V.C Daga, J.:— This writ petition is directed against the notices issued under section 147 of the Income-tax Act, 1961 (the “Act” for short), seeking to reopen assessments for the assessment years 1982-83 and 1983-84. The basic challenge to the notices impugned in the petition incorporated at annexures A-1 and A-2 are that the notices are without jurisdiction.
2. On being noticed, the respondents appeared and filed their counter affidavit and disclosed the reasons recorded by the Assessing Officer for entertaining his belief that the income has escaped assessment for the assessment years in question, i.e, 1982-83 and 1983-84. According to the reasons recorded, prima facie, deductions made on account of refundable and non-refundable deposits from the sugarcane price payable by the assessee to the farmers ought to have been shown as trading receipts being in the course of its trading operations.
3. According to the Assessing Officer full purchase price was debited to the purchases account and as such they were part of the assessee's trading receipts. These receipts, therefore, ought to have been regarded as revenue receipts and were liable to be included in the assessee's taxable income, as held by the apex court in the case of CIT v. Bazpur Co-operative Sugar Factory Limited, [1988] 172 ITR 321. The Assessing Officer while recording reasons has also recorded that he has reason to believe that by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, income chargeable to tax has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961.
The arguments:
4. Mr. Inamdar, appearing for the petitioners pressed into service the provisions of section 147 which came to be amended on April 1, 1989, and also pointed out to us the provision which was holding the field prior to April 1, 1989, i.e, before amendment to contend that on the touchstone of either of the provisions the impugned notices are without jurisdiction. According to Mr. Inamdar, the assessment order being under sub-section (3) of section 143, the assessments were made after due notice to the assessee and that too after detailed hearing from time to time as such it would not be permissible under section 147 to reopen the assessment after 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 or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
5. Mr. Inamdar, learned counsel for the petitioner submits that the figures of refundable and non-refundable deposits were very much disclosed in the return. The said figures were also disclosed in the balance-sheet filed along with the return. Apart from the balance-sheet a separate statement showing how the figures were calculated and how the adjustments were made were also disclosed in the return, the extract of which are filed along with the petition as exhibit “J”.
6. Mr. Inamdar also submits that having disclosed all the details including the bye-laws which were applicable to the facts of the present case cannot lead to a conclusion that there was any lapse or failure on the part of the petitioners to make a true and full disclosure of the material facts for the assessment of the assessee for that assessment year. He further pointed out that the petitioners are being assessed since the last more than 25 years. In every assessment year such refundable and non-refundable deposits and utilisation thereof are disclosed in the returns, as such by no stretch of imagination it can be said that any material fact was suppressed or not disclosed fully and truly by the assessee. He also pointed out to us from the text of the assessment order, wherein the Assessing Officer has categorically stated that in response to notice under section 143(2) Shri G.S Thorat, C.A, attended the assessment proceedings with Shri Kashid, accountant of the assessee, from time to time and explained the return to him. The Assessing Officer has also specifically stated in para. 7 of the assessment order that after verification of the profit and loss account and balance-sheet and after going through the books of account and other material available, the assessments were completed. In this view of the matter, Mr. Inamdar, appearing for the petitioners, contends that the case of the Revenue cannot be said to be covered under the second part of the proviso to section 147 of the Income-tax Act, 1961, so as to enable the Assessing Officer to invoke the larger period of limitation.
7. In reply to the aforesaid submissions, Mr. Desai, learned senior counsel appearing for the Revenue, pressed into service para. 3 of the reasons recorded by the Assessing Officer for reopening the assessments; wherein he has stated that there was omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment as such income chargeable to tax has escaped assessment within the meaning of section 147 of the Income-tax Act, 1961. He reiterates that fully and truly necessary facts leading to utilisation of the said refundable and non-refundable deposits were not disclosed by the assessee and, therefore, notices directing reopening the assessments cannot be said to be beyond the period of limitation. In his submission the second part of the proviso to section 147 of the Income-tax Act, 1961, shall be applicable in the facts and circumstances of the case. He thus prayed for dismissal of the petition.
Consideration:
8. Having considered the rival submissions, it is not in dispute that while recording the reasons the figures of refundable deposits and non-refundable deposits were taken by the Assessing Officer from the returns filed by the assessee—the petitioner herein. It is thus clear that so far as these figures are concerned, they were disclosed in the returns. Apart from this, the returns were also accompanied by the balance-sheets wherein these figures were disclosed. On the top of it, how the deductions were made out of cane bills for the years 1982-83 and 1983-1984 was also disclosed by the petitioner-assessee in their returns. Under these circumstances all the basic facts with material particulars were disclosed by the petitioner-assessee in their returns for the relevant assessment years and on the top of it all the account books were also made available at the time of assessment. No failure on the part of the petitioner to fully disclose the material facts is established by the Revenue. Under these circumstances, by no stretch of imagination it can be said that the assessee failed to make full and true disclosure of income in its return. It is no doubt true that the judgment of the apex court delivered in the case of Bazpur Co-operative Sugar Factory Limited, [1988] 172 ITR 321 would be said to be information received, but in that event reopening or notice to reopen ought to have been issued within the period of four years from the last date of the assessment year. It is thus not open for the Revenue to exercise their right to reopen the assessment beyond the period of four years.
9. In this view of the matter, we hold that the impugned notices are without jurisdiction and, therefore, the same are liable to be quashed and set aside. Accordingly, the same are quashed and set aside. The petition is allowed. Rule is made absolute in terms of prayer clause (a), with no order as to costs.
Comments