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TMI Blog2021 (10) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... ned in the reasons to believe that the income has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts. Thus, this reason too cannot be considering as fulfilling the condition precedent to the reopening of assessment beyond the period of four years as per the applicable proviso to Section 147 of the Act. - Decided in favour of assessee. - WRIT PETITION NO. 2816 OF 2019 - - - Dated:- 30-9-2021 - K.R. SHRIRAM R.I. CHAGLA JJ. Mr. P.J. Pardiwalla, Senior Advocate i/b Ms. Vasanti B. Patel for petitioner. Mr. Suresh Kumar for respondents. ORAL JUDGMENT : (PER R.I. CHAGLA, J.) 1. Since pleadings are completed, we decided to dispose this petition at the admission stage itself. 2. Rule. Rule made returnable forthwith. 3. Petitioner is engaged in the business of real estate development. Petitioner had filed its annual returns for assessment year 2012-13. As required under section 139 of the Income Tax Act 1961 (the Act), petitioner being a company filed its audited profit and loss account and balance sheet and the auditor s report with the annual returns. The annual returns was filed by the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 09.2012. 8. Respondent No.1 by its letter dated 28.05.2019 provided the petitioner with the reasons recorded for reopening of the assessment. 9. Respondent No.1 issued notice dated 14.06.2019 under Section 142(1) of the Act calling upon petitioner to provide further details/ information/ documents in order to proceed with the reassessment proceedings. Petitioner responded by its letter dated 19.06.2019 filing its objections to reopening of the assessment. According to petitioner, there was no failure to truly and fully disclose material facts and in any case, it was a mere case of change of opinion and there was no fresh tangible material for initiating reassessment proceedings. Respondent No.1 passed an order dated 30.09.2019 with reference to the objections raised by the petitioner to the issuance of notice under Section 148 of the Act, which is impugned in this petition. According to Respondent No.1, (i) To confer jurisdiction under Section 147 (A), two conditions were required to be satisfied, firstly the Assessing Officer must have reasons to believe that income, profits or gains chargeable to income tax had escaped assessment, and secondly he must also have reason t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scaped assessment; (v) The contention of the assessee that true and full disclosure of material fact with respect to interest income was made during the course of original assessment proceedings is not correct as the assessee was fully aware that it is settled position of law that the interest expenses incurred for the purpose of business cannot be set off against the interest income under the income from other sources. The disclosure of material facts with respect to the setting off the interest expenses under Section 57 of the Act might be full but it cannot be considered as true. This is failure on the part of the assessee; (vi) Further, explanation 1 to Section 147 of the Act stipulates that mere production of books of accounts or other documents from which the Assessing Officer could have, with due diligence, inferred material facts, does not amount to full and true disclosure of material facts. 10. Mr. Pardiwalla, learned Senior Counsel for petitioner has relied upon the judgment dated 14.09.2021 passed by this Division Bench in Writ Petition No.2814 of 2019 in Ananta Landmark Pvt. Ltd. vs. Deputy Commissioner of Income Tax Central Circle 5 (3) and others. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e objection to reopening of the assessment under Section 147 of the Act. 13. In Ananta Landmark Pvt. Ltd. this Court had held that the petitioner had truly and fully disclosed all material facts for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for reopening, the Assessing Officer has in fact relied upon the audited accounts to say that the claim of deduction under Section 57 of the Act was not correct. The figures mentioned in the reasons for reopening of assessment are also found in the audited accounts of petitioner. In the reasons for reopening, there was not even a whisper as to what was not disclosed. It was thus held in Ananta Landmark Pvt. Ltd. that the Assessing Officer had admitted that all details are fully disclosed. This was not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of the assessee to disclose truly and fully all material facts that were necessary for computation of income but thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as chargeable to tax has escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary, there is nothing else in the reasons. 16. The Supreme Court in Calcutta Discount Co. Ltd. vs. Income Tax Officer, 1961 411 91 has held that there can be no doubt that the duty of disclosing all primary facts relevant to the decision of the question before the assessment authority lies on the assessee. To meet all possible contentions that when some account books or other evidence have been produced, there is no duty to of the assessee to disclose further facts which on due diligence, the Income Tax Officer might have discovered, the legislature has put in explanation to Section 34(1). The duty, however, does not extend beyond the full and truthful disclosure of all primary facts before the assessing authority. He requires no further assistance by way of disclosure. It is for him 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s: You, the assessing officer examine them, and find out the facts necessary for your purpose: My duty is done with disclosing these account-books and the documents . His omission to bring to the assessing authority's attention these particular items in the account books, or the particular portions of the documents, which are relevant, amount to omission to disclose fully and truly all material facts necessary for his assessment. Nor will he be able to contend successfully that by disclosing certain evidence, he should be deemed to have disclosed other evidence, 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. Does the duty however extend beyond the full and truthful disclosu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the Income-tax officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some non-disclosure of material facts. .............. Both the conditions, (i) the Income-tax Officer having reason to believe that there has been under assessment and (ii) his having reason to believe that such under assessment has resulted from nondisclosure of material facts, must co-exist before the Incometax Officer has jurisdiction to start proceedings after the expiry of 4 years. The argument that the Court ought not to investigate the existence of one of these conditions, viz., that the Income-tax Officer has reason to believe that under assessment has resulted from non-disclosure of material facts, cannot therefore be accepted. 17. In the present case there is no failure on the part of the assessee to truly and fully, disclose all primary facts necessary for the purpose of assessment. It cannot be stated that the condition precedent to the reopening of the assessment beyond the period of four years has been fulfilled. The statement in the reasons for reopening I have reasons to believe that income of ₹ 11,46,38, 381/which was chargeabl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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