9911796707
TMI Blog2023 (9) TMI 625X X X X Extracts X X X X X X X X Extracts X X X X ..... of notice. As has been repeatedly held, such reasons cannot be supplemented or substituted belatedly either by affidavits or while disposing of objections of the Petitioner. Thus, it is clear that the crucial jurisdictional parameters prescribed in the proviso to Section 147 of the IT Act i.e. assessee's failure to disclose fully and truly all material facts necessary for assessment, was not fulfilled. The impugned notice, therefore, warrants interference. We are not too sure whether the ratio of SL Lumax Ltd. [ 2021 (9) TMI 249 - MADRAS HIGH COURT] would apply to the facts of the present case when there is no dispute that the Petitioner had furnished reference Court's award determining the market rate at ₹300/- per square metre. The record discloses that at the time of original assessment proceedings, the Petitioner had filed hardly five documents, out of which one was a copy of the judgment and award of the District Court enhancing base rate for compensation to ₹300/- per square metre. Since the impugned notice warrants interference based upon non-satisfaction with the crucial jurisdictional parameters prescribed in the proviso to Section 147 we do not propose ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a speaking order. Ms. Linhares submitted that the Respondents would dispose of the Petitioner's objections by a speaking order and until then will not proceed with the reassessment. This statement was accepted, and liberty was granted to the Respondents to consider and dispose of the Petitioner's objections on their own merits by passing a speaking order. 8. This Court, in its order dated 04.10.2022, clarified that if the Petitioner's objections were to be overruled or rejected, then the Respondents would refrain from proceeding with reassessment for a period of four weeks from the date of communication of the speaking order to the Petitioner. 9. The Respondents, by order dated 14.04.2023 disposed of the Petitioner's objections. The objections were rejected for the reasons recorded in the order dated 14.04.2023. Accordingly, the Petitioner instituted the present petition to question the notice dated 31.03.2021 seeking to reopen the assessment for Assessment Year 2015-2016 and the order dated 14.04.2023 by which the Petitioner's objections to such reopening came to be rejected. 10. Mr Rao, learned counsel for the Petitioner submits that since in this case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lculated based on the rate of ₹300/- per square metre awarded by the reference Court and paid to the Petitioner by the appropriate Government. He submits that this is nothing but a case of change of opinion, which cannot be a legitimate basis for reopening the assessment. He relied on Aroni Commercials Limited (supra) and Lintas India Private Limited (supra) to support this proposition. 14. Based on the above grounds, Mr Rao urged that the rule be made absolute in this petition. 15. Ms Linhares, learned Standing Counsel for the Respondents countered Mr Rao's contention by submitting that mere production of reference Court's award by which the Petitioner was awarded compensation at the rate of ₹300/- per square metre was not sufficient. She referred to Explanation - 1 to Section 147 of the IT Act which provides that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the proviso to Section 147 of the IT Act. 16. Ms Linhares submitted that the Petitioner, nowhere pointed out to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs from the end of the relevant Assessment Year. Accordingly, there was no dispute that proviso to Section 147 of the IT Act would apply. 22. In Aroni Commercials Limited (supra), a coordinate Division Bench of this Court has explained a common jurisdictional requirement for reopening of assessment both within and beyond a period of 4 years from the end of the relevant assessment year must be based on reason to believe that income chargeable to tax has escaped assessment. The reason for issuing such a notice to reopen must be recorded before issuing such a notice. However, there is an additional jurisdictional requirement to be satisfied while seeking to reopen the assessment beyond the period of 4 years from the end of the relevant assessment year viz. that there must have been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment during the original assessment proceedings. Thus, the primary requirement to reopen any assessment is a reason to believe that income chargeable to tax has escaped assessment. However, as observed by the Supreme Court in the case of CIT vs. Kelvinator India Limited 320 ITR 561 in the context of Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessment in the case of Teofilo Fernando Antonio Pinto A. Y. 2015-16 u/s 147 of the Income Tax Act, 1961. The assessee is an Individual. It has filed a return of income for the assessment year 2015-16 on 28.07.2015, declaring income of Rs. 3,82,42,440/-. The case is selected for scrutiny assessment, which was completed on 07-12-2017 declaring assessed income of Rs. 3,82,42,440/-. During the relevant A Y, the assessee had received enhanced compensation (6,05,09,227) received compulsory acquisition of the assessees' inherited lands, which included enhanced compensation amount of Rs. 2,45,52,900 chargeable u/s 45(5)(b) and accumulated interest thereon to an extent of Rs. 3,59,56,327 chargeable under the head Income from other sources (net of deduction u/s 57(iv). The assessee in his computation of income, offered the enhanced compensation of Rs. 2,45,52,900 under the head Capital Gains against which the aggregate amount of Rs. 24,80,00,246 was deducted as indexed cost of acquisition resulting in LTCL of Rs. 22,34,47,346. After adjusting the LTCG derived from the sale of the plot (Rs. 22,27,493), the net LTCL that was claimed for carry forward was to an extent of Rs. 22,12, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne Bom 29, neither in the notice nor in the reasons for reopening assessment there was any allegation about failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The Court, therefore, held that it was by now well settled that the reasons which are recorded by the AO for reopening the assessment are the only reasons which can be considered. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on the reasons not recorded. This being the position in law, and admittedly there being no allegation in the reasons that there was any failure on the part of the assessee to disclose fully and truly any material fact, the Tribunal was not incorrect in upholding CIT (Appeals) interfering with the notice seeking to reopen the assessment. The Division Bench relied upon the earlier decision on the same fact in the case of City and Industrial Development Corporation of Maharashtra Ltd. vs. Assistant Commissioner of Income Tax (Writ Petition No. 1568 of 2013 decided on 24.03.2014). 30. In Business India vs. Joint Commissioner of Income Tax and others (2014 SCC On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be determined based on such reasons existing and recorded at the time of issuance of notice. As has been repeatedly held, such reasons cannot be supplemented or substituted belatedly either by affidavits or while disposing of objections of the Petitioner. 32. Thus, it is clear that the crucial jurisdictional parameters prescribed in the proviso to Section 147 of the IT Act i.e. assessee's failure to disclose fully and truly all material facts necessary for assessment, was not fulfilled. The impugned notice, therefore, warrants interference. 33. The issue of whether Explanation - 1 to Section 147 applies or not need not be gone into in the present case because of the absence of even an allegation in the impugned notice or in the reasons furnished to the Petitioner that the Petitioner had failed to disclose fully and truly all material facts necessary for his assessment for the Assessment Year 2015-2016. SL Lumax Ltd. (supra) was not a case where there was no allegation either in the notice seeking reopening of assessment or in the reasons furnished to the assessee about failure to disclose material facts. Even otherwise, we are not too sure whether the ratio of SL Lumax Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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