CROWN Consultants Pvt. Ltd. vs. CIT (Bombay High Court)

S. 147: Assessee is not entitled to challenge validity of reopening on a ground not stated in objections to AO

The case of the revenue is that the assessee has not reported a loan of Rs.1,19,42,900 received from its directors and their family members in the financial statement filed along with return of income. The Petitioner’s contention before us is that the alleged loan transaction has in fact been reflected in their financial statement as margin money which they had received from its directors and their family members while carrying on its business of share and stock broker. This margin money was reflected in Schedule 8 to the balance sheet. However, we find that this submission is being made before us for the first time as in their objections to the reasons for reopening the Petitioner did not state that the loan amount mentioned in the reasons for reopening is nothing but margin money which stands reflected as margin deposits in Schedule 8 of the balance sheet. The response of the petitioner in its objection was that they are not obliged to disclose in their return of income and financial statement the transaction of its directors and their family members. Just as the revenue cannot improve upon its case for reopening before the Court and but must stand or fall by the reasons recorded for reopening the assessment, the same test would be applicable in case of an assessee i.e. it must stand or fall by its objection to the grounds for reopening of assessment. It is not open to the assessee to urge fresh objections before the Court which the AO had no occasion to deal with, unless of course the notice to reopen is ex-facie without jurisdiction not requiring consideration of any argument such as beyond limitation.