In The Absence Of A Full And True Disclosure, Reassessment Is Not Barred By Limitation: Madras High Court

The Madras High Court has held that the criminal investigation wing is separate and distinct from the assessment wing and that disclosure made before one wing will not exonerate the assessee from the requirement of making a "full and true disclosure" before the assessing officer in an assessment.

The single bench of Justice Anitha Sumanth has observed that in the absence of full and true disclosure in the first instance, the assumption of jurisdiction by the assessing authority beyond the period of four years is not barred by limitation, and cannot be faulted.

The petitioner/assessee has challenged the proceedings for re-assessment under the provisions of the Income Tax Act, 1961 for the assessment year A.Y. 2011-2012. The petitioner filed the return of income on time, accompanied by the required annexures. The return was taken up for scrutiny and a notice under Section 143(2) was issued on 31.07.2012.

The assessing authority calls for the attendance of the petitioner at his office to finalise the assessment. Parallelly and separately, a notice has been issued by the Income Tax Officer in the Intelligence and Criminal Investigation wing of the Income Tax Department (ITO (I&CI)) on 05.10.2012.

The ITO (I&CI) calls upon the petitioner to furnish information under Section 133(6), including bank statements relating to cash deposits in excess of Rs. 2 lakhs. On October 15, 2012, the petitioner responded by enclosing copies of statements from ICICI, Dhanlaxmi, Axis, and other banks wherein the petitioner holds deposits.

There was a further exchange of notices and responses between the petitioner and the respondent, and the reply of the petitioner dated October 24, 2013 also refers to "Details of bank accounts of the company and its directors" without any reference to ICICI Bank. The order of assessment has come to be passed by the assessing officer under Section 143(3) of the Act on 28.01.2014, based upon the materials available.

The petitioner was in receipt of a notice under Section 148 on 29.03.2018 beyond the period of four years from the end of the relevant assessment year. The Department was thus to satisfy the additional condition set out under the proviso to Section 147 to the effect that the petitioner had made an incomplete and untrue disclosure of relevant facts at the initial stage.

The court noted that post finalisation of the assessment, the department had received information regarding suspicious bank transactions between the periods of 01.02.2011 and 31.02.2011. An amount of Rs. 42.29 crores has been deposited in cash and immediately debited through RTGS. The proceedings for re-assessment have come to be initiated based upon the information received regarding the aforesaid modus operandi and to verify the same.

"The communications/responses of the petitioner during the original assessment do not reveal the existence of the bank account at ICICI, R.S. Puram Branch. In this regard, mere reference to the bank account in the communication addressed to the ITO (ICI) will be of no aid to the petitioner," the court said while dismissing the petition.

Case Title: RKR. Gold P. Ltd Versus ACIT

Citation: 2022 LiveLaw (Mad) 444

Case No: W.P.No.29867 of 2019 & WMP.No.29781 of 2019

Date: 29.09.2022

Counsel For Petitioner: Advocate A.S.Sriraman

Counsel For Respondent: Senior Standing Counsel A.P.Srinivas

Click Here To Read Order