Case: M/S. Crown Consultants Private Limited Vs. Commissioner of Income Tax-4 &amp; Another

disclosure as it evident from the following:-(i) The response of Not applicable in column 24(a) and (b) of Form 3CD was correct disclosure. The column 24(a) and (b) of Form 3CD in the context of taking of loans/deposits or repayment of loan/deposits exceeding the specified limits provided under Section 269 SS and 269T of the Act for being visted with penalty. The columns were not applicable to the petitioners case;(ii) The margin money received by it from its Directors and their family members have in fact been disclosed in its financial statement as reflected in Schedule 8 appended to the balance sheet for the year ending 31 March 2007; and (iii) So far as the loan of Rs.1,19,42,900/- received by the petitioners from its directors and their family members is concerned it is submitted that the same was not a loan but the amounts received by way of margin money. These amounts as margin money were reflected in Schedule 8 appended to the balance sheet of the year ending 31 March 2007.In view of the above, it was submitted that the reasons for reopening do not disclose a reasonable belief that income chargeable to tax has escaped assessment. In any event, there has been no failure on the part of the petitioner to make a full and true disclosure for the purpose of assessment.5) As against the above, Shri. Suresh Kumar, learned Counsel for the revenue seeks to sustain the notice dated 28 September 2012 issued under Section 148 by placing reliance on one of the reasons for reopening the assessment i.e. on verification of the accounts the petitioners directors and their family members it was revealed that an amount of Rs.1,19,42,900/- was received by the petitioner and the same has not been disclosed by the petitioner in its financial statement. Thus, there has been a failure on the part of the petitioner to truly and fully disclose all facts necessary for assessment. It is this further information which would have to be examined during the reassessment proceeding.6) Mr. Suresh Kumar invites our attention to the petitioners objections dated 5 November 2012 to the grounds for reopening of the assessment. The petitioner in its objection has not categorically stated that the amount of Rs.1,19, 42,900/- which the Assessing Officer calls an undisclosed loan was in fact margin money and reflected as part of Schedule 8 to the balance sheet. It is being urged for the first time in the petition. The response in the petitioners objections to the above ground is that it is not required to furnish details of the accounts of its directors and their family members in its return of income. Therefore, it was submitted that the aforesaid reason for reopening an assessment has gone unchallenged before the Assessing Officer. In the circumstances, the Assessing Officer was correct in rejecting the petitioners objection for reopening the assessment for assessment year 2007-08.7) We have considered the rival contentions. The notice dated 28 September 2012 seeks to reopen assessment beyond the period of 4 years i.e. beyond the period of four years from assessment year 2007-08. The case of the revenue argued before us is limited to its ground 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. Thus, there was a failure to truly and fully disclose all material facts necessary for assessment. The petitioners 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 for the year ending 31 March 2007. However, we find that this submission is being made before us for the first time as in their objections to the reasons for reopening filed on 5 November 2012 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 Assessing Officer 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. In view of the above, we find substance in the submissions on behalf of the revenue that the Assessing Officer had tangible material to come to prima facie view that income chargeable to tax has escaped assessment.8) It is very likely that during the course of reassessment proceeding the petitioner would be able to satisfy the Assessing Officer that the amount of Rs.1,19,42,900/- received in cheque by the petitioner from its directors and family members is nothing but margin money and stands reflected in schedule 8 to the balance sheet. However, this would be a subject matter of reassessment proceeding. At this stage, we are only to examine whether or not there was a reasonable belief on the part of the Assessing officer to come to a prima facie view that the income chargeable to tax has escaped assessment. We find that no sufficient explanation was offered by the petitioner in its objection dated 5 November 2012 to the reasons for reopening of assessment for assessment year 2007-08.

Decision (1 = appeal accepted, 0 = rejected): 0

Explanation:
0[ds]The notice dated 28 September 2012 seeks to reopen assessment beyond the period of 4 years i.e. beyond the period of four years from assessment yearThe case of the revenue argued before us is limited to its ground 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. Thus, there was a failure to truly and fully disclose all material facts necessary for assessment. The petitioners 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 for the year ending 31 March 2007. However, we find that this submission is being made before us for the first time as in their objections to the reasons for reopening filed on 5 November 2012 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 Assessing Officer had no occasion to deal with, unless of course the notice to reopen iswithout jurisdiction not requiring consideration of any argument such as beyond limitation. In view of the above, we find substance in the submissions on behalf of the revenue that the Assessing Officer had tangible material to come to prima facie view that income chargeable to tax has escaped assessment.8) It is very likely that during the course of reassessment proceeding the petitioner would be able to satisfy the Assessing Officer that the amount of Rs.1,19,42,900/received in cheque by the petitioner from its directors and family members is nothing but margin money and stands reflected in schedule 8 to the balance sheet. However, this would be a subject matter of reassessment proceeding. At this stage, we are only to examine whether or not there was a reasonable belief on the part of the Assessing officer to come to a prima facie view that the income chargeable to tax has escaped assessment. We find that no sufficient explanation was offered by the petitioner in its objection dated 5 November 2012 to the reasons for reopening of assessment for assessment year