INCOME TAX ACT, 1961

Section 147, Proviso

Reassessment - Validity of - Full and true disclosure - Reason to believe

After completion of assessment, the AO issued notice under section 148 based upon material information received from the District Registrar, Seraikella-Kharsawan there was reasons to believe that assessee had not made full and true disclosure of income (Petitioner), the AO after examination of the assessment record and the annual return for the year 2012-13 of the assessee, noticed that an expenditure of Rs. 11.65 crore was incurred for the purchase of freehold land in the year. However, on cross-verification from the Report of the District Registrar, Seraikella-Kharsawan, it was found that assessee had actually purchased the land at Rs. 30.04 crores from 11 different persons on 26-2-2013, as per the table furnished therein. This indicated that assessee had incurred Rs. 18.39 crores more than the declared expenditure on lands. These were unexplained expenditure to the tune of Rs. 18.39 crores which was liable to be added back to assessee's total income. Held: It was clear that the assessee had not made full disclosure of the purchase of lands made in the year 2012-13. In particular, he had failed to disclose that on 26-2-2013 he had purchased lands in the district of Seraikella-Kharsawan from certain persons named therein. After the assessment was over, on cross-verification from the Report of the District Registrar, Seraikella-Kharsawan, it was revealed that the Company had actually purchased lands of Rs. 30.04 crores from 11 different persons on 26-2-2013. The balance sheet for the year ending 31-3-2013 revealed that the Company had incurred Rs. 18.39 crores more than the declared expenses on land which appear to have escaped assessment for the assessment year 2013-14. This was the basis on which the AO formed a reasonable belief that assessee had failed to truly and fully disclose his income. As such, this income of the assessee had escaped assessment. Thus, the ingredients of first proviso to section 147 appear to be made out on the basis of materials on records. If that was so, the initiation of reassessment proceedings under section 148 beyond the limitation of four years, as prescribed under the first proviso to section 147 and also under section 149(1)(b) was not in breach of the statutory provisions. In the light of the facts and circumstances discussed above and for the reasons recorded, there was no error in the initiation of the proceedings under section 148.

Relied:<./i>GKN Driveshafts (India) Ltd. v. Dy. CIT ((2003) 259 ITR 19 (SC) : 2003 TaxPub(DT) 734 (SC). Distinguished:Calcutta Discount Co. Ltd. v. ITO & Anr. AIR 1961 SC 372 : 1961 TaxPub(DT) 130 (SC), ITO, I Ward, District VI, Calcutta & Ors. v. Lakhmani Mewal Das ((1976) 3 SCC 757 : 1976 TaxPub(DT) 742 (SC), CIT v. Kelvinator of India Limited ((2010) 2 SCC 723 : 2010 TaxPub(DT) 1335 (SC), Asstt. CIT, Gujarat v. Dhariya Construction Company ((2010) 15 SCC 251 : 2010 TaxPub(DT) 1530 (SC) and Jeans Knit v. Dy. CIT ((2018) 12 SCC 36 : 2016 TaxPub(DT) 5149 (SC).