Assessee-company is engaged in business of publishing newspapers, weeklies and other periodicals in several languages. It filed its return of income, however, did not file any balance sheet along with return of income on ground that books of account were seized by Income-tax Department in course of search and seizure operations and that those books of account were not yet returned. Assessing Officer initiated reassessment proceeding on basis that increase in capital during relevant year remained unexplained. He made additions to income of assessee in reassessment order. Tribunal quashed the reassessments.On appeal High Court reversed the order of the Tribunal. On appeal the Court held that since returns filed by assessee were accompanied by tentative profit and loss account and other details of income like cash flow statements, statements showing source and application of funds reflecting increase in capital and current accounts of partners of assessee which were duly enquired into by Assessing Officer and Assessing Officer had accepted returns submitted by assessee, it could not be said that assessee had not made full and true disclosure of all material facts necessary for its assessment.On appeal the Court held that Tribunal was justified in coming to conclusion that reassessments for assessment years under consideration were not justified and High Court had erred in reversing such findings of Tribunal.Court also held that if the Assessing Officer does not exercise discretion, return of income cannot be construed as a defective return. (AY.1988-89 to 1993-94)
Mangalam Publications v CIT (2024)461 ITR 159 / 297 Taxman 537 /336 CTR 657 (SC) Editorial : CIT v. Mangalam Publications (2010) 323 ITR 6 (Ker)(HC), CIT v. Biju Varghees (2010) 323 ITR 36 (Ker) (HC), reversed.
S. 147 : Reassessment-After the expiry of four years-Full and true disclosure-Change of opinion-Books seized not returned-Unable to draw balance-sheet-Subsequently drawing the balance sheet-Assessment under section 143(3) of the Act-Return not treated as defective-Subsequent subjective analysis of Assessing Officer that income of assessee was much higher than that assessed- Change of opinion- Reassessments are not justified-Once primary facts disclosed by assessee, burden shifts to Assessing Officer-Defective return-Burden on Assessing Officer to intimate defect to Assessee for rectification within time specified- Assessing Officer not exercising discretion- Return cannot be construed as defective burden on Assessing Officer to intimate defect to Assessee for rectification within time specified. [S. 139(9)(f), 145(1) 147, 149(1)(b)(iii)]