LexM/S MANGALAM PUBLICATIONS, KOTTAYAM versus COMMISSIONER OF INCOME TAX, KOTTAYAM
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* Author [2024] 1 S.C.R. 642 : 2024 INSC 53 M/s Mangalam Publications, Kottayam v. Commissioner of Income Tax, Kottayam (Civil Appeal Nos. 8580-8582 of 2011) 23 January 2024 [B. V. Nagarathna and Ujjal Bhuyan*, JJ.] Issue for Consideration Reopening of a concluded assessment-reassessment u/s. 147 of the Income Tax Act, 1961 following issuance of notice u/s. 148 of the Act, legally sustainable or bad in law. Headnotes Income Tax Act, 1961 – ss. 147 and 148 – Reopening of a concluded assessment-reassessment u/s. 147 following issuance of notice u/s. 148 – Sustainability: Held: On the basis of the balance sheet submitted by the assessee before the Bank for obtaining credit, the assessing officer upon a comparison of the same with a subsequent balance sheet filed by the assessee for the assessment year 1993-94 concluded that there was escapement of income and initiated reassessment proceedings – Dehors such balance sheet, there were no other material in the possession of the assessing officer to hold that income of the assessee for the assessment years had escaped assessment – When the assessee had not made any false declaration, it was nothing but a subsequent subjective analysis of the assessing officer that income of the assessee for the assessment years was much higher than what was assessed and thus, had escaped assessment – This was a mere change of opinion which cannot be a ground for reopening of assessment – Returns for the assessment years were not accompanied by the regular books of account – Such return may be a defective one but certainly not invalid return – Furthermore, in none of the assessment years, the assessing officer had issued any declaration that the returns were defective – Assessee asserted both in the pleadings and in the oral hearing that though it could not file regular books of account along with the returns for the assessment years because of seizure by the department, nonetheless the returns [2024] 1 S.C.R. 643 M/S Mangalam Publications, Kottayam v. Commissioner of Income Tax, Kottayam of income were accompanied by tentative profit and loss account and other details of income which were duly enquired into by the assessing officer in the assessment proceedings – Thus, the tribunal justified in holding that the reassessments for the assessment years not justified – High Court erred in reversing the findings of the tribunal – Order of the High Court set aside and that of the tribunal restored. [Paras 41-45] Income Tax Act, 1961 – s. 147 – Income escaping assessment – ‘Full and true disclosure’ – Meaning of: Held: Word ‘disclosure’ means to disclose, reveal, unravel or bring to notice –Word ‘true’ qualifies a fact or averment as correct, exact, actual, genuine or honest – Word ‘full’ means complete – True disclosure of concealed income must relate to the assessee concerned – Full disclosure, in the context of financial documents, means that all material or significant information should be disclosed – Thus, the meaning of ‘full and true disclosure’ is the voluntary filing of a return of income that the assessee earnestly believes to be true – Production of books of accounts or other material evidence that could ordinarily be discovered by the assessing officer does not amount to a true and full disclosure. [Para 31] Income Tax Act, 1961 – s. 147 – Income escaping assessment – Expression “change of opinion” in terms of assessment proceedings: Held: Expression “change of opinion” would imply formulation of opinion and then a change thereof – In terms of assessment proceedings, it means formulation of belief by the assessing officer resulting from what he thinks on a particular question – Thus, before interfering with the proposed reopening of the assessment on the ground that the same is based only on a change of opinion, the court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable – If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. [Para 36] Income Tax Act, 1961 – s. 139 – Return of income – Obligation on assessee to disclose all material facts necessary for his assessment: 644 [2024] 1 S.C.R. Digital Supreme
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