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TMI Blog2022 (12) TMI 459X X X X Extracts X X X X X X X X Extracts X X X X ..... not be decided because the impugned notice will have to be set aside for the other reasons discussed above. For all such reasons, we are satisfied that the impugned notice is liable to be quashed and set aside. The rule is accordingly made absolute without costs in terms of prayer which read as Hon'ble Court may be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ, Order or direction under Article 226 of the Constitution of India calling for the records of the Petitioner's case, and after examining the legality and validity thereof, quash and set aside the notice dated 29th March 2019 (EXHIBIT A) issued by the Respondent No. 1 u/s 148 of the Act, seeking to re-open the assessment for the Assessment Year 2012-13; and the Order rejecting objections (EXHIBIT AAN) dated 2nd November 2019. Hon'ble Court may be pleased to issue a Writ of Mandamus or a writ in the nature of Mandamus or any other appropriate writ, Order or direction under Article 226 of the Constitution of India ordering and directing the Respondents to forthwith withdraw and cancel the notice issued by the Respondent No. 1 under section 148. - M. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notice was without jurisdiction, null and void. 7. Mr. Jain relied on several decisions including Hindustan Lever Ltd. V/s. R.B. Wadkar (2004) 137 Taxman 479 (Bom.), 3i Infotech Ltd. V/s. Assistant Commissioner of Income Tax (2010) 329 ITR 257, Bombay Stock Exchange Ltd. V/s. DDIT (Exemp.) (No.2) 365 ITR 181 (Bom.), Godrej Industries Ltd. V/s. Assistant Commissioner of Income Tax WP No.50 of 2007, Bharti Infratel Ltd. V/s. Deputy Commissioner of Income Tax (2019) 411 ITR 403 (Del), Delhi Farming Construction (P.) Ltd. V/s. Assistant Commissioner of Income Tax (1999) 240 ITR 127, India Steamship Co. Ltd. V/s. Jt. Commissioner of Income Tax (2005) 275 ITR 155 (Cal), Arthur Anderson Co. V/s. Asst. Commissioner of Income Tax (2010) 324 ITR 240 (Bom) in support of his contentions. 8. Mr Jain referred to the reasons recorded and furnished to the Petitioner for the issue of the impugned notice. Based upon the same, he submitted that such reasons did contain a statement about the alleged failure on the Petitioner's part to fully and truly disclose the following material facts necessary for the assessment for the year under consideration. However, he pointed out that no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TR 295 (SC), Cable Corporation of India Ltd. (2016) 75 taxmann.com 117 (Bom.), Millennium Estates (P.) Ltd. (2018) 93 taxmann.com 41 (Bom), Aditya Builders, Rajesh Prakash Timblo (2015) 378 ITR 75 (Bom), Rajesh Prakash Timblo (2019) 415 ITR 334 (Bom) in support of his contentions. 11. The rival contentions now fall for our determination. 12. After the impugned notice was served upon the Petitioner, reasons were sought, and the same were furnished to the Petitioner on 01.05.2019. 13. The reasons furnished to the Petitioner are at Exhibit AAJ (pages 813 to 815 of the paper book). Such reasons are transcribed below for the convenience of reference: OFFICE OF THE ASST. COMMISSIONER OF INCOME TAX-Circle-2(1), AAYAKAR BHAVAN, EDC COMPLEX, PATTO PLAZA, PANAJI-GOA 403 001. Tel. 0832-2438464 F.No.ACIT/C-2(1)/PNJ/19-20 Date: 01.05.2019 To The Director M/s. Tumkur Minerals Pvt. Ltd. Salgaocar House, Off. Dr. F.L.Gomes Road Vasco-Da-Gama, Goa403 802 _ Sir/Madam, Sub.: Reasons of re-opening of assessment proceedings for A.Y. 2012-13 - reg. Ref.: Yours letter dt. 26.04.2019 Please refer to the above ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee or not, in addition to regular income in respective years, it is proposed to re-open the case by issue of notice u/s 147 of the I.T. Act. I have reason to believe that income chargeable to tax has escaped the assessment to the extent of Rs.1,29,46,90,665/- for the AY 2012-13, within the meaning provision of section 147 of the Income Tax Act, 1961. Accordingly, assessment for A.Y. 2012-13 is proposed to be reopened by issuing notice u/s 148 of the I.T. Act. 1961. Applicability of the provision of section 147/151 to the facts of the case: In this case, a return of income was filed for the year under consideration and regular assessment u/s 143(3) was made on 28.03.2015. Since 4 years from the end of the relevant year has expired in this case, the requirements to initiate proceeding u/s 147 of the Act are reason to believe that income for the year under consideration has escaped assessment because of failure on the part of the Assessee to disclose fully and truly all material facts necessary for his assessment for the assessment year under consideration. It is pertinent to mention here that reasons to believe that income has escaped assessment for the year under c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the year under consideration : 15. However, after recording the above-emboldened portion in paragraph 4 of the reasons transcribed above, the AO omitted to disclose what were the material facts, which according to him, the Assessee failed to disclose for the relevant AY. Instead, after the above quoted emboldened wordings or phrases, the AO simply proceeded to state that it is evident from the above facts that the Assessee had not truly and fully disclosed material facts necessary for his assessment for the year under consideration thereby necessitating re-opening u/s 147 of the Act . There is a reference to the phrase 'the above facts' at further two places in the reasons. 16. However, what was actually the above facts was never stated in the reasons dated 01.05.2019. Thus, in the reasons furnished to the Petitioner, the AO disclosed which material facts, according to him, were not fully or truly disclosed by the Petitioner. Such non-disclosure suggests that there was no failure on the Petitioner's part to fully and truly disclose all material facts. In any case, such non-disclosure by the AO denies the Petitioner an adequate opportunity to lodge its o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be based on evidence. The Assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the Assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary re-opening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced. Emphasis supplied 19. The Division Bench in terms has held that the AO, who seeks to re-open the assessment after four years from the end of the relevant AY, must disclose in the reasons as to which fact or material was not disclosed by the Assessee fully and truly necessary for the assessment of that AY, to establish a vital link between the reasons and the evidence. 20. However, in this ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch matters. 24. Therefore, following the law in Hindustan Lever Ltd. (supra) in the context of reasons furnished by the AO to the Petitioner on 01.05.2019, the impugned notice will have to be quashed because there is no disclosure in the reasons as to which fact or material was not disclosed by the Assessee fully and truly and which the AO thought, was necessary for assessment of the relevant AY. As noted earlier, such non-disclosure suggests that there was no failure on the Petitioner's part to fully and truly disclose all material facts. In any case, such non-disclosure by the AO denies the Petitioner an adequate opportunity to lodge its objections to such reasons consistent with the procedure in GKN Driveshafts (India) Ltd. (Supra). 25. The AO, in this case, has invoked Explanation (1) to Section 147 of the IT Act. This provides that the production before the AO of account books or other evidence from which material evidence could, with due diligence, have been discovered by the AO will not necessarily amount to disclosure within the meaning of the foregoing proviso that deals with re-opening of assessment after expiry of four years from the end of the relevant AY. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nual accounts and tax audit report. Further, details were also supplied by the Petitioner on 23.03.2015. 30. Finally, the AO, on 28.03.2015, assessed the Petitioner's return for AY 2012-13 by making an order under Section 143(3) of the IT Act. 31. Mr Jain submitted that since the Petitioner had disclosed fully and truly all the above material facts, in the reasons furnished to the Petitioner on 01.05.2019, the AO could not list a single material fact that was alleged to have been suppressed by the Petitioner for assessment during the relevant AY. As noted earlier, in the reasons furnished to the Petitioner, there is an omission to state the alleged material facts which the Petitioner is alleged to have failed to disclose. Therefore, the above disclosures, together with the absence of the material facts which the Petitioner has failed to reveal, leads to the legitimate inference that there was no failure on the part of the Petitioner to truly and fully disclose all material facts necessary for assessment for the relevant AY. 32. In the context of Explanation (1) to Section 147 of the Income Tax Act, the same refers to account books or other evidence. In this case, the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort his contention that the amount had not accrued during AY 2012-13. However, we need not go into this issue as long as there was disclosure of the material facts necessary for the Petitioner's assessment during AY 2012-13. Additionally, even if Mr Jain's accrual contention was wrong, given the disclosures, the AO could have taxed the accrued income or re-opened the assessment within four years. A mere incorrect claim based on full disclosures cannot be reassessed after four years by invoking sections 147 and 148 of the IT act. 36. In Titanor Components Ltd. V/s. Assistant Commissioner of Income Tax (2012) 20 taxmann.com 805 (Bombay), the Division Bench of this Court pointed out that there is a notable difference between a wrong claim by an Assessee after disclosing the true and material facts and the wrong claim made by the Assessee by withholding material facts fully and truly. Only in the latter case would the Assessing Officer be entitled to re-open the assessment after four years. 37. Mr Jain had also contended that since only the issue of the year of taxability/deductibility was involved and the tax rate was the same or lower, the Revenue ought not to agita ..... 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