DISTRIB. INDIA C AND F THRU. PARTNER, LKO. (IN WTAX NO.- 74 OF 2022) V. UNION OF INDIA THRU. ITS SECY. FINANCE DEPTT. OF REVENUE

/112/2022

AI Insights

The case involves Distributors India C And F, the petitioner, who sought a review of a judgment dismissing their writ petition against a notice issued under Section 148 of the Income Tax Act, 1961. The original judgment found that the petitioner had not fully disclosed all material facts necessary for assessment, leading to income escaping assessment. The review application argued that the original judgment overlooked certain facts and misapplied legal precedents. However, the court found that the reassessment was justified based on the material available and that the review did not reveal any error apparent on the face of the record.

• Counselvise Citation: [2022] 140 COUNSELVISE.COM (IT) 723465 (HC-LUCKNOW)
• Appeal Type: Others
• Pronouncement Date: 24-05-2022
• Assessment Year: misc
• Other Referred Cases: Raymond Woollen Mills Ltd. Vs. I.T.O., Arun Gupta Vs. Union of India, Phool Chand Bajrang Lal Vs. ITO, Srikrishna (P) Ltd. V. ITO, Meera Bhanja v. Nirmala Kumari Choudhury, Perry Kansagra v. Smriti Madan Kansagra, Ajit Kumar Rath, Lily Thomas v. Union of India, Parision Devi, BCCI v. Netaji Cricket Club
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: MANISH MISRA
• Assessee Lawyers: SHAILESH VERMA
• Keywords: Income Tax; Non-disclosure; Reassessment; Review Application; TDS
• Section: 147; 148; 194 I; 194(C); 194-J; 194-A; 194-H

Judgement Text

"Court No. - 2 Case :- CIVIL MISC REVIEW APPLICATION No. - 112 of 2022 Applicant :- Distributors India C And F Thru. Partner, Lko. (In Wtax No.- 74 Of 2022) Opposite Party :- Union of India Thru. Its Secy. Finance Deptt. Of Revenue Counsel for Applicant :- Shailesh Verma Counsel for Opposite Party :- Manish Misra Hon'ble Devendra Kumar Upadhyaya, J. Hon'ble Subhash Vidyarthi, J. 1. Heard Shri Desh Deepak Chopra, Senior Advocate assisted by Sri Shailesh Verma, the learned counsel for the petitioner and Shri Manish Misra, Advocate, the learned counsel for the respondents. 2. The instant application has been filed by the petitioner seeking review of the judgment and order dated 20-04-2022 passed by this Court dismissing its writ petition, which was filed challenging the validity of a notice issued under Section 148 of the Income Tax Act, 1961. 3. This Court had called for and examined the original records of the department which contains the reasons recorded for initiation of the re-assessment proceedings and had found that the reasons recorded by the Assessing Officer for initiating the process of re-assessment state that on examination of the documents on record and 26 AS, it was noticed that in the Profit and Loss account, the petitioner had showed total receipts of Rs.2,61,28,435/-, including commission income of Rs.2,50,58,983/-, and interest income of Rs.10,69,452/-. However, as per 26 AS its total receipt under Sections 194 A, 194 C, 194 H, 194 I and 194 J is Rs.5,23,84,738/-. The Assessing Officer recorded that there is a difference of Rs.2,62,56,303/- in the receipts shown by the petitioner, which income has escaped assessment. During the assessment proceedings, the petitioner was asked to explain the discrepancy and 10 it stated that at the time of reimbursing the expenses, some of its principals are deducting TDS under Section 194 C and some are deducting it under Section 194 H and, therefore, these Page 1 of 11 receipts are not reflecting in its income. However, the petitioner has received payments under Sections 194 I and 194 J also, but it did not show the above receipts and gave no explanation for the same. It did not produce any ledger, bills and vouchers of expenses incurred by it on behalf of the principal companies. On the basis of the aforesaid reasons, the Assessing Officer came to a conclusion that the petitioner has not truly and fully disclosed all material facts necessary for the assessment thereby necessitating reassessment under Section 147 of the Act. 4. While deciding the Writ Petition, this Court held that the Assessing Officer has recorded his reason to believe that the petitioner had received payments under Sections 194 I and 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same. The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the petitioner did not make a “full and true” disclosure of all the material facts which resulted in an income of Rs. 2,62,56,303/- having escaped assessment. 5. Relying upon the judgments in Raymond Woollen Mills Ltd. Vs. I.T.O. (1999) 236 ITR 36 (SC); Arun Gupta Vs. Union of India, (2015) 371 ITR 394 (AII); Phool Chand Bajrang Lal Vs. ITO, (1993) 4 SCC 77; Srikrishna (P) Ltd. V. ITO, (1996) 9 SCC 534, this Court had held that we do not have to give a final decision as to whether there is suppression of material facts by the petitioner or not, as the sufficiency or correctness of the material is not required to be considered at this stage. In the instant case, the notice under Section 148 of the Act has been issued by the Assessing Officer after an investigation was conducted and after going through the income tax return and other related documents of the petitioner and after recording a reason to believe that the petitioner did not truly and fully Page 2 of 11 disclose all the material facts, because of which income amounting to Rs. 2,62,56,303/- has escaped assessment. We recorded out satisfaction that there was prima facie material available on record before the assessing officer for issuing a notice under Section 148 of the Act and, therefore, the notice dated 26-03-2021 issued under Section 148 of the Act as well as all the proceedings undertaken in consequence of the notice, including the order dated 18-02-2022 passed by the National Faceless Assessment Centre rejecting the petitioner’s objections against the notice, do not suffer from any such illegality as to warrant interference by this Court in exercise of its Writ Jurisdiction and, accordingly, the Writ Petition was dismissed. 6. The petitioner has sought a review of the aforesaid judgment on the grounds that it had not received any payments from its Principals on which TDS had been deducted under Section 194-I and Section 194-J which is evident from 26 AS; that the reason recorded by the Assessing Officer makes no mention of non-disclsoure of the amount of reimbursement of expenses; that the figure of Rs.5,23,84,738/- alleged to have been received through commission and Rs.36,13,775/- alleged to be TDS do not appear in 26 AS and the same are imaginary. The petitioner has further contended that the judgment in the case of Raymond Woolen Mills Ltd. (supra) is case specific and it cannot be applied to the case of the petitioner and the judgment in Phool Chand Bajrang Lal (supra) supports the petitioner's contention that to initiate reassessment proceedings, the Assessing Officer must have some tangible material before him before proceeding to initiate the reimbursement under Section 147 of the Act; contended that the order passed by the Hon’ble Supreme Court in Srikrishna (Pvt.) Ltd. versus I.T.O., (1996) 9 SCC 534 relied upon by this Court required that the assessee is under obligation to disclose the material facts and such disclosure should be full and true and the petitioner has made true and full disclosure of all material facts and that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. Page 3 of 11 7. Before proceeding to examine the submissions of the learned Counsel for the review-petitioner, it would be appropriate to have a look at the scope of review. It is settled law that review cannot be treated as an appeal and a re-hearing of the matter is not allowed in the name of a review of the judgment. Review of a judgment can be sought only the ground that it suffers from an “error apparent on the face of the record”. The meaning of the expression “error apparent on the face of the record” has been explained by the Hon’ble Supreme Court in various decisions, some of are being referred hereinbelow. 8. In Meera Bhanja v. Nirmala Kumari Choudhury, (1995) 1 SCC 170, the Hon’ble Supreme Court explained the term “error apparent on the face of the record” in the following words: - “an error apparent on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on points where there may conceivably be two opinions. We may usefully refer to the observations of this Court in the case of Satyanarayan Laxminarayan Hegde v. Mallikarjun Bhavanappa Tirumale AIR 1960 SC 137, wherein, K.C. Das Gupta, J., speaking for the Court has made the following observations in connection with an error apparent on the face of the record: An error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions can hardly be said to be an error apparent on the face of the record. Where an alleged error is far from self-evident and if it can be established, it has to be established, by lengthy and complicated arguments, such an error cannot be cured by a writ of certiorari according to the rule governing the powers of the superior court to issue such a writ.” (Emphasis Supplied) 9. In Perry Kansagra v. Smriti Madan Kansagra, (2019) 20 SCC 753, the Hon’ble Supreme Court referred to the earlier decisions on the point and summarized the law on the subject in the following manner: - “15.1.In Inderchand Jain (2009) 14 SCC 663 it was observed in paras 10, 11 and 33 as under: (SCC pp. 669 & 675) Page 4 of 11 “10. It is beyond any doubt or dispute that the review court does not sit in appeal over its own order. A rehearing of the matter is impermissible in law. It constitutes an exception to the general rule that once a judgment is signed or pronounced, it should not be altered. It is also trite that exercise of inherent jurisdiction is not invoked for reviewing any order. 11. Review is not appeal in disguise. In Lily Thomas v. Union of India (2000) 6 SCC 224 this Court held: (SCC p. 251, para 56) ‘56. It follows, therefore, that the power of review can be exercised for correction of a mistake but not to substitute a view. Such powers can be exercised within the limits of the statute dealing with the exercise of power. The review cannot be treated like an appeal in disguise.’ *** 33. The High Court had rightly noticed the review jurisdiction of the court, which is as under: ‘The law on the subject—exercise of power of review, as propounded by the Apex Court and various other High Courts may be summarised as hereunder: (i) Review proceedings are not by way of appeal and have to be strictly confined to the scope and ambit of Order 47 Rule 1 CPC. (ii) Power of review may be exercised when some mistake or error apparent on the fact of record is found. But error on the face of record must be such an error which must strike one on mere looking at the record and would not require any long-drawn process of reasoning on the points where there may conceivably be two opinions. (iii) Power of review may not be exercised on the ground that the decision was erroneous on merits. (iv) Power of review can also be exercised for any sufficient reason which is wide enough to include a misconception of fact or law by a court or even an advocate. (v) An application for review may be necessitated by way of invoking the doctrine actus curiae neminem gravabit.’ In our opinion, the principles of law enumerated by it, in the facts of this case, have wrongly been applied.” Page 5 of 11 15.2.In Ajit Kumar Rath(1999) 9 SCC 596, it was observed: (SCC p. 608, para 29) “29. In review proceedings, the Tribunal deviated from the principles laid down above which, we must say, is wholly unjustified and exhibits a tendency to rewrite a judgment by which the controversy had been finally decided. This, we are constrained to say, is not the scope of review under Section 22(3)(f) of the Administrative Tribunals Act, 1985. …” 15.3.Similarly, in Parsion Devi (1997) 8 SCC 715 the principles were summarised as under: (SCC p. 719, para 9) “9. Under Order 47 Rule 1 CPC a judgment may be open to review inter alia if there is a mistake or an error apparent on the face of the record. An error which is not self-evident and has to be detected by a process of reasoning, can hardly be said to be an error apparent on the face of the record justifying the court to exercise its power of review under Order 47 Rule 1 CPC. In exercise of the jurisdiction under Order 47 Rule 1 CPC it is not permissible for an erroneous decision to be “reheard and corrected”. A review petition, it must be remembered has a limited purpose and cannot be allowed to be “an appeal in disguise”.” 16.On the other hand, reliance was placed by the respondent on the decision in BCCI v. Netaji Cricket Club(2005) 4 SCC 741 to submit that exercise in review would be justified if there be misconception of fact or law. Para 90 of the said decision was to the following effect: (SCC p. 765) “90. Thus, a mistake on the part of the court which would include a mistake in the nature of the undertaking may also call for a review of the order. An application for review would also be maintainable if there exists sufficient reason therefor. What would constitute sufficient reason would depend on the facts and circumstances of the case. The words “sufficient reason” in Order 47 Rule 1 of the Code are wide enough to include a misconception of fact or law by a court or even an advocate. An application for review may be necessitated by way of invoking the doctrine actus curiae neminem gravabit.” 17.We have gone through both the judgments of the High Court in the instant case and considered rival submissions on the point. It is well settled that an error which is required to be detected by a process of reasoning can hardly be said to be an Page 6 of 11 error apparent on the face of the record. To justify exercise of review jurisdiction, the error must be self-evident. Tested on this parameter, the exercise of jurisdiction in the present case was not correct. The exercise undertaken in the present case, in our considered view, was as if the High Court was sitting in appeal over the earlier decision dated 17-2-2017. Even assuming that there was no correct appreciation of facts and law in the earlier judgment, the parties could be left to challenge the decision in an appeal. But the review was not a proper remedy at all. In our view, the High Court erred in entertaining the review petition and setting aside the earlier view dated 17-2-2017.” (Emphasis Supplied) 10. Now we proceed to examine the grounds taken by the petitioner for seeking a review of the judgment passed by this Court so as to ascertain whether this judgment sought to be reviewed suffers from any such error as strikes on mere looking at the record and as would not require any long-drawn process of reasoning for being established and regarding which there may not be conceivably be two opinions. 11. The first submission made by the learned Counsel for the petitioner s that the petitioner had not received any payments from its Principals on which TDS had been deducted under Section 194-I and Section 194-J which is evident from 26 AS. In this regard, we have observed that the Assessing Officer has recorded his reason to believe that the petitioner had received payments under Sections 194 I and 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same; that it had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement; that it had not submitted the details of expenses incurred by it for verification during the assessment proceedings and that it did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. For the aforesaid reasons, the Assessing Officer came to a conclusion that the petitioner did not make a “full and true” disclosure of all the material facts which resulted in an income of Rs. 2,62,56,303/- having escaped assessment. Page 7 of 11 12. In the judgment sought to be reviewed, it has been held that the notice under Section 148 of the Act has been issued by the Assessing Officer after conducting an investigation and going through the income tax return and other related documents of the petitioner and after recording a reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income amounting to Rs. 2,62,56,303/- has escaped assessment. We merely recorded our satisfaction that there was prima facie material available on record before the assessing officer for issuing a notice under Section 148 of the Act, without going into the sufficiency or correctness of the material, which, of course, will be looked into by the Assessing Officer during reassessment proceedings and the petitioner will have to place its case in that proceedings. The reassessment has not been ordered on the sole ground the petitioner had received payments under Sections 194 I and 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same and entertaining this ground raised by the petitioner for review would necessarily require a re-hearing of the Writ Petition as this ground does not relate to an error, which can be said to be apparent on the face of the record. 13. The learned Counsel for the petitioner has next contended that in the reasons recorded by the Assessing Officer, there is no mention of non- disclosure of the amount of reimbursement expenses and, therefore, this question does not arise at all and that the figure of Rs.5,23,84,737/- alleged to have been received through commission and Rs.36,13,775/- alleged to be TDS do not appear in 26 AS and the same are imaginary figures. We have found that the reasons recorded by the Assessing Officer contain a mention that during the assessment proceedings, the petitioner was asked to explain the discrepancy and it stated that at the time of reimbursing the expenses, some of its principals are deducting TDS under Section 194 C and some are deducting it under Section 194 H and, therefore, these receipts are not reflecting in its income. It further records that the petitioner has received payments under Sections 194 I and 194 J also, but it did not Page 8 of 11 show the above receipts and gave no explanation for the same; it did not produce any ledger, bills and vouchers of expenses incurred by it on behalf of the principal companies. On the basis of the aforesaid reasons, the Assessing Officer came to a conclusion that the petitioner has not truly and fully disclosed all material facts necessary for the assessment thereby necessitating reassessment under Section 147 of the Act. The correctness of this finding recorded after examining the original record is not open to challenge in review, as even if this finding may be erroneous, it does not suffer from any such error, as is apparent on the face of the record. 14. The review jurisdiction can be invoked in order to prevent miscarriage of justice but in the present case, we had merely dismissed the Writ Petition filed by the petitioner challenging reassessment proceedings under Section 147 of the Act, in which proceedings the petitioner will have the right to place all the facts and submissions and it is not that its opportunity of placing its case stands closed with the dismissal of the Writ Petition. Therefore, the dismissal of the Writ Petition has occasioned any miscarriage of justice warranting a review of the judgment. 15. The learned Counsel for the petitioner has next contended that the judgment in the case of Raymond Woolen Mills Ltd. (supra) is case specific and it cannot be applied to the case of the petitioner and the judgment in Phool Chand Bajrang Lal (supra) supports the petitioner's contention that to initiate reassessment proceedings, the Assessing Officer must have some tangible material before him before proceeding to initiate the reimbursement under Section 147 of the Act. 16. The ratio of the judgments passed by the Hon'ble Supreme Court in the cases of Raymond Woolen Mills Ltd. (1) and (2) (supra), is that at the stage of issuing a notice for reassessment, the court has only to see whether there is prima facie some material on the basis of which, the department could re-open the case; the sufficiency or correctness of the material is not a thing to be considered at this stage, and this ratio does not appear to be based on any peculiar facts so as to be not Page 9 of 11 applicable to the present case and the learned counsel for the petitioner could not point out as to how the aforesaid ratio is based on any peculiar facts and it would not apply to the present case. Therefore, we are unable to accept the submission of the learned Counsel for the petitioner that the judgment in the case of Raymond Woolen Mills Ltd. (supra) is case specific and it cannot be applied to the case of the petitioner. 17. So far as the submission that the judgment in Phool Chand Bajrang Lal (supra) supports the petitioner's contention that to initiate reassessment proceedings, the Assessing Officer must have some tangible material before him before proceeding to initiate the reimbursement under Section 147 of the Act, we may state that in Phool Chand Bajrang Lal (supra), the Hon’ble Supreme Court had held that the reassessment proceedings may be started either because of some fresh fact come into light which were not previously disclosed or some information with regard to the fact previously disclosed comes into light which intends to expose untruthfulness of those facts. 18. The learned Counsel for the petitioner has also contended that the order passed by the Hon’ble Supreme Court in Srikrishna (Pvt.) Ltd. versus I.T.O., (1996) 9 SCC 534 relied upon by this Court required that the assessee is under obligation to disclose the material facts and such disclosure should be full and true and the petitioner has made true and full disclosure of all material facts. 19. In the present case, the reassessment has been ordered because the A.O. has recorded his reasons to believe that the petitioner had received payments under Section 194 J also, but it had not shown the said receipts in his Profit and Loss account and had not given any explanation for the same. The petitioner had not disclosed the amount of reimbursement of expenses claimed by it and the actual amount received by it towards reimbursement. It had not submitted the details of expenses incurred by it for verification during the assessment proceedings. It did not produce any ledger, bills and vouchers of expenses incurred on behalf of the Principal Companies. Thus the Page 10 of 11 petitioner did not make a “full and true” disclosure of all the material facts which resulted in an income of Rs. 1,07,24,386/- having escaped assessment. In the instant case, the notice under Section 148 of the Act has been issued by the Assessing Officer after an investigation was carried out and after going through the income tax return and other related documents of the petitioner and after forming reason to believe that the petitioner did not truly and fully disclose all the material facts, because of which income amounting to Rs.1,07,24,386/- has escaped assessment. Thus the reassessment has been ordered upon discovery of apprehended untruthfulness of facts previously disclosed, which came to light after an investigation and, therefore, the judgment in Phool Chand Bajrang Lal (supra) does not support the petitioner and as per the law laid down in Srikrishna (Supra), the reassessment proceedings have rightly been initiated. 20. The judgment passed by this Court has also been sought to be reviewed on the ground that various case laws relied upon by the petitioner in support of its claim have not been considered by this Court. In the judgment sought to be reviewed, the judgments of Aventis Pharma Ltd. Versus ACIT, (2010) 323 ITR 570 (Bom) and Arun Gupta versus Union of India, (2015) 371 ITR 394 (All), cited by the learned counsel for the petitioner have been referred to and dealt with. This Court is not obliged to refer to each and every judgment forming part of a compilation of judgments submitted after conclusion of oral submissions, which judgments were not placed before the Court during oral submissions Therefore, this submission also stands rejected. 21. In view of the aforesaid discussion, we do not find any “error apparent on the face of the record” in the judgment and the order dated 20-04- 2022 sought to be reviewed. The application for review of the judgment and order dated 20-04-2022 lacks merit and, is accordingly dismissed. 22. However, there will be no order as to costs. Order Date :- 24.5.2022 pks Page 11 of 11 Digitally signed by PANKAJ KUMAR SRIVASTAVA Date: 2022.05.26 18:17:50 IST Reason: Location: High Court of Judicature at Allahabad, Lucknow Bench "