Case: Dempo Brothers Private Limited Vs. Assistant Commissioner of Income Tax Circle 1 (1) &amp; Another

must speak for themselves. By merely stating that `there is failure on the part of assessee to disclose fully and truly all material facts in the order does not satisfy the requirement of this 5 Wp1060.17 dt 06-3-17 Section, as it would amount to merely reproducing the language of the section.7. Mr. Naniwadekar submitted that not only the reasons supplied to the Petitioner do not elaborate and disclose in what manner the Petitioner has not furnished the relevant material facts so that the power of reassessment can be exercised, there has been no withholding of the relevant material and the Petitioner has produced all the necessary information when the case was taken for scrutiny. Ms. Linhares submitted that the Petitioner did not produce Form 29B as per Rule 40B of Income Tax Rules, 1962, which has led to escapement of income of substantial amount. Learned Counsel submitted that there is no error in the impugned order as there was failure on the part of the Petitioner to disclose all the material facts.8. When the Petitioners case was taken up for the scrutiny, the Petitioner was specifically confronted with the questions as regarding the transaction in respect of the sale of shares of Goa Carbon Limited. The Petitioner was specifically asked why the profits from sale should not be taxed. The Petitioner replied to this question and explained that the Petitioner is a wholly owned subsidiary of Esmeralda Investments Private Limited and transfer of capital asset to Esmeralda Investments Private Limited is not regarded as a transfer. It was not the case of the Petitioner that the transfer is exempted under the provisions of Section 10 (38) of the Act but, it was the contention of the Petitioner that it is not a transfer at all. The contention based on Section 10 (38) was invoked for the purpose of sale of shares of HDFC Bank. This explanation of the Petitioner was accepted by the Assessing Officer.9. In the reason supplied to the Petitioner, it has been stated by the Assessing Officer, which is also the contention of Ms. Linhares that the Form 29B was not furnished by the Petitioner. Mr. Naniwadekar has drawn our attention to Section 115JB, which deals with special provision for payment of tax by certain Companies. Sub-section (4) of Section 115JB reads thus:(4) Every company to which this section applies, shall furnish a report in the prescribed form from an accountant as defined in the Explanation below subsection (2) of section 288, certifying that the book profit has been computed in accordance with the provisions of this section along with the return of income filed under sub-section (1) of section 139 or along with the return of income furnished in response to a notice under clause (i) of sub-section (1) of section 142”.As rightly contended by Mr.Naniwadekar, the Section refers to production of the Form from an accountant along with the original assessment. This requirement, therefore, is at the time of original assessment. But the matter of the Petitioner had travelled much further than that stage. The Petitioners case was taken in scrutiny and the Petitioner was specifically called upon to respond the certain queries, which the Petitioner did.10. Mr. Naniwadekar right in contending that the Petitioner has placed all the primary facts before the Assessing Authority namely that the concerned Company was a wholly owned subsidiary Company and the transfer share does not amount to transfer. After disclosing this position, the Assessing Officer accepted the explanation of the Petitioner. The Apex Court in the case of Gemini Leather Store Vs. Income Tax Officer, B-Ward and others [(1975) 100 ITR 1 (SC) has observed that in every assessment proceeding the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessees, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences. It was held that once all the primary facts are before the assessing authority he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else, far less the assessee, to tell the assessing authority what inferences, whether of facts or law, should be drawn. The Apex Court has thus concluded that the Income Tax Officer in that case thus had all the material facts before him when he made the original assessment and he cannot now take recourse to Section 147(a) to remedy the error resulting from his own oversight.11. Thus, if the primary facts are placed before the Assessing Officer, the Assessing Officer is in a position to take decision thereupon, it cannot amount to failure on the part of the assessee to withhold to furnish the material particulars. The Assessing Officer, in the impugned order has referred to various decisions, however, none of the decisions lay down that even though the primary facts were placed before the Assessing Officer at the time of scrutiny, on account of non-furnishing of the Form at the time of the original assessment, the assessment can be reopened, neither any such decision is brought to our notice.12. Therefore, we are of the opinion that the Petitioner had placed on record the necessary information for the purpose of assessing income as regard the transfer of shares. What is sought to be done by the Assessing Officer now is a reopening of assessment after four years, on a mere change of opinion. The non-furnishing of the Form is only an excuse given by the Assessing Officer to attempt to exercise an nonexistent power.

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

Explanation:
0[ds]As rightly contended by Mr.Naniwadekar, the Section refers to production of the Form from an accountant along with the original assessment. This requirement, therefore, is at the time of original assessment. But the matter of the Petitioner had travelled much further than that stage. The Petitioners case was taken in scrutiny and the Petitioner was specifically called upon to respond the certain queries, which the Petitioner did.10. Mr. Naniwadekar right in contending that the Petitioner has placed all the primary facts before the Assessing Authority namely that the concerned Company was a wholly owned subsidiary Company and the transfer share does not amount to transfer. After disclosing this position, the Assessing Officer accepted the explanation of the Petitioner. The Apex Court in the case of Gemini Leather Store Vs. Income Tax Officer,and others [(1975) 100 ITR 1 (SC)   has observed that in every assessment proceeding the assessing authority will, for the purpose of computing or determining the proper tax due from an assessee, require to know all the facts which help him in coming to the correct conclusion. From the primary facts in his possession, whether on disclosure by the assessees, or discovered by him on the basis of the facts disclosed, or otherwise, the assessing authority has to draw inference as regards certain other facts; and ultimately from the primary facts and the further facts inferred from them, the authority has to draw the proper legal inferences. It was held that once all the primary facts are before the assessing authority he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else, far less the assessee, to tell the assessing authority what inferences, whether of facts or law, should be drawn. The Apex Court has thus concluded that the Income Tax Officer in that case thus had all the material facts before him when he made the original assessment and he cannot now take recourse to Section 147(a) to remedy the error resulting from his own oversight.11. Thus, if the primary facts are placed before the Assessing Officer, the Assessing Officer is in a position to take decision thereupon, it cannot amount to failure on the part of the assessee to withhold to furnish the material particulars. The Assessing Officer, in the impugned order has referred to various decisions, however, none of the decisions lay down that even though the primary facts were placed before the Assessing Officer at the time of scrutiny, on account ofof the Form at the time of the original assessment, the assessment can be reopened, neither any such decision is brought to our notice.12. Therefore, we are of the opinion that the Petitioner had placed on record the necessary information for the purpose of assessing income as regard the transfer of shares. What is sought to be done by the Assessing Officer now is a reopening of assessment after four years, on a mere change of opinion. Theof the Form is only an excuse given by the Assessing Officer to attempt to exercise an nonexistent power.