TaxTMI 
TaxTMI 
2017 (6) TMI 285
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....2007 and reopening u/s 147 of the Act was made on 31/03/2012, therefore, it was beyond a period of four years. It was claimed by the ld. counsel for the assessee that the same addition was made by the Assessing Officer u/s 154 of the Act and the same was deleted by the Tribunal. Our attention was invited to page-32 of the paper book (relevant page-39, para-8). Our attention was further invited to the order of the First Appellate Authority (page-27 of the paper book), para -3.2, page 29 and para 3.4 & 3.5 of the order of the Ld. Commissioner of Income Tax (Appeal) (page-30 of the paper book). The crux of the argument is that reopening u/s 147/148 of the Act cannot be made beyond a period of four years, more specifically, when the material facts were wholly and truly were disclosed by the assessee. The issue was claimed to be debatable issue, therefore, the Tribunal decided in favour of the assessee. 2.1. On the other hand, Ms. Bharti Singh, defended the reopening done by the Assessing Officer by contending that true disclosure of facts was not made by the assessee. The Ld. DR, contended that even if the issue is debatable, as held by the First Appellate Authority and this Tribuna....
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...., the assessee has challenged reopening of assessment, whereas, the Revenue is in appeal against deleting the disallowance/addition made u/s 40(a)(ia) of the Act, by the First Appellate Authority. The crux of the argument, so far as, reopening is concerned, is that reopening cannot be done beyond a period of four years, when the material facts were fully disclosed by the assessee. 2.5. We find that on the issue of reopening, the Ld. Commissioner of Income Tax (Appeal) considered the decision in 31 Infotech Ltd. vs ACIT (2010) 329 ITR 257 (Bom.), Imperial Chemical Industries Ltd. vs Income Tax Officer (1978) 111 ITR 614 (Cal.) and Rakesh Agarwal vs ACIT (1996) 221 ITR 492 and Income Tax Officer vs Bhanji Lav Ji (1971) 79 ITR 582 (Del.) held that reopening is correct. If the observation made in the assessment order, leading to addition made to the total income, conclusion drawn in the impugned order, material available on record, assertions made by the ld. respective counsel, if kept in juxtaposition and analyzed, we are expected to first analyze the provision of section 147 of the Act. "147. If the Assessing Officer has reason to believe that any income chargeable to tax has e....
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....eturn of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reason....
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....isions of law, now it is a settled position if the details are furnished before due date of filing of return, therefore, it cannot be disallowed. The ratio laid down by the Tribunal in the case of M/s Selprint vs CIT (ITA No.3688/Mum/2012), order dated 21/10/2015, supports our view. The relevant portion of the aforesaid order is reproduced hereunder for ready reference:- "The present appeal has been preferred by the assessee against the order dated 22.03.2012 of the Commissioner of Income Tax (Appeals) [hereinafter referred to as the CIT(A)] relevant to assessment year 2008-09. 2. The assessee has taken the following grounds of appeal: "1. On the facts and circumstances of the case and in law the learned CIT(A) erred in confirming the disallowance of payments in the nature of purchases from M/s M.R. Enterprises of Rs. 13,51,484 u/s 40(a)(ia) on account of non-deduction of TDS on payments made to it ignoring the fact that M/s. M.R. Enterprises has already discharged the tax liability by duly filing the return of income the due date of filing of the return of income by the appellant. The disallowance being bad in law the same needs to be deleted. 2. On the facts and circu....
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....nt pertains to the commission of Rs. 1,79,400 (net of TDS) that is already disallowed by the learned AO and confirmed by the learned CIT(A). The addition leading to taxing the amount twice is bad in law and needs to be deleted. 7. The appellant craves leave to add to amend, alter, delete and/or modify the above grounds of appeal on or before the final date of hearing of this appeal petition." M/s. Selprint 3. The Ld. A.R. of the assessee has invited our attention to ground No.1 vide which the disallowance has been made by the lower authorities under section 40(a)(ia) on account of non deduction of TDS on payments made to M/s. M.R. Enterprises. It is the contention of the Ld. A.R. that M/s. M.R. Enterprises has already discharged the tax liability by duly filing the return of income. He has contended that as per the new proviso inserted in section 40(a)(ia) vide Finance Act, 2012 w.e.f. 01.04.13 wherein it has been provided that if the assessee fails to deduct TDS in respect of any payment to which the TDS provisions apply but he is not deemed to be an assessee in default under section 201 of the Act, which provides that if the payee of the such amount computed the same int....
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....od, thus by virtue of the amendment to the provisions of section 40(a)(ia) of the Act by insertion of the second proviso to section 40(a)(ia) of the Act w.e.f. ;1.4.2013, the provisions of section 40(a)(ia) of the Act would not be attracted to the payments made by the assessee i.e. Sri G. Shankar of Rs. 2,69,21,500 and to Sri Ramesh Kotian of Rs. 1,54,75,000. This view of ours, is in accordance with the decision of the co-ordinate bench of this Tribunal in the case of Ananda Markala (supra) wherein it was held that the insertion of the second proviso to section 40(a)(1a) of the Act should be read retrospectively from 1.4.2005 and not prospectively from 1.4.2013. In this view of the matter, the provisions of section 40(a)(ia) of the Act is not attracted to the payments made by the assessee to Sri G.Shankar of Rs. 2,69,21,500 and to Sri Ramesh Kotian of Rs. 1,54,75,000 since the object of introduction of section 40(a)(ia) of the Act is achieved for the reason that the payees / recipients have declared and offered to tax the payments received from the assessee in their respective hands. 3.4.2 As regards the issue of non-furnishing of Form No.26A, we are of the view that since the s....
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....from house property, disallowance out of telephone expenses and site expenses are concerned, the same has been duly considered by the Ld. Assessing Officer and even not challenged by the Revenue. It clearly shows that material facts, for making the assessment, were duly furnished by the assessee before the Ld. Assessing Officer. Even in para-2.3 of the impugned order, the Ld. Commissioner of Income Tax (Appeal) has observed that in the assessment u/s 143 (3) of the Act an addition of Rs. 2,60,25,775/- was made u/s 40(a)(ia) was made for not paying the tax deducted as source within the time allowed under the statute. However, in view of the various judicial pronouncements, it is evidently clear that no disallowance is to be made when the payment is made for such deduction of tax at source before filing of return. Undisputedly, these payments were made by the assessee before filing of return, therefore, there was no new material with the Assessing Officer for reopening the assessment. It is not the case, something was hide by the assessee. It is also noted that Hon'ble Calcutta High Court in the case of Virgin Creations (ITA No.302 of 2011) order dated 23/11/2011 on the issue whe....
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.... 2007, Rs. 8,33,064/- was shown in the TDS account on account of professional charges amounting to Rs. 1,48,49,500/-. Rs. 69,92,000/- was paid in the month of February, 2007 and TDS of Rs. 3,92,221/- thereon was deposited on 7th March, 2007. The balance amount of Rs. 78,51,800/- was paid/released in the month of March, 2007 and TDS was deducted and was paid on the said amount before the due date in the month of April, 2007. Deduction, therefore, was due and made in the month of March, 2007 and the TDS was deposited in the Government account in April, 2007, i.e., within the stipulated time. 6. The Assessing Officer after noticing the submission did not deal with it but observed that there was violation of Section 40(a)(ia) as TDS should have been paid on or before 31st March, 2007 and as expenses of Rs. 78,51,800/- had been debited to the professional charges account in February, 2007, i.e., prior to March, 2007. 7. The Commissioner of Income Tax (Appeals) upheld the said addition under Section 40(a)(ia) observing that Section 194J required deduction of tax at source either at the time of payment or at the time of credit of such sum to the account of the payee, whichever is ea....
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....hich is a factual assertion. It did not examine on merits the ratio and reasoning of the tribunal in Bharati Shipyard Limited (supra) and/or affirm or disapprove the same. The order of the tribunal in the case of Shyam Narayan and Brothers (supra) was set aside for re-examination as the tribunal had followed the decision in the case of Bansal Parivahan (India) Private Limited (supra) which stood overruled by the Full Bench. Thus, the said decision does not deal with the legal question raised before us. 12. The decision of the Calcutta High Court in Virgin Creations (supra) is a short one and is as under:- "The Court: We have heard Mr.Nizamuddin and gone through the impugned judgment and order. We have also examined the point formulated for which the present appeal is sought to be admitted. It is argued by Mr.Nizamuddin that this court needs to take decision as to whether section 40A(ia) is having retrospective operation or not. The learned Tribunal on fact found that the assessee had deducted tax at source from the paid charges between the period April 1, 2005 and April 28, 2006 and the same were paid by the assessee in July and August 2006, i.e., well before the due date ....
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.... "profit and gains of business or profession"... (ia) any interest, commission or brokerage, rent, royalty, fees for professional services or fees for technical services payable to a resi-dent, or amounts payable to a contactor or subcontractor, being resident, for carrying out any work (including supply of labour for carrying out any work), on which tax is deductible at source under Chapter XVII-B and such tax has not been paid,- (A) in a case where the tax was deductible and was so deducted during the last month of the previous year, on or before the due date specified in sub-section (1) of section 139; or (B) in any other case, on or before the last day of the previous year; Provided that where in respect of any such sum, tax has been deducted in any subsequent year, or has been deducted- (A) during the last month of the previous year but paid after the said due date; or (B) during any other month of the previous year but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid." (emphasis supplied) 15. Section 40(a)(ia) was further amended by Financ....
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....ear but paid after the end of the said previous year, such sum shall be allowed as a deduction in computing the income of the previous year in which such tax has been paid. This amendment will take effect retrospectively from 1st April, 2010, and will, accordingly, apply in relation to the assessment year 2010-11 and subsequent years." 17. We have noticed the facts of the present case. It is an accepted and admitted position that the assessee was following cash system and not mercantile system of accountancy. Neither the Assessing Officer nor the CIT (Appeals) have disputed the said factual position. The assessment order itself specifically records that the assessee was following cash system. It is not disputed in the assessment order or in the first appellate order that the assessee had paid a sum of Rs. 78,51,800/- in the month of March, 2007 and had accordingly deducted TDS of Rs. 4,40,843/- and the same was deposited within the due date from the date of said deduction in the month of April, 2007. Prior to that, the assessee had deducted TDS of Rs. 3,92,221/- on professional charges of Rs. 69,92,700/- in February, 2007. TDS on the said amount which was deducted in the mont....
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....lause A of the proviso will apply in different factual matrix or situations. Clause A of the main Section applies when the tax was deductable and was so deducted during the last month of the assessment year and was paid on or before the due date for filing of the return under Section 139(1). The proviso applies when tax has been deducted in any subsequent year or has been deducted as per clause A thereto during last month of the previous year, but has been paid after the said due date. The expression "said due date" cannot mean the date on which TDS as per the Chapter XVIII B should have been paid. It refers to the due date for filing of the return under Section 139(1) of the Act. Any other interpretation would lead to difficulties, incongruities and conflict between clause A of the main Section and clause A of the proviso. Both would be applicable to the same factual matrix/situation with contradictory stipulations or consequences. Under clause A of the main Section, the TDS deductable and so deducted during the last month should be paid on or before the due date for filing of the return under Section 139(1) but as per the Revenue under the proviso clause A, TDS should be deducted....
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.... Commissioner of Income Tax versus Alom Extrusions Limited, (2009) 319 ITR 306 (SC). In the case of Allied Motors (P) Limited (supra), the Supreme Court was examining the first proviso to Section 43B and whether it was retrospective. Section 43B was inserted in the Act with effect from 1st April 1984 for curbing claims of taxpayers who did not discharge or pay statutory liabilities but claimed deductions on the ground that the statutory liability had accrued. Section 43B states that the statutory liability would be allowed as a deduction or as an expense in the year in which the payment was made and would not be allowed, even in cases of mercantile system of accountancy, in the year of accrual. It was noticed that in some cases hardship would be caused to assessees, who paid the statutory dues within the prescribed period though the payments so made would not fall within the relevant previous year. Accordingly, a proviso was added by Finance Act, 1987 applicable with effect from 1st April, 1988. The proviso stipulated that when statutory dues covered by Section 43B were paid on or before the due date for furnishing of the return under Section 139(1), the deduction/expense, equal to....
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....gh court has also held the amendment inserting the first proviso to be explanatory in the case of Jamshedpur Motor Accessories Stores v. Union of India. The special leave petition from this decision of the Patna High Court was dismissed. The view of the Delhi High Court, therefore, that the first proviso to Section 43-B will be available only prospectively does not appear to be correct. As observed by G.P. Singh in his Principles of Statutory Interpretation, 4th Edn. At p. 291: "It is well settled that if a statute is curative or merely declaratory of the previous law retrospective operation is generally intended." In fact the amendment would not serve its object in such a situation unless it is construed as retrospective. The view, therefore, taken by the Delhi High Court cannot be sustained." 23. Section 43B deals with statutory dues and stipulates that the year in which the payment is made the same would be allowed as a deduction even if the assessee is following the mercantile system of accountancy. The proviso, however, stipulates that deduction would be allowed where the statutory dues covered by Section 43B stand paid on or before the due date of filing of return of incom....
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....ssion "said due date" used in clause A of proviso to unamended section refers to time specified in Section 139(1) of the Act. The amended section 40(a)(ia) expands and further liberalises the statue when it stipulates that deductions made in the first eleven months of the previous year but paid before the due date of filing of the return, will constitute sufficient compliance. 26. Before we close, we must deal with another contention raised by the counsel for the Revenue to the effect that Finance Bill, 2010 increases the rate of interest from 12% to 18% for failure to deposit TDS in time. This increase in rate of interest, it is submitted, is directly connected and associated with the concession or benefit which was extended to the assessee by amending the proviso. We do not find any merit in the said contention. Even prior to the amendment made by Finance Bill, 2010, Section 40(a)(ia) had stipulated that in case where the tax was deductable and so deducted during the last month of the previous year but was paid on or before the due date specified in Section 139(1) of the Act, deduction/expenditure will be allowed in the previous year notwithstanding the main Section. The secti....
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....use-A of the main section and Clause-A of the proviso. Admittedly, failure to deduct TDS or deposit TDS results in loss of Revenue and may deprive the government of the tax due and payable. But, the provision should be interpreted in fair, just and equitable manner. Finally, the issue was decided in favour of the assessee by holding that the Assessing Officer was not justified in disallowing and invoking section 40(a)(ia) of the Act. 2.9. In a later decision in CIT vs Naresh Kumar (ITA No.24/2013) order dated 06/09/2013 identically an elaborate discussion was made by Hon'ble High Court of Delhi and decided in favour of the assessee by dismissing the appeal of the Revenue. In the light of the foregoing discussions and following the aforesaid decisions from Hon'ble High Court, we are of the considered opinion that there was no justification for invoking section 40(a)(ia) of the Act as the assessee deposited the TDS amount before filing of return. 2.10. Now, question arises whether the Ld Assessing Officer was justified in reopening the assessment u/s 147/148 of the Act and the Ld. Commissioner of Income Tax (Appeal) in affirming the same. We find that the assessee filed....
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....ed on facts. "Opinion" formed or based on wrong and incorrect facts or which are belied and untrue do not get protection and cover under the principle of "change of opinion". Factual information or material which was incorrect or was not available with the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression "material facts" means those facts which if taken into account would have an adverse effect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have a remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. However, in such cases, the onus will be on the Revenue to show that the assessee had stated incorrect and wrong material facts resulting in the Assessing Officer proceeding on the basis of facts, which are incorrect and wrong. The reasons recorded and the documents on record are of paramount importance and will have to be examined to determine whether the stand of the Revenue is correct. There is a differe....
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....IT v. Chase Bright Steel Ltd. (No. 1) [1989] 177 ITR 124 (Bom) (para 21) CIT v. DLF Power Ltd. [2012] 345 ITR 446 (Delhi) (para 14) CIT v. Eicher Ltd. [2007] 294 ITR 310 (Delhi) (paras 10, 28) CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] (paras 2, 12, 20, 48) CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) (paras 2, 28) CIT v. Khemchand Ramdas [1938] 6 ITR 414 (PC) (para 50) CIT v. P. V. S. Beedies P. Ltd. [1999] 237 ITR 13 (SC) (para 18) CIT (Asst.) v. Rajesh Jhaveri Stock Brokers P. Ltd. [2007] 291 ITR 500 (SC) (paras 4, 12) CIT v. Sharma (H. P.) [1980] 122 ITR 675 (Delhi) (para 9) Consolidated Photo and Finvest Ltd. v. Asst.CIT [2006] 281 ITR 394 (Delhi) (paras 9, 11) Dalmia P. Ltd. v. CIT [2012] 348 ITR 469 (Delhi) (para 17) G. R. Ramachari and Co. v. CIT [1961] 41 ITR 142 (Mad) (paras 38, 61) Hari Iron Trading Co. v. CIT [2003] 263 ITR 437 (P&H) (para 10) ITO v. Habibullah (S. K.) [1962] 44 ITR 809 (SC) (para 50) Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR 996 (SC) (paras 34, 35) Indian Hume Pipe Co. Ltd. v. Asst. CIT [2012] 348 ITR 439 (Bom) (para 17) 3i Infotech Ltd. v. Asst. CIT [2010] 3....
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....on... An opinion is a conviction based on testimony... they are as a result of reading, experience and reflection". In the context of assessment proceedings, it means formation of belief by an Assessing Officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection to use the words in Law Lexicon by P. Ramanatha Aiyar. The question of change of opinion arise when an Assessing Officer forms an opinion and decides not to make an addition or holds that the assessee is correct and accepts his position or stand. In Hari Iron Trading Co. v. CIT [2003] 263 ITR 437 (P&H), a Division Bench of the Hon'ble Punjab and Haryana High Court observed that an assessee has no control over the way an assessment order is drafted. It was observed that generally, the issues which are accepted by the Assessing Officer do not find mention in the assessment order and only such points are taken note of on which the assessee's explanations are rejected and additions/disallowances are made. Applying the principles laid down by the Full Bench of this court as well as the observations of the Punjab and Haryana High Court, we find that if the enti....
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....ind, which is best done by giving reasons for the view which the authority is taking. In cases where the order passed by a statutory authority is silent as to the reasons for the conclusion it has drawn, it can well be said that the authority has not applied its mind to the issue before it nor formed any opinion. The principle that a mere change of opinion cannot be a basis for reopening completed assessments would be applicable only to situations where the Assessing Officer has applied his mind and taken a conscious decision on a particular matter in issue. It will have no application where the order of assessment does not address itself to the aspect which is the basis for reopening of the assessment, as is the position in the present case. It is in that view inconsequential whether or not the material necessary for taking a decision was available to the Assessing Officer either generally or in the form of a reply to the questionnaire served upon the assessee. What is important is whether the Assessing Officer had based on the material available to him taken a view. If he had not done so, the proposed reopening cannot be assailed on the ground that the same is based only on a cha....
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....r material available should relate to material facts. The expression "material facts" means those facts which if taken into account would have an adverse effect on the assessee by a higher assessment of income than the one actually made. Correct material facts can be ascertained from the assessment records also and it is not necessary that the same may come from a third person or source, i.e., from source other than the assessment records. However, in such cases, the onus will be on the Revenue to show that the assessee had stated incorrect and wrong material facts resulting in the Assessing Officer proceeding on the basis of facts, which are incorrect and wrong. The reasons recorded and the documents on record are of paramount importance and will have to be examined to determine whether the stand of the Revenue is correct. A decision from Hon'ble Delhi High Court dated September 26, 2011 in Dalmia P. Ltd. v. CIT [2012] 348 ITR 469 (Delhi) and another decision from Hon'ble jurisdictional High Court dated November 8, 2011, in Indian Hume Pipe Co. Ltd. v. Asst. CIT [2012] 348 ITR 439 (Bom) are two such cases, which throws light on the issue. In the first case, the Assessing Officer i....
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....essee." "As recorded above, the reasons recorded or the documents available must show nexus that in fact they are germane and relevant to the subjective opinion formed by the Assessing Officer regarding escapement of income. At the same time, it is not the requirement that the Assessing Officer should have finally ascertained escapement of income by recording conclusive findings. The final ascertainment takes place when the final or reassessment order is passed. It is enough if the Assessing Officer can show tentatively or prima facie on the basis of the reasons recorded and with reference to the documents available on record that income has escaped assessment." This brings us to the observations of the Delhi High Court in Kelvinator of India Ltd. [2002] 256 ITR 1 (Delhi) [FB] which read as under (page 18): "The Board in exercise of its jurisdiction under the aforementioned provisions had issued the circular on October 31, 1989. The said circular admittedly is binding on the Revenue. The authority, therefore, could not have taken a view, which would run counter to the mandate of the said circular." From a perusal of clause 7.2 of the said circular it would appear that i....
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....TR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the 'oversight, inadvertence or mistake' of the Income-tax Officer must fall within section 34(1)(b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Incometax Officer discovers that he has committed an error in consequence of which income has escaped assessment it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC), and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay....
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....en. Again, suppose the Income-tax Officer accepts the plea of an assessee that a particular receipt is not income liable to tax. But, on further research into law he finds that there was a direct decision holding that category of receipt to be an income receipt. He would be entitled to reopen the assessment under section 147(b) by virtue of proposition (4) of Kalyanji Mavji. The fact that the details of sales of house properties were already in the file or that the decision subsequently come across by him was already there would not affect the position because the information that such facts or decision existed comes to him only much later. What then, is the difference between the situations envisaged in propositions (2) and (4) of Kalyanji Maviji's case [1976] 102 ITR 287 (SC). The difference, if one keeps in mind the trend of the judicial decisions, is this. Proposition (4) refers to a case where the Incometax Officer initiates reassessment proceedings in the light of 'information' obtained by him by an investigation into material already on record or by research into the law applicable thereto which has brought out an angle or aspect that had been missed earlier, ....
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.... material in the original assessment itself, then he would be powerless to start the proceedings for the reassessment. Where, however, the Income-tax Officer had not considered the material and subsequently came by the material from the record itself, then such a case would fall within the scope of section 147(b) of the Act'." (emphasis supplied) The aforesaid observations are a complete answer to the issue that if a particular subject-matter, item, deduction or claim is not examined by the Assessing Officer, it will nevertheless be a case of "change of opinion" and the reassessment proceedings will be barred. 2.23. We are conscious of the fact that the aforesaid observations have been made in the context of section 147(b) with reference to the term "information" and conceptually there is difference in scope and ambit of reopening provisions incorporated with effect from April 1, 1989. However, it was observed by the Hon'ble Apex Court in Kelvinator of India Ltd. [2010] 320 ITR 561 (SC) that the amended provisions are wider. What is important and relevant is that the principle of "change of opinion" was equally applicable under the un-amended provisions. The Supreme Court....
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....Vasant Chunilal Patel vs ACIT (1999) 236 ITR 82, 840 (Guj.) even went to the extent that action under main section 147 is possible in spite of complete disclosure of material facts. The primary condition of reasonable belief having nexus with the material on record is still operative. However, we are of the view, that mere fresh application of mind to the same set of facts or mere change of opinion does not confer jurisdiction to the Assessing Officer even under the post 1989 section 147 of the Act. Our view find support from following decisions:- a. Jindal Photo Films Ltd. vs DCIT (1998) 234 ITR 170 (Del.), b. Garden Silk Mills Pvt. Ltd. vs DCIT (1999) 151 CTR (Guj.) 533, c. Govind Chhapabhai Patel vs DCIT 240 ITR 628, 630 (Guj.), d. Foramer vs CIT (2001) 247 ITR 436 (All.), affirmed in CIT vs Foramer Finance (2003) 264 ITR 566, 567 (SC), e. Ipca Laboratories vs DCIT (2001) 251 ITR 416 (Bom.), f. Ritu Investment Pvt. Ltd.(2012) 345 ITR 214 (Del.), g. Ketan B. Mehta vs ACIT (2012) 346 ITR 254 (Guj.), h. Ms. Praveen P. Bharucha vs DCIT (2012) 348 ITR 325 (Bom.), i. CIT vs Usha International Ltd. 348 ITR 485 (Del.), j. Agricultural Produce Market Committ....
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....ars were furnished by the assessee which were examined, or presumed to be examined, by him. There was a divergence of opinion amongst various High Courts as to what constitute "Information" for the purposes of section 34(1)(b) of the 1922 Act (which corresponds to section 147(b) of the 1961 Act) the Hon'ble Apex Court in CWT vs Imperial Tobacco Company Ltd. (1966) 61 ITR 461 has noted such divergence of opinion on the point. Hon'ble jurisdictional High Court in CIT vs Sir Mohammad Yusuf Ismail (1944) 12 ITR 8 (Bom.) held that mere change of opinion on the same facts are on question of law or mere discovery of mistake of law is not sufficient information and that in order to sustained action u/s 34 by further holding that reassessment is not permissible. The Hon'ble Apex Court in Simon Carves Ltd. (1976) 105 ITR 212 held that errorless legally correct order cannot be reopened, therefore, it is settled law that without any new information and on the basis of mere change of opinion, reopening of assessment is not permissible. As was held in CIT vs TTK Prestige ltd. (2010) 322 ITR 390 (Karn.) SLP dismissed in 2010 322 ITR (St.) 14 (SC). Reference also made to Asian Paints ltd. vs DCIT ....
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....made foreign liquors purchased by them from the Andhra Pradesh State Beverages Corporation. The petitioners are aggrieved by the reopening of assessment sought to be made by the Assessing Officers under Section 147 of the Income Tax Act, 1961. 2. Heard Mr. K.Vasantkumar, learned counsel for the petitioners and Mr. B.Narasimha Sarma, learned Standing Counsel appearing for the respondents. 3. The petitioners in these writ petitions were issued with notices under Section 148 of the Act on various dates. In the notices which were in the printed form, it was stated that the Assessing Officers had reason to believe that there was income chargeable to tax relating to the relevant assessment years which had escaped assessment within the meaning of Section 147 of the Act and that therefore the petitioners should file a return in the prescribed form. 4. In response to the said notices, the petitioners sent individual replies indicating that they had already filed their returns of income electronically admitting income to a particular extent. In the replies, the petitioners also sought the reason for issuance of the notice. 5. Thereafter, the Assessing Officers sent a rejoinder in....
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....e purposes of this section, the following shall also be deemed to be cases where income chargeable to tax escaped assessment, namely (a)------- (b) where a ROI has been furnished by the assessee but no assessment has been made and it is noticed by the AO that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the FOI. 5. The notice was issued after obtaining approval from the competent Authority. The Joint Commissioner of Income Tax, Nizamabad Range has given approval vide F.No.51/JCIT/ NZB/u/s 148/2015-16 dated 12.02.2016. 6. In view of the above the objections of the assessee fail and there is no reason for dropping the case. Hence, the proceedings shall continue." 8. Though the learned counsel for the petitioners as well as the learned Standing Counsel for the respondents raised several contentions, we are of the considered view that one contention of the petitioners is sufficient for the disposal of all these writ petitions. Admittedly, the notices under Section 148 was issued on the sole ground that the total income admitted by each of these petitioners, constituted a very small percentage of their gross receipts f....
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....ss receipts. Therefore, we are of the considered view that the Assessing Officers completely erred in reopening assessments on the basis of either a suspicion that there is suppression of income or on the basis that persons in the same line of business are returning a higher income. Without even mentioning the comparables, no initiation of proceedings under Section 147 can be made. 12. In the order rejecting the objections, the Assessing Officer has relied upon Clause (b) under Explanation 2 to Section 147. Clause (b) under Explanation 2 to Section 147 deals with cases where a return of income has been furnished by the assessee but no assessment has been made and the Assessing Officer notices that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return. Admittedly, the cases of none of these petitioners fall under the category of claiming excessive loss or deduction or allowance or relief in the return. The cases of the assessees are attempted by the Assessing Officers to be brought within the category of "understatement of income", so as to invoke Clause (b) under Explanation 2. 13. But to come to the conclusion tha....
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.... Hon'ble Bombay High Court in the case of Bayer Material Science Pvt. Ltd. v. DCIT(2016) 382 ITR 333 (Bom.)(HC) held that non-disposal of objections and providing the assessee with the recorded reasons towards the end of the limitation period and passing a reassessment order without dealing with the objections results in gross harassment to the assessee which the Pr. CIT should note and take remedial action. In the present appeal also, the Assessing Officer issued notice u/s 148 of the Act, one day before, expiry of extended period of six years. Thus, considering the ratio laid down in the aforementioned judicial pronouncement and the material facts, we allow the appeal of the assessee by holding that reopening of assessment was not valid, beyond four years, when the material facts were duly disclosed by the assessee and the tax deducted at source was deposited in the state exchequer before due date of filing of return. 3. Now, we shall take up the appeal of the Revenue (ITA No.865/Mum/2014). The Department had raised additional ground as under:- "On the facts and in the circumstances of the case and in law, the Ld. Commissioner of Income Tax (Appeal) is not justified as the ....