Madras High Court
M/S.Thirveni Earthmovers Pvt. ... vs The Assistant Commissioner Of on 1 September, 2021
W.A.Nos.1911, 1922 & 1987 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 01.09.2021
CORAM
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Mr.Justice SATHI KUMAR SUKUMARA KURUP
Judgment Reserved On Judgment Pronounced On
17.08.2021 01.09.2021
W.A.Nos.1911, 1922 and 1987 of 2021
and C.M.P.Nos.12403, 12537, 12469, 12472,
12811 and 12817 of 2021
W.A.No.1911 of 2021
M/s.Thirveni Earthmovers Pvt. Ltd.,
#22/110, Greenways Raod, Fairlands,
Salem – 636 016.
Represented by its Executive Director
and Authorised Signatory
Sri.B.Karthikeyan .. Appellant
-vs-
1.The Assistant Commissioner of
Income Tax, Central Circle,
#3, Gandhi Road, Salem – 636 007.
2.The Deputy Commissioner of
Income Tax, Central Circle,
#3, Gandhi Road, Salem – 636 007.
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3.The Deputy Commissioner of
Income Tax, Circle I,
#3, Gandhi Road, Salem – 636 007. .. Respondents
Appeal under Clause 15 of Letters Patent against the order dated
26.04.2021 made in W.P.No.10846 of 2016.
W.A.Nos.1922 and 1987 of 2021
M/s.Thirveni Earthmovers Pvt. Ltd.,
#22/110, Greenways Raod, Fairlands,
Salem – 636 016.
Represented by its Executive Director
and Authorised Signatory
Sri.B.Karthikeyan .. Appellant
-vs-
The Assistant Commissioner of
Income Tax, Central Circle,
#3, Gandhi Road, Salem – 636 007. .. Respondent
Appeals under Clause 15 of Letters Patent against the common order dated
26.04.2021 made in W.P.Nos.38185 and 38186 of 2016 respectively.
For Appellant : Mr.R.V.Easwar,
(In all Appeals) Senior Counsel
for Mr.Suhrith Parthasarathy
For Respondents : Mr.A.P.Srinivas
(In all Appeals) Senior Standing Counsel
******
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COMMON JUDGMENT
T.S.Sivagnanam, J.
The writ petitioner in W.P.Nos.10846/2016, 38185/2016 and
38186/2016 is the appellant before us.
2.The prayer sought for in W.P.No.10846 of 2016 is for issuance of
writ of Certiorarified Mandamus to quash the order passed by the first
respondent dated 23.02.2016, by which the objections raised by the
appellant, objecting to the reopening of the assessment under Section 147 of
the Income Tax Act, 1961 ['the Act' for brevity] was disposed of and for a
consequential direction to forbear the respondent from in any manner re-
assessing the appellant's income for the assessment year 2008-09 under
Section 147 of the Act.
3.Writ Appeal Nos.1922/2021 and 1987/2021 are directed against the
common order dated 26.04.2021 in W.P.Nos.38185/2016 and 38186/2016.
The common prayer in both the writ petitions is to quash the order passed
by the first respondent dated 13.10.2016 by which the objections raised by
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the appellant against the reopening of the assessment under Section 147 of
the Act for the assessment year 2009-2010 and 2010-2011 were disposed of
by the respondent. The writ petitions have been dismissed by two separate
orders both dated 26.04.2021.
4.Since the petitioner in all the three writ petitions is one and the
same, namely, M/s.Thiriveni Earthmovers Private Limited, the facts as
stated in W.P.No.10846/2016 are taken for consideration. In this judgment,
the appellant shall be referred to as the assessee and the respondent as the
revenue.
5.The assessee is a Company registered under the Companies Act,
engaged in the business of iron ore mining services, transportation and
handling of iron ore and limestone, quarrying of blue metal boulders and
sale of blue metals. The assessee filed its return of income for the
assessment year under consideration AY 2008-2009 on 30.09.2008
declaring a total income of Rs.117,55,95,560/-, the return was processed
and the assessee was issued an intimation under Section 143(1) of the Act
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on 23.09.2009. Subsequently the case was selected for scrutiny and notice
under Section 143(2) of the Act dated 23.09.2009 was issued. The income
tax was computed at higher rate resulting in a total tax demand of
Rs.38,82,78,150/- after credit for tax deducted at source given for
Rs.8,51,06,508/- as against the TDS of Rs.9,04,19,747/- claimed by the
assessee. The assessee filed an application under Section 154 of the Act on
05.04.2010 to rectify the assessment. The rectification order was passed on
28.12.2010 and a revised demand for Rs.38,05,14,782/- was issued.
Subsequently, assessment was completed under Section 143(3) of the Act
by order dated 31.12.2010. In the said order of assessment, TDS credit was
given to the tune of Rs.8,51,06,508/- as against the TDS credit claimd by
the assessee to the tune of Rs.9,04,19,747/-. Therefore, the assessee filed an
application under Section 154 of the Act on 20.07.2011 on the ground that
once TDS amount of Rs.55,65,195/- had not been given credit for was taken
into account, the levy of interest under Section 234B of the Act would be
reduced and there would be no further income tax payable by the assessee.
6.While the application under Section 154 of the Act was pending,
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the Assessing Officer, the third respondent issued notice dated 20.02.2015
under Section 148 of the Act to reopen the assessment for the assessment
year 2008-2009 on the ground that income had escaped assessment. The
said notice was issued after four years after the end of the relevant
assessment year, namely, 2008-2009. The assessee by letter dated
21.04.2015 requested the third respondent to furnish the reasons for
reopening. On 12.10.2015, the second respondent to whose file the case
was transferred furnished the reasons for reopening. The second respondent
stated that it had been seen from the Form 26As downloaded that the
petitioner was in receipt of Rs.419,47,44,777/- as opposed to the total
amount credited to the P&L account of Rs.387,30,50,376/- and that
therefore the Deputy Commissioner of Income Tax had a reason to believe
that income of Rs.41,59,51,722/- had escaped assessment within the
meaning of Section 147 of the Act, that the assessee had claimed less TDS
credit in respect of other deductors corresponding to the TDS of
Rs.36,46,935/- claimed by the assessee in its rectification application dated
20.07.2011 and the assessee has suppressed income of Rs.2,82,22,870/- on
the basis that the assessee had not claimed TDS credit of Rs.6,39,531/-
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corresponding to the aforesaid income in the return of income.
7.The assessee would contend that the second respondent failed to
show any evidence of any failure on the part of the assessee to fully and
truly disclose all materials. The assessee filed their objections to the
reopening on 22.11.2015, among other things, submitting that the reopening
was completely untenable as complete information was available with the
Assessing Officer even at the time of scrutiny under Section 143(3) of the
Act and the reopening was contrary to law. The assessee contended that
they had made full and true disclosure during the scrutiny assessment, the
re-assessment cannot be initiated after four years from the end of the
relevant assessment year as per the first Proviso to Section 147 of the Act.
It is further contended that there is no tangible material to come to the
conclusion that the income has escaped assessment, reopening is based on
mere change of opening, reopening is based on assumptions and surmises,
on merits the notice under Section 148 is illegal and the notice under
Section 148 was issued with an intention of initiating a rowing and fishing
enquiry. The assessee pointed out that the allegation that they had not
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disclosed the entire contractual receipts as shown in Form 26AS is incorrect
as the said Form is essentially a consolidated statement, i.e. with the Income
Tax Department and comprises of details of tax paid and deposited in the
Department including any TDS deposited on behalf of the assessee. The
said objections were rejected and an order to the said effect was passed on
23.02.2016 which was impugned in the writ petition.
8.The facts in the other two writ petitions which order is subject
matter of W.A.Nos.1922 and 1987 of 2021 are more or less similar except
that they are for the assessment years 2009-2010 and 2010-2011 and in
those writ petitions, the challenge was to the rejection of the objections filed
by the assessee for reopening of the assessment.
9.Since the appellant is before us questioning the reopening of the
assessment on legal grounds, it may not be necessary to have a threadbare
analysis of the facts and figures and to the extent required, we shall refer to
the facts and figures as we proceed to decide the cases on merits.
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10.The learned Single Bench opined that if there are additional
materials available which satisfies the requirements of Section 147 of the
Act, then it is sufficient for the Assessing Officer to have reason to believe
for the purposes of reopening of assessment. It was further observed that
from Form 26AS, it is seen that the assessee was in receipt of income of
Rs.419,47,44,777/-, whereas the total amount credited to the Profit and Loss
account is Rs.387,30,50,376/- and in view of the large discrepancy and
mismatch, the Assessing Officer had reason to believe that income of
Rs.41,59,51,722/- has escaped assessment within the meaning of Section
147 of the Act due to the failure on the part of the assessee to disclose all
and true material facts necessary for the assessment. Further, the Court
observed that the rectification application dated 20.07.2011 submitted by
the assessee was considered by the Assessing Officer and the information
was verified and it was found that there was huge mismatch in the receipts
appearing in Form 26AS vis-a-vis receipts credited in P&L account.
Therefore, the Assessing Officer had reason to believe that the income of
the assessee has escaped assessment and decided to reopen the assessment.
Further, the learned Writ Court took note of the fact that the Assessing
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Officer relied on Justice MB Shah Commission report which was
constituted by the Governments of India to enquire into the cases of illegal
mining in the State of Odisha. The Court pointed out that the assessee was
a raising Contractor employed by one KJS Ahulwalia, who was a lessee
whose name finds place in the Commission's report. Noting the materials
available on record, the Court opined that there are sufficient reasons to
believe that there is escapement of income and the sufficiency of reasons
cannot be gone into by the Court in a writ proceedings under Article 226 of
the Constitution of India and those are all matters to be adjudicated before
the competent authority and therefore, on the grounds raised in the writ
petition, there is no reason to interfere with the re-assessment proceedings.
11.In so far as W.P.Nos.38185/2016 and 38186/2016, the assessee
contended that the allegation that one M/s.Indrani Patnaik has illegally
removed 3,04,568.175 Mts of iron ore with the assistance of the assessee is
only a surmise and not based on any objective reasons, there is no embargo
whatsoever between the alleged dispatch by the mine owner and the
assessee being a raising contractor does not have power to dispatch the
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stock which belongs to the mine owner and they do not maintain the books
of accounts pertaining to the production and dispatch of iron ore. The
assessee contended that the Mines Tribunal had granted the relief to the
mine owner and the entire proceedings were quashed on 16.01.2012 and
prior to issuance of notice under Section 148 of the Act. The said order was
put to challenge by the State of Odisha in W.P.No.10219 of 2012 before the
High Court of Odisha which was dismissed on 08.08.2016. Therefore, the
assessee contended that the entire issue which is subject matter of reopening
is non-est in law and there cannot be any reason to believe that income has
escaped assessment for the assessment years under consideration, namely,
2009-2010 and 2010-2011.
12.The revenue resisted the prayer sought for in the writ petition
stating that the Department came to be in possession of new issues
emanating from Justice MB Shah Commission report on illegal mining in
the State of Odisha and on examination of the report, it reveal that based
upon vigilance enquiry by the State Government, the Commission noted that
there was huge shortage of stock valued at Rs.182,74,09,050/- and it gave a
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finding that the lessee M/s.Indirani Patnaik with the help of the assessee, the
raising contractor had clandestinely disposed of the material without any
records for which royalty and sales tax was not paid. It was further
contended by the revenue that the vigilance inspection was conducted on
24.09.2009 and the period for which production and dispatches analysed
and shortage of stock arrived was from May 2008 to September 2009
relevant to the assessment years 2009-2010 and 2010-2011. Further, as per
the work order dated 24.02.2008 given by M/s.Indrani Patnaik to the
assessee, they were entitled for 35.8% of the net value as its share of income
on the value of the ore dispatched which comes to Rs.65.2 Crores for the
period covered under the report. Thus, it was contended that on receipt of
new material based on the Commission's report, the Assessing Officer had
reason to believe that there was escapement of income and thus initiated
proceedings under Section 147 of the Act.
13.Further, it was contended that there was failure on the part of the
assessee to disclose fully and truly all materials as envisaged in Section 147
of the Act and the assessment was validly reopened. There are fresh
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tangible material and there are enough reasons which have been set out for
reopening the assessment as contained in the orders which were impugned
in the writ petitions. With regard to the writ petition filed by the State of
Odisha challenging the order of the Mines Tribunal, the Court pointed out
that what was challenged in the writ petition is an order dated 16.01.2012
passed by the revisional authority under Section 30 of the Mines and
Minerals [Development and Regulation] Act, 1957 and admittedly the
assessee was not a party to the proceedings and the writ proceedings were
conducted with reference to the issues in an independent manner and the
materials relied on by the revenue for reopening the assessment has not been
adjudicated by the High Court in the said writ petition. Further, the Court
pointed out that even if there were certain observations made in the order
passed by the High Court of Odisha which would enure in favour of the
assessee, the assess has to place all facts and circumstances before the
Assessing Officer and participate in the re-assessment proceedings. The
discrepancy with regard to the TDS was also pointed out and the Court
came to the conclusion that when materials are available on record, the
Assessing Officer should allowed to proceed with the reopening
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proceedings and accordingly held that there are no grounds to interfere with
the reopening of the assessment.
14.Mr.R.V.Easwar, learned senior counsel assisted by Mr.Suhrith
Parthasarathy, learned counsel for the appellant submitted that the
reopening proceedings do not satisfy the two conditions under Section 147
of the Act, namely, (a) that the Assessing Officer had reason to believe that
income has escaped assessment and (b) such escapement was due to the
omission or failure on the part of the assessee to make a return or to
disclose fully and truly all material facts necessary for the assessment for
the relevant year. The facts with regard to the scrutiny assessment which
we have had set out in the preceding paragraphs were elaborated upon by
the learned senior counsel. It is further submitted that Section 147 of the
Act is triggered only if the Assessing Officer had “reason to believe” that
income chargeable to tax had escaped assessment and in the absence of the
same, the entire re-assessment proceedings will be void. Referring to the
Constitution Bench judgment of the Hon'ble Supreme Court in the case of
Muthiah vs. CIT [1956 29 ITR 390], it is submitted that the expression
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'reason to believe' is distinguishable from the expression 'reason to suspect'
and precisely the Assessing Officer has done so and therefore, the reopening
is illegal.
15.With regard to the TDS, it was submitted that the reopening is
sought to be done on the basis of Form 26AS and the report of the Justice
MB Shah Commission. The Form 26AS was available with the Assessing
Officer during the original assessment proceedings and it was based on the
same, the Assessing Officer granted TDS credit to a certain extent as against
the TDS credit claimed by the assessee. Therefore, when the Assessing
Officer has acted on the basis of Form 26AS available during the
assessment proceedings, the same Form 26AS cannot form the basis for
reopening under Section 147 of the Act. In so far as Justice MB Shah
Commission's report is concerned, the assessee is neither a party nor
referred to in the said report and nothing has been independently brought
out to link the assessee to the alleged excess production by KJS Ahulwalia.
It is submitted that though the assessee has given a detailed explanation, the
same was brushed aside by the Assessing Officer while rejecting the
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objections to the reopening proceedings. Placing reliance on the decision of
the High Court of Bombay in Sesa Sterlite Limited and others vs. Assistant
Commissioner of Income Tax and others [(2019) 417 ITR 334 (Bom)], it
is submitted that the opinion expressed by Justice MB Shah Commission
report cannot qualify as information so as to sustain the belief on the part of
the Assessing Officer of income having escaped assessment. Therefore, the
reopening of the assessment was bad in law.
16.Reliance was placed on the decision of the High Court of Delhi in
Commissioner of Income Tax vs. Kelvinator India Ltd.. [ 256 ITR 1]
which was confirmed by the Hon'ble Supreme Court. Further, it is
submitted that the assessee's books were available with the Assessing
Officer at the time of scrutiny assessment and any failure on the part of the
Assessing Officer to make due enquiries during the scrutiny does not mean
there is a failure on the part of the assessee to make full and true disclosure.
To support such proposition, reliance was placed on the decision of the
Hon'ble Supreme Court in Gemini Leather Stores vs. ITO [(1975) 100 ITR
1(SC)]. Reliance was also placed on the decision of the Constitutional
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Bench of the Hon'ble Supreme Court in the case of Calcutta Discounts
Company Ltd. vs. ITO [(1961) 41 ITR 191 (SC)]. Similar are the
arguments in the other two writ appeals.
17.The learned senior counsel submitted that when the writ petition
was pending before the learned Single Bench, the Court noted that the
assessee had filed application under Section 154 of the Act as early as on
20.07.2011 and that the disposal of the rectification application will have
material ramification in the case in the light of the objections on merits
raised by the assessee and direction was issued to the assessee to appear
before the Assessing Officer and the Assessing Officer was directed to
dispose of the rectification application after hearing the assessee prior to the
next date of hearing of the writ petition by order dated 21.10.2019.
Subsequently when the case was heard on 19.11.2019, the revenue produced
an order under Section 154 of the Act dated 18.01.2013 which in the
opinion of the Court did not taken into account the objections raised as it is
a computer generated order. Therefore, the Court clarified that the
rectification application dated 20.07.2011 be heard and a speaking order be
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passed by the Assessing Officer in the light of the objections raised on the
merits by the assessee in the objections dated 23.11.2015 and the assessee
was directed to appear before the Assessing Officer.
18.Subsequently, an order was passed and when the writ petitions
were heard on 22.01.2020, the Court noted that two orders have been passed
by the Assessing Officer dated 06.12.2019 and 16.01.2020 and it appears
that the orders passed by the Court on 21.10.2019 as clarified on 19.11.2019
had not been complied with by the Assessing Officer whereas the revenue
took a stand that the directions have been complied with. The Court
therefore observed that since there is some area of doubt as to whether the
order has been complied with or not, it gave liberty to obtain suitable
clarification from the very same Hon'ble Court which passed the order dated
21.10.2019 and 19.11.2019 and the matter was adjourned. Subsequently
another order was passed by the Assessing Officer on 11.02.2020. The
interim directions issued in the writ petitions were referred to by the learned
senior counsel with a view to impress upon the Court that when the
rectification application was pending, there is no occasion for the Assessing
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Officer to reopen the assessment, more particularly, for the reasons which
have been stated to be the basis for the reopening of the assessment. In fact
this submission is without prejudice to the other contentions of the assessee
that the entire reopening of the assessment was bad in law.
19.The learned senior counsel referred to the return of income filed by
the assessee for the assessment year 2008-2009 in particular Column No.15
which relates to taxes paid and has drawn our attention to paragraph (b) of
Column No.15 which deals with TDS and referred to Schedule TDS 2
which provides for the entire details which were appended to the return of
income filed by the assessee. These aspects were referred to, to substantiate
the contention that all materials were fully and truly disclosed by the
assessee at the time of filing the return and the scrutiny assessment was
done on the same material, reopening could not have been made. The
learned senior counsel referred to the rectification application dated
05.04.2010 and the order rectifying assessment dated 28.12.2010 and
thereafter the second rectification application dated 20.07.2011 which was
not disposed of and which was noted by the learned Single Bench when the
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writ petition was pending and interim directions were issued on 21.10.2019.
Next, the learned senior counsel has extensively referred to the reasons for
reopening as communicated by the assessee vide communication dated
12.10.2015. It is submitted that a reading of the reasons for reopening will
clearly show that it is based upon the details in Form 26AS which was
available with the Assessing Officer at the time of scrutiny assessment and
the same could not have been the reason for reopening. With the above
submission, the learned senior counsel sought for setting aside the
reopening of the assessment for all the three assessment years.
20.Mr.A.P.Srinivas, learned senior standing counsel submitted that
mere production of books of accounts by the assessee cannot tantamount to
full and true disclosure as per the explanation to Proviso to Section 147 of
the Act. With regard to the TDS credit, the same is given only as per the
credit available in the Online Tax Accounting System [OLTAS] which
reflects the correct TDS available to the assessee at the given point of time.
It is submitted that the provisions of Section 147 of the Act prior to the
amendment and post-amendment are different and the conditions that were
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present earlier are no longer required to be fulfilled post amendment of the
said provision. Further, Explanation 1 to third Proviso is abundantly clear
to indicate that mere production before the Assessing Officer, the Accounts
books or other evidence from which material evidence could with due
diligence have been discovered by the Assessing Officer will not
necessarily amount to disclosure. Further, it is submitted that the assessee
has spelt out as to what opinion was formed by the Assessing Officer
initially and how the reasons furnished shown change of opinion. The
records show that no opinion was formed by the Assessing Officer during
the original assessment proceedings on the issues which have been
mentioned in the reasons recorded in the reopening of assessment. In other
words, it is submitted no opinion had been formed by the Assessing Officer
during the course of original assessment on the issues under consideration.
It is further submitted that the information in Form 26AS which is a
statement of TDS deducted and deposited by itself was not used as a reason
for reopening of the assessment. Rather the information was matched with
the details provided by the assessee in his return of income and
accompanying statements/documents and on observing that certain receipts
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of income were not accounted by the assessee, the Assessing Officer
formed the belief that income chargeable to tax had escaped assessment and
therefore, has reopened the assessment by issuing notice under Section 148
of the Act. Further, it is submitted that this observation was made from the
rectification application filed by the assessee on 20.07.2011 claiming
additional credit for tax deduction, albeit corresponding income receipts had
not appeared in the P&L account filed by the assessee along with the return
of income.
21.Elaborating on the issue regarding the TDS, it is submitted that
there is a huge difference between the data reflected in Form 26AS and the
assessee's statement. Form 26AS is constantly updated from time to time
and the figures may increase or decrease based on the TDS statement filed
by the deductors. It is further submitted that though the amount of TDS
credited in the assessee's account may vary according to the e-TDS
statement filed by the deductor, the amount of gross receipts
received/receivable by the assessee during the financial year is available
with the assessee as it follows Mercantile System of Accounting. It is
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submitted that the assessee has credited in his P&L Account an income of
Rs.377,87,93,055/- only out of the total receipts of Rs.419, 47, 44,777/- and
there is a huge difference in the assessee's submission before the Assessing
Officer during the course of assessment and the figures which were
reflected in Form 26AS. Therefore, it is submitted that the assessee did not
submit the correct figures before the Assessing Officer and the facts came to
the knowledge when the assessee filed the rectification application and
Form 26AS was downloaded by the Assessing Officer. Thus, it is clear that
there is failure on the part of the assessee to disclose fully and truly all
materials before the Assessing Officer and the reopening of the assessment
is valid.
22.The learned counsel had referred to the relevant details appearing
in Form 26AS which has been extracted in ground (f) of the counter
affidavit to point out that there is a huge mismatch in receipts appearing in
Form 26AS vis-a-vis the receipts credited in the P&L Account. Countering
the submissions of the learned senior counsel that Form 26AS was very
much available before the Assessing Officer and based on which TDS
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credit was given during the course of assessment, it is submitted that the
issue for reopening of the assessment is not the TDS credit but the gross
receipts received by the assessee and the assessee had not disclosed all the
receipts/receivables in his financial statements which they are bound to do,
more so because they are following Mercantile System of Accounting,
wherein all receipts/receivables are recorded in the financial year itself.
Therefore, there should not be any deviation in reporting of the gross
receipts as this figure is very much available with the assessee and if the
assessee had disclosed fully and truly all material facts before the Assessing
Officer, there would not be any deviation between its financial statement
and Form 26AS. Further, it is submitted that as per Justice MB Shah
Commission report, a tabulated statement has been given which lists out
146 lessees who were involved in illegal and excess production of iron ore
during the period 2000-2001 to 2009-2010 and KJS Ahulwalia and other
persons are lesseses who employed the assessee as raising contractor. The
assessee is doing extraction work for the lessee, the contract charges
correspond to the value of the excess production was believed to have been
suppressed and hence, the Assessing Officer has rightly reopened the
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assessment. The information in Form 26AS about the receipts of income
found out from the rectification application filed subsequent to the
assessment proceedings led to the discovery of non-disclosure of receipts in
the P&L Account which is a tangible material and hence, exercise of power
under Section 147 of the Act is valid. On the above grounds, the learned
senior standing counsel sought to sustain the order passed by the learned
Writ Court.
23.We have elaborately heard the learned senior counsel appearing
for the appellant and the learned senior standing counsel appearing for the
respondents.
24.We have set out the relevant facts to demonstrate as to how the
proceedings have reached the present stage where the objections raised by
the assessee to the reopening of assessment have been rejected. The sum
and substance of the contentions raised by the assessee is that the TDS issue
could not have been the basis for reopening the assessment as Form 26AS
was very much available at the time of scrutiny assessment and based upon
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the said Form, TDS credit was granted to the assessee and based on the very
same material, the Assessing Officer is not justified in reopening the
proceedings. Secondly it is contended that there is no fresh tangible
material available with the Assessing Officer to reopen the assessment and
all that the Assessing Officer falls back on is the Form 26AS which cannot
be done. Therefore, the submission is that the re-assessment proposed is
based on change of opinion and it is not based upon the facts but merely on
assumptions and presumptions. So far as the effect of Justice MB Shah
Commission report is concerned, the assessee would state that they are not
party to the said proceedings and in any event, the revisional authority has
granted full relief to the lessees and such order passed has been affirmed as
the writ petition filed by the State of Odisha has been dismissed by the High
Court of Odisha.
25.After carefully going through the material facts, we find that the
case as projected by the assessee does not merit acceptance. We support
this conclusion with the following reasons. Admittedly, the TDS issue
cropped up only after the assessee filed a rectification application under
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Section 154 of the Act after the assessment was completed. Therefore, it
needs to be examined as to whether the details as contained in Form 26AS
as filed by the assessee along with the return of income was the sole reason
for reopening the assessment. When we look into the facts we find that
after the rectification application was filed, the details in Form 26AS was
downloaded by the Assessing Officer and while examining the same, they
found that there was mismatch of TDS and also the receipts which form the
income of the assessee. This undoubtedly is a tangible material to form an
opinion that the income has escaped assessment. It is seen that from Form
26AS, the Assessing Officer was able to ascertain that the assessee was in
receipt of Rs.419,47,44777 whereas total amount credited in P&L account is
Rs.387,30,50,376. The break-up details were noted and it was pointed out
that the income mentioned from sale of boulders, transportation receipts,
trailer hire receipts and profit on sale of assets would not form part of
receipts appearing in Form 26AS as tax deduction at source is not required
on such receipts. Further the assessee has credited in the P&L account an
income of Rs.377,87,93,055/- only out of the total receipts of
Rs.419,47,44,777/- as appearing in Form 26AS. Thus the Assessing Officer
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while recording reasons for reopening stated that the assessee has
suppressed incoe of Rs.41,59,51,722/- by not crediting entire receipts as
appearing in Form 26AS. Further, the Assessing Officer recorded that even
if the entire receipts of Rs.387,30,50,376/- credited in the P&L Account has
suffered TDS which is much lesser than the amount appearing in Form
26AS which is Rs.419,47,44,777/-. The assessee filed rectification
application dated 20.07.2011 wherein they stated that they have received
contract payment of Rs.12,70,89,680/- from Tata Steel Ltd. and claimed
corresponding TDS of Rs.28,79,852/-. The Assessing Officer pointed out
that as per Form 26AS the assessee is in receipt of contract charges of
Rs.1,66,78,156/- only and corresponding TDS of Rs.3,77,927/-.
26.The Assessing Officer has tabulated the parties from whom they
are stated to have received contract charges, whose names do not find place
in Form 26AS. Such tabulated statement is as follows:
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Sl.No. Deductor As per assessee's submission As per 26AS
vide rectification application
dated 20.07.2011
Amount Amount of Amount Amount
Credited TDS Credited of TDS
1. Tata Steel Limited 127089680 2879852 16678156 377927
2. Topworth Steel Private 18047097 408948 Nil
3. Rajesh Jaiswal & Co. 4472001 101336 Nil
4. Rashmi Cement Limited 16852646 381391 Nil
5. Shree Virangana Steels 5818292 131843 Nil
6. Sunflag Iron & Steel Ltd. 5102596 105113 Nil
7. Tata Sponge Iron Ltd. 722341 16369 Nil
Total 17,81,04,653 40,24,852
27.On receiving such details, the Assessing Officer pointed out that
there is a huge mismatch in receipts appearing in Form 26AS vis-a-vis
receipts credited in P&L account. The receipts and TDS from the above
mentioned parties were not appearing in Form 26AS whereas it was claimed
by the assessee in the rectification application dated 20.07.2011. The
Assessing Officer has recorded that the assessee has claimed less TDS in
respect of some other deductors and thereby suppressed corresponding
receipts to that extent and during the assessment proceedings, the assessee
did not produce the accurate particulars of income and TDS claimed and it
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is only after the rectification application was filed the issue cropped up.
Further the Assessing Officer has noted from the rectification application
that the assessee has claimed TDS of Rs.6,39,531/- which was neither
claimed in the return under Section 143(1) nor during the assessment
proceedings. The details were tabulated in the following manner:
Deductors Name Deductors TAN Nature of Amount Tax
Payment Credited/Paid Deducted
RAJENDRAN CMBRO4973D Contract 11541112 261522
VADUGAPATTI Payment
CHENDIL-S S Logistics
Tata Steel Ltd. RCHTO0148B Contract 16681758 378009
Payment
Total Rs.2,82,22,870 Rs.6,39,531
28.Thus, the Assessing Officer recorded that the assessee never
disclosed and claimed the above TDS during the assessment proceedings
though he had opportunity to do so and therefore, deliberately concealed the
particulars during assessment proceedings. Therefore, we are fully satisfied
that the issue which is now subject matter of the reopening was never
discussed during the original assessment proceedings and no opinion was
formed by the Assessing Officer during the original assessment proceedings
on this issue. In fact, the issue cropped up only after the assessee filed the
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W.A.Nos.1911, 1922 & 1987 of 2021
rectification application. Therefore, the contention of the assessee that the
reopening is a case of change of opinion and based on surmises and
conjunctures has to be outrightly rejected.
29.Next we consider as to what would be the effect of the report of
Justice MB Shah Commission. The assessee seeks to wriggle out from the
rigor of the said report by contending that they are only a raising contractor,
they are not party to the proceedings which were subject matter of reference
to the Commission. Admittedly, the lessee who had awarded the raising
contract to the assessee was a party to the subject matter which was referred
to the Enquiry Commission. The matter concerned illegal mining in the
State of Odisha and there were 146 lessees who were involved in the illegal
mining and excess production of iron ore during 2000-2001 to 2009-2010.
Though the assesse might not have been party to the subject which was
probed by the Commission, the admitted fact is that they were a raising
contractor for the lessee whose mining activities were subject matter of
scrutiny by the enquiry commission. The revisional authority under the
Mines and Minerals [Development and Regulation] Act, 1957 appears to
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have passed an order in favour of the lessees and the State of Odisha was
unsuccessful in the challenge to the said order of the revisional authority as
the writ petition filed by the State was dismissed.
30.The writ petition filed by the State of Odisha was dismissed on the
technical ground. In any event, it is too early for this Court to rule on the
effect on the judgment of State of Odisha qua the assessee and undoubtedly
this is a matter which is required to be adjudicated on facts. The specific
stand of the revenue is that the assessee who was a raising contractor
engaged for extraction of iron ore by the lessee, the contract charges
corresponding to the value of the excess production has been believed to
have been suppressed. This aspect has to be gone into in the re-assessment
proceedings. Therefore, we are of the clear view that the assessee has not
made full and true disclosure of all material facts during the original
assessment, the reopening of the assessment was not based on the change of
opinion but the facts which emanated after the rectification application was
filed by the assessee and it is incorrect on the part of the assessee to state
that the reopening of the original assessment was on assumptions and
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W.A.Nos.1911, 1922 & 1987 of 2021
presumptions. The reliance placed on the interim directions which were
issued during the pendency of the writ petitions is of little avail as the the
main writ petitions have been dismissed which is subject matter of
challenge before us in these appeals. Therefore, the assessee cannot be
heard to say that they can advance their case based on certain interim
directions issued in the writ petitions when the cases were pending before
the learned Single Bench. Thus, for all the above reasons, we hold that the
reopening proceedings have been validly done and the assessee should co-
operate in the re-assessment to be done by the Assessing Officer.
31.In the result, we find no ground to interfere with the reopening of
the assessment in all these cases. Accordingly, the writ appeals fail and are
dismissed. No costs. Consequently, connected miscellaneous petition is
closed.
(T.S.S., J.) (S.S.K., J.)
01.09.2021
Index: Yes/ No
Speaking Order : Yes/ No
cse
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W.A.Nos.1911, 1922 & 1987 of 2021
To
1.The Assistant Commissioner of
Income Tax, Central Circle,
#3, Gandhi Road, Salem – 636 007.
2.The Deputy Commissioner of
Income Tax, Central Circle,
#3, Gandhi Road, Salem – 636 007.
3.The Deputy Commissioner of
Income Tax, Circle I,
#3, Gandhi Road, Salem – 636 007.
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W.A.Nos.1911, 1922 & 1987 of 2021
T.S.Sivagnanam, J.
and
Sathi Kumar Sukumara Kurup, J.
cse
Pre-delivery Common Judgment made in
W.A.Nos.1911, 1922 and 1987 of 2021
01.09.2021
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