Calcutta Discount Company Ltd. v. ITO (1961) 41 ITR 191 (SC) are also relevant: "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 Assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X
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