Deccan Mining Syndicate Private Limited Vs DCIT (Karnataka High Court)
Summary: The petitioner, M/s. Deccan Mining Syndicate Private Limited, challenged the notice dated 05.09.2014 issued under Section 148 of the Income-tax Act, 1961 for Assessment Year 2009-10, along with the order dated 24.02.2016 dealing with its objections. The petitioner sought quashing of the reopening notice and consequential proceedings, contending that the Assessing Officer had proceeded merely on surmise, conjecture and suspicion without having the requisite “reason to believe” under Section 147 of the Income-tax Act.
The petitioner was a private limited company engaged in export of iron ore from its mines at Sandur, Bellary District. Following a search under Section 132 on 03.03.2010, notice under Section 153A was issued for AY 2009-10. The petitioner filed its return on 14.12.2010 declaring taxable income of Rs.18,88,55,530/-. Assessment was subsequently completed under Section 143(3) read with Section 153A on 30.09.2011, determining taxable income at Rs.51,71,93,963/-.
The reasons recorded for reopening stated that a letter had been received from the Additional CIT, Range-11, Bangalore, enclosing material relating to the Justice M.B. Shah Commission of Enquiry for illegal mining of iron ore and manganese. The reasons relied upon the Commission’s report concerning alleged under-invoicing of iron ore exports. In relation to a transaction dated 02.12.2008, involving 51,300 WMT of iron ore exported to China, the report reflected an FOB value of Rs.9,12,31,920/- and alleged under-invoicing of 54% as compared with the average sale FOB price for the same grade and period. The recorded reasons calculated an alleged actual sale value of Rs.19,83,30,260/- and a concealed sale value of Rs.10,70,98,340/-, concluding that taxable income to that extent had escaped assessment.
