| COURT: | Supreme Court |
| CORAM: | A. K. Patnaik J, Chief Justice, J. S. Khehar J |
| SECTION(S): | 147, 148 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | Reopening |
| COUNSEL: | S. Ganesh |
| DATE: | July 20, 2012 (Date of pronouncement) |
| DATE: | February 19, 2015 (Date of publication) |
| AY: | 2004-05 |
| FILE: | Click here to download the file in pdf format |
| CITATION: | |
| S. 147: Verdict of Bombay High Court in The Indian Hume Pipe Co Ltd vs. ACIT 348 ITR 439 that “full & true disclosure of material facts” means “specific” disclosure of “each” fact nullified | |
The assessee entered into an agreement in July 2001 for sale of development rights for Rs.39 crore. The transfer was in December 2003. The assessee computed LTCG of Rs. 23.19 crore. The assessee invested in eligible bonds between Feb & June 2002 (after the agreement to sell but before the transfer) and claimed exemption u/s 54EC. During the assessment proceedings, the AO asked for a copy of the agreements with the purchaser and other details which the assessee furnished. A copy each of the s. 54EC bonds (which gave the dates of investments) was also furnished. The AO allowed the deduction as claimed. After the expiry of 4 years from the end of the assessment year, the AO issued a notice u/s 148 claiming that as the investments were made prior to the date of transfer (Dec 2003), s. 54EC deduction was not admissible. The assessee filed a Writ Petition to challenge the reopening on the ground that there was no failure on its part to make a full and true disclosure of material facts. The High Court (348 ITR 439) dismissed the Writ on the ground that (i) “Full and true disclosure of material facts” means that the disclosure should not be garbled or hidden in the crevices of the documentary material which has been filed by the assessee with the AO. The assessee must act with candor. A full disclosure is a disclosure of all material facts which does not contain any hidden material or suppression of fact. It must be truthful in all respects and (ii) On facts, though the AO enquired into the matter and the assessee furnished a copy of the s. 54EC bonds (from which the dates of allotment/ investment were evident), there was no (specific) reference by the assessee to the dates on which the amounts were invested in the s. 54EC bonds. It was also held that it was evident that the AO had not applied his mind to the issue of s. 54EC exemption and that the AO was justified in reopening the assessment. On a SLP filed by the assessee to the Supreme Court HELD by the Supreme Court:
Learned counsel for the assessee seeks permission to withdraw this Special Leave Petition in view of the fact that assessee’s appeal, bearing No. IT No.63/2012-2013 is pending before Commissioner of Income-tax (Appeals) against the Order of re-assessment dated 29th May, 2012. We make it clear, that on the validity of Notice under Section 148 of the Income Tax Act, 1961, it would be open to the assessee as well as the Department to put forth their respective contentions before the Appellate Authority and the Appellate Authority will decide this issue also along with other issues without being influenced by the observations made by the High Court in the impugned order.
Frankly the High Court findings is on incomplete disclosure in computation or elsewhere in query answer replies and and not on specific disclosure of each fact. The High Court finds are absolute and CIT (A) cannot overlook them.
OFFHAND
“full & true disclosure of material facts” means “specific” disclosure of “each” fact nullified ” – These are aspects which , however, have lost significance/faded into irrelevance in the changed circumstances; but call for a sharp focused consideration and from a different angle, in the current scenario of electronic fling of tax returns and the new regime and administration now in place, through CPC.. Do so having regard to the facts that, it is strictly a paper less regime, with no supporting (statements or documents – of facts or evidence) permitted to be filed with roi. To be precise, the obligation is shifted and lies entirely with the Revenue to embark on any detailed inquiry or further probe or investigation , that too only in those cases selected for ‘scrutiny’.
Over to ‘experts’ at large in field practice inviting to come out with any possible contra view or perception.
Limitation of 4 years itself has expired before issue of 148 notice ?
1) there is departmental circular that for getting deduction advance money invested will be considered for exemption. no reference of this appears
2) when only 2% cases are selected for scrutiny , then it is hard to accept that the papers filed by assessee has not been properly appreciated by A.O , on the contrary it must be presumed that A.O. has appreciated the documents filed and consciously made the assessment. the responsibility is on department and if they failed, assessee should not be suffered. there must be reciprocatable responsibility on assessee and depatrment.