UNLAWKD

"It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No addition can be made to those reasons. No inference can be allowed to be drawn based on reasons not recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material fact necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and   should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are manifestation of the mind of the assessing Officer. The reason guessing for the reasons record

 The powers of the ITAT under Section 254 of the IT Act are very limited and akin to power under O XLVII Rule 1 of the Code of Civil Procedure, 1908. Power confined to only rectify/correct any mistake apparent from the record. - CIT vs Reliance Telecom Limited, [2022] 440 ITR 1 (SC)

The Comparable Uncontrolled Price (CUP) method is one of the five main transfer pricing methods. It’s used to ensure transactions between related companies are comparable in price to those conducted with unrelated organizations. It has been consistently held by the ITATs across the country that government companies/PSUs could not be considered to be a comparable for the reason that the contracts between public sector undertakings are not driven by profit motive along but other considerations also weigh in such as discharge of social obligations etc. The view has also been upheld by the Hon'ble High Court of Bombay in CIT v. Thyssen Krupp Industries India Pvt. Ltd. [2016] 385 ITR 612( Bom) ; [2016] 68 taxmann.com 248 (Bom).

The Supreme Court in Calcutta Discount Co. Ltd., ITR [1961] 41 ITR 191 (SC) has held that there can be no doubt that the duty of disclosing all primary facts relevant to the decision of the question before the assessment authority lies on the assessee. To meet all possible contentions that when some account books or other evidence have been produced, there is no duty of the assessee to disclose further facts which on due diligence the Income tax Officer might have discovered, the Legislature has put in Explanation to section 34 (1). The duty, however, does not extend beyond the full and truthful disclosure of all primary fact 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

In CIT vs. Usha International Ltd., [2012] 348 ITR 485 (Delhi) [FB] , it was held as under (pages 496 and 497 of 348 ITR) : “13. It is, therefore clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under section 143 (1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion. (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said case will be hit by the principle of change of opinion. (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted in the issue was examined but the Assessing Officer did not find

"It appears to the court prima facie that there is nothing in either in section 132 or 133A that prohibits the department from surveying an entity exclusive to one location of its operations, whereas it may have credible information for search as regards the operation in another location .  As rightly pointed out by the Department search is qua a “place’ and not necessarily qua the ‘assessee’. The survey by its very nature could be of the entity and any place from where such entity may operate. It is perfectly possible that while conducting survey and search of the premises of an entity for which an authorization has been issued the department can come across material pertaining to some other person or entity. The provisions like section 153C of the Act deal with such contingencies However, that is not to say that a survey or a search cannot happen in two different premises simultaneously. Further, if search is qua the place the court sees no reason why if there are two entities

"It is trite that under section 132 (1) of the Act the jurisdictional facts should be established by the Department to justify a search authorization. But there cannot be any presumption that there is no such information available with the Department. The observations by the Delhi High Court that the information which forms the basis of such search operation must be based on credible information and there must be a nexus between the information and the search ordered are unexceptionable To the same effect, the decision in Laljibhai Kanjibhai Mandalia (supra) where the Gujarat High Court found in favour of the assessee after perusing the satisfaction note. Whether the legal requirement is met will obviously depend on the facts of each case." -Shiva Cement Ltd. and Ors. vs. Director of Income-Tax (Investigation) and Ors, [2021] 439 ITR 92 (Orissa)

 Recently a controversy arose as to the power of the Dispute resolution Panel under Section 144C(8) of the Income Tax Act, 1961. It was contended by the Assessee that the power under the section can be exercised by the DRP only with respect to an issue which has been discussed in the draft assessment order. However, relying on the Explanation to the Section, the Hon'ble High Court of Madras has held that- "there is no impediment as such for the Dispute Resolution panel to consider any matter arising out of the assessment proceedings relating to the draft assessment order and no matter such an issue was discussed in the draft assessment order or not but it should not be totally unconnected with the assessment proceedings or the draft assessment order." -Delphi-TVS Diesel Systems Ltd. vs. ITO (OSD), [2022] 440 ITR 310, at Page 323, Para 28

  In appellate practice, whenever we draft appeals, petitions etc. it is utmost important to precisely ascertain the averments, the controversy/dispute and the findings of the Court/Tribunal so that a decipherable chain of reasoning can be formed on a particular point in dispute, making it easy for the appellate court to sift the record.  As regards judgments of the Income Tax Appellate Tribunals, in the case of CIT v. Scindia Steam Navigation Co. Ltd.,  [1961] 42 ITR 589 (SC) the Constitution Bench of the Hon’ble Supreme Court of India summed up the principles as under (page 611 of 42 ITR) ;       “39. The result of the above discussion may thus be summed up; 1)       (1) When a question is raised before the Tribunal and is dealt with by it,   it is clearly one arising out of its order. 2)     (2) When a question of law is raised before the Tribunal but the Tribunal fails to deal with it, it must be deemed to have been dealt with by it, and is therefore, one arising out of its o

 It has been regularly seen in practice that the revisionary powers of the Commissioner of Income Tax are available for invocation under Section 263 of the Income Tax Act, 1961 when the order passed by the Assessing Officer is erroneous and prejudicial to the interests of the Revenue . An interesting controversy arose in CIT vs Barry-Wehmiller International Resources (Mad), [2022] 440 ITR 411 wherein one of the ancillary issues before the Hon'ble High Court of Madras, was that whether an order passed by the AO closing reopening proceedings under Section 148 of the Act can be revised under Section 263 of the Act. Interestingly, the Court did not decide it expressly, however it can be presumed from the way the judgment has been drafted that the Court has held that an order under Section 148 of the Act can be revised under Section 263 of the Act.

In a recent judgment delivered by the Hon'ble High Court of Rajasthan (Jaipur Bench), titled Commissioner of Income tax vs. Vishnu Prakash Sharma, [2022] 440 ITR 324 (Raj.), an observation has been made at para 6 of Page 338 that-" It is an established law that the assessee should be given an opportunity to complete the books of account found incomplete at the time of search . " The judgment has been delievered by a Division Bench of Sh. K.S. Jhaveri and Vijay Kumar Vyas, J.J. However, the observation is not supported by any case law by the Hon'ble bench. This appears to be an observation which needs further analysis and may not be completely true.

At the time of search, the confessional statement recorded of the assessee cannot be said to be free and independent statements.   Any admission made in ignorance of legal rights or under duress cannot bind the maker of admission and mere admission cannot be bed rock or foundation of an assessment and it is always open to the assessee who made the admission to show that what he admitted was not correct. The retraction by the Assessee of a statement made under Section 132(4) of the Income Tax Act, is permissible when the assessee retracts the statement successfully by adducing sufficient corroborating evidence to show that the said statement was not voluntary and that the admission made therein was incorrect. The Hon’ble Supreme Court in the case of Director of Inspection of Income-tax (Investigation) V. Pooran Mal and Sons, [1974] 96 ITR 390 (SC) has held that confession cannot be made foundation of the assessment. In the case of Pullangode Rubber Produce Co. Ltd. V. State of Kera

 Right of Personal Hearing to the Assessee under the Scheme for Faceless Assessments The relevant part of Section 144B of the IT Act, 1961 which deals with Assessee's right to personal hearing during faceless assessments is reproduced as follows-  ‘144B. Faceless assessment.-… (7) For the purpose of faceless assessment .-… (vii) in a case where a variation is proposed in the draft assessment order or final draft assessment order or revised draft assessment order, and an opportunity is provided to the assessee   by serving a notice calling upon him to show cause as to why the assessment should not be completed as per such draft or final draft or revised draft assessment order the assessee or his authorized representative as the case may be may request for personal hearing so as to make his oral submission or present his case before the income-tax authority in any unit: (viii) the Chief Commissioner or the Director General in charge of the Regional Faceless Assessment Centre, u