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TMI Blog2020 (6) TMI 314X X X X Extracts X X X X X X X X Extracts X X X X ..... days need to be excluded. See case of DCIT vs. JSW Limited [ 2020 (5) TMI 359 - ITAT MUMBAI ]. - Shri Pramod Kumar, Vice President And Ms. Madhumita Roy, Judicial Member For the Appellant : Shri Mukesh Butani, Shreyash Shah AR For the Respondent : Shri Sanjay Singh, CIT D.R. ORDER PER Ms. MADHUMITA ROY - JM: The appeal at the instance of the assessee is directed against the order dated 06.11.2017 passed by the Commissioner of Income Tax (Appeals) 24, Mumbai arising out of the order dated 29.03.2016 passed by the ACIT-15(2)(1), Mumbai under section 143(3) r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred as to the Act ) for Assessment Year 2008-09. 2. The assessee mainly challenged the following grounds:- 1. On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) (CIT(A) ) erred in upholding the reassessment proceedings u/s. 147 of the Income-tax Act, 1961 ( Act ) initiated by the learned Assessing Officer ( AO ); 2. On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in upholding the disallowance u/s. 40(a)(ia) of the Act made by the learned AO; 3. On the facts and in the circumst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the records further on, it is seen that disallowance u/s 40(a)(ia) of Income-tax Act, 1961 amounting to ₹ 20,38,13,871/- was not, made on account of non deduction of tax at source u/s. 195 of I.T. Act, 1961 on payments made to foreign companies. It is noted that this fact was not brought to light earlier. In view of the above facts, I have reasons to believe that an income amounting to Rs. 20,38,13,871/- has escaped assessment which needs to be assessed by reopening of the assessment proceedings of the assessee company for A.Y. 2008-09. Notice u/s 148 of the Income Tax Act. 1961 is issued. Sd/- (Swapan Kumar Bepari) Dy. Commissioner of Income- Tax, 15(2)(1),Mumbai. 5. It is evident from the records that the re-assessment was made on the basis of the internal audit objection on 04.03.2015, much after the elapse of four years from the end of relevant A.Y. 2008-09 i.e. from 31.03.2009. Moreso, a plain reading of the aforesaid reasons for re-opening of assessment under section 148 of the Income Tax Act, 1961 has not pointed out as to how the assessee failed to disclose fully and truly all material facts necessary for his assessment, for that assessment year particularly in vie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to a notice under Sections 142(1) or 148 of the Act or failing to disclose fully and truly all material facts necessary for the assessment. (d) The reasons for re-opening the assessment must themselves contain all of the above elements. In other words the factum of the existence of tangible material and the recording of the satisfaction of the AO about the failure by the Assessee to disclose fully and truly all material facts necessary for the assessment must find place in the reasons recorded for re-opening the assessment. The deficiency in this regard cannot be sought to be made up by a counter affidavit filed in the Court in response to a petition questioning the reopening of the assessment. 17. In Sabh Infrastructure (supra) after referring to the decisions in Oracle India (P.) Ltd. v. ACIT 2017 SCC online Del 9360 and BDR Builders Developers (P.) Ltd. v. ACIT 2017 SCC Online Del 9425 this Court held: Thus, it is also now well settled that the reasons to believe have to be self explanatory. The reasons cannot be thereafter supported by any extraneous material. The order disposing of the objections cannot act as a substitute for the reasons to believe and neither can any count ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The complete statement of bank account of Axis bank reflecting the debits and credits in the account including money received from PACL and repaid to it were furnished. It is therefore plain that all details pertaining to the amount received from PACL was in fact furnished by the Assessee to the AO. 21. While, in the present case the assessment order does not itself discuss the details furnished by the Assessee, the fact remains that all the relevant materials were indeed disclosed by the Assessee before the AO. It is relevant to mention that such reopening has been initiated on the basis of internal Audit Objection being No. DCIT(SAP)-I(2)/Objection No. 18/2013-14 appearing at Page 103 of the Paper Book; objection was to this effect that disallowance under section 40(a) of the Act amounting to ₹ 20,38,13,871/- not made on account of non-deduction of tax at source under section 195 on payments reimbursement made to foreign companies. It further appears that the DCIT-15(1)(2) Mumbai, while replying to the said internal Audit Objection in the case of the assessee for the year under consideration on 04.03.2015 categorically mentioned that the nature of payment in dispute relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he exception provision embedded in the statute in failing to disclose fully and truly all the materials necessary for such original assessment. Certain case laws were also relied upon by the assessee in support of his challenges in the said reply dated 18.11.2015. Subsequently, the detailed break-up of the payment made to the foreign companies to the tune of ₹ 20,38,13,871/- was also provided to the Revenue by the assessee with explanation thereof. It is needless to mention that the objection raised by assessee against the re-assessment proceeding was disposed off by the concerned officer negating the contentions made by the assessee to this effect. The case of the assessee is this that no fresh material/information came to the light of the Revenue suggesting income escaping assessment, neither it is the case of the Revenue that the assessee has not disclosed fully the material facts available for the relevant assessment year before the AO. The argument of the Ld. AR, as we find from the record is also supported by the view already taken by the DCIT disclosed in its letter dated 04.03.2015 address to the DCIT-15(2)(1), Mumbai appearing at Page-106 of the Paper Book where he h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ime of original assessment proceedings, but reopens the assessment proceedings as a measure of abundant caution nevertheless, it cannot be said that the Assessing Officer had any reasons to believe that an income has escapade assessment- a belief which is a sine qua non for reopening the assessment. In view of these discussions, as also bearing in mind entirety of the case, I uphold the action of the CIT(A), in quashing the reassessment proceedings, and decline to interfere in the matter. Taking into consideration the entire aspect of the matter, we have found cogent reasons as discussed above for not appreciating such reopening as an abundant caution by the Revenue only on the basis of an internal audit objection particularly when the same officer himself has objected such reopening on merit; consideration whereof has already been done by him in the original proceeding. We have further been enlightened by the ratio laid down by the Hon ble Tribunal in the judgment narrated hereinabove in the same set of facts and relying upon the same we find no justification for approving the reassessment proceeding initiated by the Revenue. Hence, the same is found to be devoid of any merit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ordships had, inter alia, directed that We, therefore, direct the President of the Appellate Tribunal to frame and lay down the guidelines in the similar lines as are laid down by the Apex Court in the case of Anil Rai (supra) and to issue appropriate administrative directions to all the Benches of the Tribunal in that behalf. We hope and trust that suitable guidelines shall be framed and issued by the President of the Appellate Tribunal within shortest reasonable time and followed strictly by all the Benches of the Tribunal. In the meanwhile (emphasis, by underlining, supplied by us now) , all the revisional and appellate authorities under the Income-tax Act are directed to decide matters heard by them within a period of three months from the date case is closed for judgment . In the ruled so framed, as a result of these directions, the expression ordinarily has been inserted in the requirement to pronounce the order within a period of 90 days. The question then arises whether the passing of this order, beyond ninety days, was necessitated by any extraordinary circumstances. 9. Let us in this light revert to the prevailing situation in the country. On 24th March, 2020, Hon ble Pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... trolled When such is the position, and it is officially so notified by the Government of India and the Covid-19 epidemic has been notified as a disaster under the National Disaster Management Act, 2005, and also in the light of the discussions above, the period during which lockdown was in force can be anything but an ordinary period. 10. In the light of the above discussions, we are of the considered view that rather than taking a pedantic view of the rule requiring pronouncement of orders within 90 days, disregarding the important fact that the entire country was in lockdown, we should compute the period of 90 days by excluding at least the period during which the lockdown was in force. We must factor ground realities in mind while interpreting the time limit for the pronouncement of the order. Law is not brooding omnipotence in the sky. It is a pragmatic tool of the social order. The tenets of law being enacted on the basis of pragmatism, and that is how the law is required to interpreted. The interpretation so assigned by us is not only in consonance with the letter and spirit of rule 34(5) but is also a pragmatic approach at a time when a disaster, notified under the Disaster ..... X X X X Extracts X X X X X X X X Extracts X X X X
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