INCOME TAX ACT, 1961

Section 147 Section 143(1)

Reassessment - Full and true disclosure - Notice under section 148 issued after expiry of four years -

Writ applicant was a limited liability partnership firm. The writ applicant filed its return of income for the assessment year 2011-12 on 13-2-2012 declaring total income at Rs. 23,936 and the same was processed under section 143(1). The question for consideration was whether the revenue was justified in reopening the assessment beyond a period of four years under section 147. The demand to reopen the assessment was substantially on the ground that, the assessee-company had invested Rs. 5,50,000 in Gujarat Natural Resources Ltd., towards share application money for whifh the assessee-company failed to provide the details of source of investment for the year under consideration. After receiving the impugned Notice, dt. 28-3-2018, the assessee company vide Letter, dt. 9-4-2018, requested to treat the original return of income as its return of income in response to the notice and also filed a copy of the audited annual accounts including the audited balance-sheet, which was on record. Held: It was the omission on the part of the assessee company not to point out this specific particular items of the balance-sheet to show that, the surplus funds was being utilized for the investment. Therefore, failure to highlight specifically the relevant items of the account books or the particular portion of the balance-sheet to the revenue could be said to be an omission on the part of the assessee to disclose fully and truly all the material facts necessary for its assessment. Thus, the assessee had failed to disclose the primary facts with regard to the sources of investment. It is pertinent to note that, the Explanation 1 to section 147 clearly says that the production before the AO of account books or other evidence could with due diligence have been discovered by the AO will not amount to disclosure. In absence of primary facts with regard to the sources of investment, the AO had rightly recorded that the assessee has not furnished the details with regard to the sources of investment and therefore, there is a cause or justification for him to believe that, the unexplained investment chargeable to tax has escaped assessment. It cannot be said that, there was no tangible material before the AO to re-open the assessment and that he had proceeded mechanically based only on the information received from the Investigation DDIT (Inv.) I, Ahmedabad and therefore, the impugned notice was without jurisdiction and contrary to section 147. For the foregoing reasons, no case was made out and accordingly, present writ application was dismissed.

Followed:Calcutta Discount Company Ltd. v. ITO, Companies District I, Calcutta & Anr. AIR 1961 SC 372 : 1961 TaxPub(DT) 130 (SC).

REFERRED : Raymolnd Woolen Mills Ltd. v. ITO (1999) 36 ITR 34 (SC) : 1999 Taxub(DT0 348 (SC).

FAVOUR : Agaimst the assessee.

A.Y. : 2011-12

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