2013 (7) TMI 60 - AT - Income Tax

High Court allows Revenue's appeal on assessment reopening, condones delay in cross-objections, grants cricket earnings exemption.

Assistant Commissioner of Income Tax Versus Shri Kapil Dev

The Revenue's appeals were successful as the High Court held that the reopening of assessments for AY 1992-93 and 1993-94 under Section 147 was valid due ... Reopening of assessment – Taxability of Earning from Cricket - condonation of delay in filing of cross objections – Held that:- No original assessment in present case – Once there was no original assessment, no opinion expressed by Assessing Officer – Therefore reopening of assessment not due to change of opinion by Assessing Officer – For assessment years 1992-93 & 1993-94, original assessment not completed under Section 143(3) – Therefore, proviso to Section 147 not applicable – CIT(A) not justified in quashing reopening of assessment as well as annulling impugned assessment orders – reopening justified - Decided in favor of revenue. Condonation of delay – Appeal memo not served upon assessee – Held that:- No evidence of service of appeal memo and grounds of appeal upon assessee – Assessee had no occasion to file cross-objections after filing of appeals by Revenue – Following decision of N.Balakrishnan Vs. M. Krishnamurthy [1998 (9) TMI 602 - SUPREME COURT OF INDIA] and Auto Centre Vs. State of Uttar Pradesh and Others [2005 (5) TMI 53 - ALLAHABAD High Court] – Delay condoned - decided in favor of assessee. Taxability of Earning from Cricket - professional cricketer or amateur cricketer - Benefit of CBDT's Circular No.447 – Assessing Officers denied exemptions – Held that:- In all subsequent years, in order passed under Section 143(3), Assessing Officer himself accepted that assessee to be amateur cricketer and not professional cricketer – No justification to hold that during accounting year relevant to AY 1992-93 and 1993-94, assessee was professional cricketer – Exemption allowed to assessee which is available as per Board's Circulars to amateur cricketers – Decided in favor of assessee. Issues Involved:1. Validity of reopening assessments under Section 147 of the Income-tax Act for AY 1992-93 and 1993-94.2. Condonation of delay in filing cross-objections by the assessee.3. Entitlement to exemption under CBDT Circular No. 447 dated 22.01.1986 for cricket earnings.Issue-wise Detailed Analysis:1. Validity of Reopening Assessments under Section 147:The primary issue was whether the reopening of assessments for AY 1992-93 and 1993-94 under Section 147 was valid. The Revenue argued that the CIT(A) erred in annulling the assessments by ignoring that no original assessment was made under Section 143(3), thus the proviso to Section 147 was not applicable. The Tribunal initially upheld the CIT(A)'s decision, but the High Court remitted the matter back to the ITAT, noting an error in the Tribunal's order which incorrectly stated that assessments for these years were completed under Section 143(3). Upon rehearing, it was admitted that no original assessment was made under Section 143(3) for these years. The Tribunal concluded that without an original assessment, there could be no change of opinion by the Assessing Officer, thus the reopening was valid. Consequently, the appeals by the Revenue were allowed, and the CIT(A)'s order was reversed.2. Condonation of Delay in Filing Cross-Objections:The assessee's cross-objections were delayed by 2082 days. The assessee argued that the delay was due to not receiving the appeal memo from the department initially and not being advised to file cross-objections after the High Court's order. The Tribunal considered the principles laid out by the Supreme Court in MST. Katiji and Others, emphasizing a liberal approach to condonation of delay to advance substantial justice. The Tribunal accepted the assessee's explanation, noting that the assessee, a renowned cricketer, was not aware of the legal intricacies and was not advised to file cross-objections timely. Thus, the delay was condoned, and the cross-objections were admitted for hearing on merits.3. Entitlement to Exemption under CBDT Circular No. 447:The assessee contested the denial of exemption under CBDT Circular No. 447 for cricket earnings, arguing that previous decisions in similar cases (e.g., Ajay Jadeja and Manoj Prabhakar) and subsequent assessments in his own case recognized him as an amateur cricketer entitled to the exemption. The Tribunal noted that in subsequent years, the Revenue accepted the assessee as an amateur cricketer. The Tribunal directed the Assessing Officer to allow the exemption as per the Board's Circular, aligning with the consistent treatment in subsequent assessments and the precedent set by other cricketers' cases. Thus, the cross-objections were allowed, and the additions made by the Assessing Officer were deleted.Conclusion:The appeals of the Revenue were allowed, reversing the CIT(A)'s annulment of the reopening of assessments for AY 1992-93 and 1993-94. The delay in filing cross-objections by the assessee was condoned, and the cross-objections were admitted and allowed, directing the Assessing Officer to grant the exemption under CBDT Circular No. 447 for cricket earnings. The decision was pronounced in the open Court on 28th June, 2013.