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TMI Blog2022 (6) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... n dated 06.09.2016, which is issued in exercise of the power conferred under section 35(1)(ii) of the I-T Act read with rule 5C and 5C of the Income Tax Rules 1968, has rescinded the earlier notification dated 14.03.2018 in No. 35/2008 with effect from 01.04.2007 with the stipulation that this notification dated 14.03.2008 shall not be deemed to have been issued for any tax benefits under the I-T Act or any other law for the time being in force. The petitioner in WP No. 52269 of 2017 is also similarly placed as the petitioner in the other two writ petitions, and this petitioner has also challenged similar notices and orders but for the AY: 2012-2013 and the Notification dated 07.09.2016. 3. A brief statement of facts in WP Nos. 44636/2017 and 52268/2017: 3.1 The petitioner, a company incorporated under the provisions of the Companies Act, 1956, has filed its returns of income for the AY 2013-2014 offering certain income for tax and paying the income tax computed on the basis of such income. During this assessment year, the petitioner has donated a sum of Rs. 5,50,00,000/- to M/s. Herbicure Healthcare Herbal Research Foundation, Kolkata [referred to as 'M/s. Herbicure'], a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 01.04.2017 and with the stipulation that it shall be deemed that this notification has not been issued for any tax benefits under the I-T Act or any other law for the time being in force. Thereafter, notice under section 148 of the I-T Act is issued on 28.09.2016 informing the petitioners that the Assessing Officer [AO] has reason to believe that income chargeable to tax for the assessment years 2013-14 and 2015-16 has escaped Income tax; the petitioners are also called upon to deliver returns in the prescribed form for the respective assessment years within 15 days from the date of receipt of this notice. 3.6 The petitioner has responded to these notices under the provisions of section 148 of the I-T Act on 03.10.2016 informing the AO that returns are filed and the returns already filed could be considered as returns filed in compliance with the notice issued under section 148 of the IT Act. Further, the petitioner, referring to the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. v. Income Tax Officer and Others (2003) 1 SCC 72, has requested the AO to provide reasons to justify the belief that income chargeable to tax in the relevant years has escap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I-T Act, that an AO is free to examine the correctness of a regular assessment and decide whether tax assessed, rate applied, relief and allowances granted, et cetera, are in terms of the provisions of the Act/Rules. 4. A brief statement of facts in WP No. 52269/2017: 4.1 The facts are similar inasmuch as the petitioner has filed returns for the AY: 2012-13 disclosing that a sum of Rs. 20,00,00,000/- is donated to M/s. Herbicure upon its recognition as an organisation admitted to the benefits of receipts as donation for scientific research. Even in this case, a notice is issued under section 143 (1) of the I-T Act requiring the petitioner to furnish ledger copy of the donation, details of the donee and the supporting documents. The petitioner has produced such details. After verifying the details and the determination of the income for assessment, the AO has raised a demand by his order dated 12.03.2015 under section 143 (3) of the I-T Act. 4.2 After this assessment order dated 12.03.2015, a survey is conducted in the petitioner's office under section 133A of the I-T Act and the statement of one of the officers of the petitioner is recorded. The facts and circumstances recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eof by the Hon'ble Supreme Court in its decision between the same parties in the appeal filed by the Revenue. 5.3 Sri. S. Parthasarathi emphasizes that in the absence of any material to demonstrate that the petitioners have received back the amounts given in donation, there cannot be any reason to believe [a condition precedent for reopening of the assessment under section 147 read with 148 of the I-T Act] that there must be reassessment of the income offered on the ground that M/s. Herbicure is a facade and is engaged in the business of receiving bogus donations for commission. The AO has not even mentioned in the reasons offered or in the impugned order rejecting the petitioner's objections, that the petitioners have received back the amounts given in donation and therefore, the notices issued under section 148 of the I-T Act is without jurisdiction and these notices and the subsequent orders must be quashed. 5.4 Sri. S. Parthasarathi next contends that the reason to believe that there must be re-assessment is based on the statement recorded in surveys under section 133A of the I-T Act, but it is settled that a statement recorded during the survey proceedings cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accommodation entries. It is because of the survey/Investigation and the subsequent notification withdrawing the approval, the reassessment proceedings are commenced. The AO, when he completed the assessment for the corresponding years, did not have this information. The AO upon receipt of this information is able to justifiably opine that there is a reason to believe that income chargeable to tax has escaped and therefore there must be re-assessment. 6.3 Sri K.V. Aravind also relies upon the decision of the Hon'ble Supreme Court in Commissioner of Income Tax v. Kelvinator of India Ltd. (2010) 2 SCC 723 to canvas that when the assessment orders were made in the respective cases, the AO, who did not have the full information about the outcome of the survey/investigation at the premises of M/s. Herbicure, could not have formed any opinion as regards the escapement of income from assessment because of the bogus donation transaction by M/s. Herbicure and this new material, which has come to AO's knowledge after the assessment orders, would constitute live link for the formation of the belief that there is escapement of tax from assessment. Sri K.V. Aravind strenuously argue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessment due to oversight, inadvertence or a mistake committed by the Income-tax Officer. This is obviously based on the principle that the taxpayer would not be allowed to take advantage of an oversight or mistake committed by the taxing authority; (3) where the information is derived from an external source of any kind. Such external source would include discovery of new and important matters or knowledge of fresh facts which were not present at the time of the original assessment; (4) where the information may be obtained even from the record of the original assessment from an investigation of the materials on the record, or the facts disclosed thereby or from other enquiry or research into facts or law." in Kalyanji Mavji and Co. vs. Commissioner of Income Tax (1976) 1 SC 985 is declared to be an incorrect position in law, the first and the third and fourth tests are reiterated A.L.A. Firm v. CIT reported in (1991 ) 2 SCC 558. Consequentially, even information obtained from the record of the original assessment proceedings from an investigation of the material on record or from other enquiry or research into facts and law would justify initiation of reassessment pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. In the background of the allegations against M/s. Herbicure, the indisputable fact that the assessment in the case of M/s. Jindal Aluminium Limited [the petitioner in W.P. No. 52269/2017] was completed even before the completion of the survey proceedings [though the assessment proceedings in the other two writ petitions are completed after the aforesaid survey] and the nature of the information shared by the petitioners' Account Officer, this Court must opine that the threshold bar for initiation of the reassessment proceedings is satisfied. This Court must conclude, at this stage, that the AO's subjective prima facie opinion, though is based on the records made available during the assessment proceedings, is because of further enquiry into the affairs of M/s. Herbicure, and this is not a case of 'change of opinion'. 12. As regards the contention that the petitioners, whose only obligation in law once approval is granted under Section 35[1][ii] of the I-T Act is to file a copy of the approval and the details of the donations made, and if the approval is later withdrawn because of certain allegations against the entity which has granted approval, even if such app ..... X X X X Extracts X X X X X X X X Extracts X X X X
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