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.

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 under Section 147-proviso applicability - change of opinion doctrine in reassessment - condonation of delay for filing cross-objections - benefit of CBDT Circular No.447-distinction between amateur and professional sportspersonReopening of assessment under Section 147-proviso applicability - change of opinion doctrine in reassessment - Validity of CIT(A)'s annulment of reassessments for AY 1992-93 and 1993-94 where original assessments were not completed under Section 143(3). - HELD THAT: - The Tribunal found that for AY 1992-93 and 1993-94 there was no original assessment under Section 143(3) and consequently the proviso to Section 147 (which restricts reopening where assessment under Section 143(3) had been completed) was not applicable. Where no original assessment under Section 143(3) exists, no prior opinion by the Assessing Officer is recorded and therefore the reopening cannot be justified on the ground of a 'change of opinion'. The CIT(A)'s common order had relied on facts and reasoning applicable to AY 1991-92 (where Section 143(3) assessment existed) and then applied by a single-line reference to AY 1992-93 and 1993-94; that approach was unsustainable because the material facts for the latter years were different. For these reasons the Tribunal reversed the CIT(A)'s annulment insofar as AY 1992-93 and 1993-94 are concerned and held that the reopening was not quashed by the CIT(A). [Paras 6]CIT(A)'s annulment of reassessments for AY 1992-93 and 1993-94 is set aside and the Revenue's appeals are allowed.Condonation of delay for filing cross-objections - Whether the delay of 2,082 days in filing the assessee's cross-objections should be condoned. - HELD THAT: - The assessee's cross-objections were filed late; the assessee relied on non-receipt of appeal memo at the original ITAT hearing and on the fact that the Revenue's appeal had been dismissed then, so there was no occasion to file cross-objections until the High Court set aside the ITAT order. The Tribunal accepted that the assessee (a sportsperson) was not advised by his counsel before the High Court to file cross-objections and that the cross-objections were filed promptly once the matter was next fixed before the ITAT. Applying the established principles favouring substantial justice and a liberal approach to condonation of delay, the Tribunal condoned the delay and admitted the cross-objections for hearing on merits. [Paras 14]Delay in filing cross-objections is condoned and the cross-objections are admitted for hearing on merits.Benefit of CBDT Circular No.447-distinction between amateur and professional sportsperson - Whether the assessee is entitled to exemption under CBDT Circular No.447 (and related instructions) for cricket earnings for the years under appeal. - HELD THAT: - The Tribunal examined the Assessing Officer's denial of exemption on the sole ground that the assessee was a professional and not an amateur. It took into account subsequent decisions in the assessee's own matters and decisions concerning other cricketers (including Ajay Jadeja and Manoj Prabhakar) where appellate authorities found in favour of treating the recipients as entitled to the benefit of the Circular. The Tribunal noted that in later assessment years the Assessing Officer himself allowed the benefit treating the assessee as an amateur cricketer. In view of that subsequent treatment, and the appellate precedents relied upon, the Tribunal directed the Assessing Officer to allow the exemption available to amateur cricketers under the Board's circulars and related instructions. [Paras 16, 20, 21]Cross-objections allowed on merits; Assessing Officer directed to allow exemption under CBDT Circular No.447 and related instructions applicable to amateur cricketers.Final Conclusion: Revenue appeals in respect of AY 1992-93 and 1993-94 are allowed insofar as CIT(A)'s annulment of reassessments for those years is set aside; the delay in filing the assessee's cross-objections is condoned and the cross-objections are admitted and allowed on merits, directing the Assessing Officer to grant exemption under CBDT Circular No.447 to the assessee as an amateur cricketer. 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.