High Court Of Allahabad
Pr.CIT vs. Light Carts P. Ltd.
Section 147
Asst. Year 2005-06
Pankaj Mithal & Umesh Chandra Tripathi, JJ.
Income Tax Appeal No. -117 of 2016
23rd August, 2017
Counsel Appeared:
Manu Ghildyal for the Appellant. : Rishi Raj Kapoor for the Respondent.
ORDER:
1. Heard Sri Manu Ghildyal, learned counsel for the appellant and Sri Prakash, Kumar, Sri Bhupendra Kumar Agarwal, Rishi
Raj Kapoor for the respondents.
2. The revenue has preferred this appeal against the order of the Income Tax Appellate Tribunal dated 10.12.2015 whereunder the proceedings initiated against the respondent-assessee under Section 147 of the Income Tax Act, 1961 have been held to be illegal.
3. The matter relates to the assessment year 2005-06. After the order of assessment was passed a notice under Section 148 of the Act was issued on 27.03.2012 for initiating proceedings for re-assessment under Section 147 of the Act.
4. The limitation for initiating proceedings for re-assessment under Section 148 of the Act is 4 years from the end of the relevant assessment year and it is extendable to 6 years again from the end of the relevant assessment year. In this view of the matter ordinarily the re-assessment proceedings could have been initiated by 31st March 2010 and within the extended period of 6 years by 31st March 2012.
5. The initiation of the re-assessment proceedings for the case in hand is within the extended period.
6. The submission of Sri Manu Ghildyal, learned counsel for the appellant is that the assessing officer was prima facie satisfied that there is reason to believe that the income of the assessee has escaped assessment and that he has omitted to disclose the full and true material facts necessary for assessment.
7. In the wake of the above submission, the appeal was admitted on the following substantial question of law:
“A. Whether in the facts and circumstances of the case and in law, the Ld. ITAT has erred in law and in facts in holding that the action initiated against the assessee u/s 147 of the Act was not legally valid ignoring the fact that the Assessing Officer, on the basis of information received from the Investigation Wing, had prima facie reason to believe that the assessee had omitted to disclose fully and truly all material facts and that as a consequence of such non disclosure, income had escaped assessment within the meaning of Section 147 of the Act?”.
8. Apart from the limitation, the other conditions relevant for re-assessment are spelled out in the first proviso to Section 147 of the Act. Section 147 of the Act provides as under:
” 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:
Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year:
Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment.”
A plain reading of the first proviso reveals that for the purposes of initiating re-assessment proceedings, the authorities have to be satisfied that the income chargeable to tax has escaped assessment for the relevant assessment year by reason of:
1) Failure on the part of the assessee to make a return under section 139 of the Act;
2) Failure on the part of the assessee to make a return in response to a notice issued under sub-section (1) of Section 142 or Section 148 of the Act; or
3) To disclose fully and truly all material facts necessary for his assessment of the relevant year.
In this way, the authorities have to be satisfied that the income of the assessee has escaped assessment inter- alia for the reason of non disclosure of true and full material facts necessary for assessment.
Thus the authority competent to initiate re-assessment proceedings must record his satisfaction that the income of the assessee had escaped assessment by reason of non disclosure of full and true material facts necessary for assessment.
We have gone through the order of the Tribunal as well as reasons recorded for forming the opinion that the income had escaped assessment as quoted in the order of the Tribunal.
A perusal of the reasons to believe as supplied by the department reveals that though it has been contended that on the information received from the Investigation Wing, New Delhi, the income of the assessee had escaped assessment but it no where states that the assessee had failed to disclose the true and full particulars necessary for the assessment of income tax for the relevant year.
The Tribunal in the impugned order has returned a categorical finding that the assessing officer was legally required to record satisfaction that the income of the assessee had escaped assessment for non disclosure of true and full material facts necessary for assessment but the reasons to believe recorded reveals that it contains no whisper or any allegation that the assessee had failed to disclose full and true material facts necessary for assessment and that its income had escaped assessment for want of such disclosure.
The aforesaid finding rendered by the Tribunal is a pure finding of fact.
Sri Ghildyal has made an effort to submit that the nature of transaction of Rs. 62 lakhs in the books of accounts of Surendra Kumar Jain, Group of Companies reveal an investment of Rs. 62 lakhs by the assessee and that this was not the accounted money of the assessee which had escaped assessment. The assessee has accepted the entry of Rs. 48 lakhs and not of the balance amount of Rs. 14 lakhs, therefore, it is implicit that he has failed to disclose the true and full particulars necessary for assessment.
Such an argument on behalf of the learned counsel of the appellant is based only upon inference. There being no whisper to that effect specifically in the reasons to believe as disclosed to the assessee to enable it to file any proper and complete response in that regard.
This apart the absence of any allegation in the reasons to believe that the assessee has failed to disclose fully and truly all material facts necessary for assessment which is one of the mandatory conditions for initiating proceedings under Section 147 of the Act, it cannot be said that the department was justified in initiating the re-assessment proceedings. Thus, the Tribunal has not committed any error of law in holding the proceedings to be illegal and in allowing the appeal of the assessee.
In view of the aforesaid facts and circumstances of the case, the question of law as formulated above is answered in favour of the assessee and against the department and it is held that in the absence of the averment that the assessee has failed to disclose fully and truly all material facts necessary for the assessment, the proceedings for re-assessment could not have been initiated under Section 147 of the Act in the extended period of limitation.
The appeal stands dismissed.
[Citation : 404 ITR 574]
