TaxTMI 
TaxTMI 
2022 (8) TMI 1279
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....ssment Year 2012-13 disclosing a total income of Rs. 167,44,57,970/- The Assessing Officer sent a Notice to the petitioner on 22.08.2013, under Section 143 (2) of the Act for the relevant Assessment Year selecting the said return filed for scrutiny assessment and calling upon the petitioner company to produce or cause to be produced on 16th September, 2013 any document, accounts and any other evidence on which the petitioner company might rely in support of the return filed by it. The Assessing Officer sent a notice dated 22.08.2013 to the petitioner under Section 142 (1) of the Act relating to the relevant Assessment Year calling upon the petitioner company to produce or cause to be produced particulars of accounts and/or documents as mentioned in the said notice and in response to the said notice, petitioner company on 12.09.2013 submitted all detailed documents and information called for in the said notice dated 22nd August, 2013 under Section 142 (1) of the Act which inter alia included Hard copy of the e-filled return form, computation, audited accounts & Tax Audit Report and Form No. 3CD. The Assessing Officer issued another notice on 05.08.2014 Notice under Section....
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....h, 2015 and in response to the said notice petitioner company filed its return of income on 29.04.2019 through e-filing and also objected to the issuance of the reassessment notice and sought for the recorded reasons for issuing the said notice. Thereafter on 26.08.2019 petitioner received recorded reasons. On 03.09.2019 the respondent no. 1 rejected the rebuttal contained in the petitioner's letter dated 26th August, 2019 and issued a notice under Section 143 (2) of the Act on 03.09.2019 calling upon the petitioner company to attend his office on 9th September, 2019 and further issued a Notice under Section 142 (1) of the said Act calling for certain documents and/or information from the petitioner company to be produced before him on 9th September, 2019. Petitioner submits that the impugned reassessment proceedings are without or in excess of jurisdiction because there can be no question of the assessee company not disclosing truly and fully all material particulars relating to its income in the Assessment year in question since the petitioner company had submitted all necessary details of the transactions at various stages in response to queries raised by the Assessing Officer ....
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....d to tax in the said Assessment Year which would be evident from the return for the Assessment Year 2015-16 and the order of scrutiny assessment passed in respect of the said Assessment Year 2015-16 dated 23rd October, 2017 read with the order of the Commissioner of Income Tax (Appeals) -1, Kolkata dated 4th March, 2019 relating to the Assessment Year 2015-16. Thus there can no question of the income in question having escaped assessment. Petitioner submitted that the transfer of the immovable properties in question being a capital asset was completed in the year of its transaction which attained on registration on those properties in favour of the transferees and as such, the income from such transfer of capital asset becomes taxable in the year of its transfer. The registration of 15 numbers of flats which form the subject matter of the notice dated 31st March, 2019 forming a part of 37 flats assessed and referred to in the Assessment Order for the Assessment Year 2015-16 read with the Appellate Order was completed in the financial year 2014-15 and as such, the question of same escaping assessment in the Assessment Year 2012-13 cannot and does not arise. Petitioner submitted th....
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....ment notice of succeeding year was issued, was set aside by Commissioner (Appeals) before the date of issue of the reassessment notice, the impugned notice was to be set aside. The ratio of the said decision applies mutatis mutandis to the facts of this case inasmuch that before issuance of the impugned notice under Section 148 of the Act, the learned CIT (Appeals) has decided the involved issue in favour of the petitioner assessee company in the other year. In other words, at the time of issuing the reassessment notice and recording of the purported reasons for issuing the same, the order relating to Assessment Year 2015-16 based on which the Notice was issued did not survive and was merged with the appellate order dated 4th March, 2019 passed by the learned Commissioner (Appeals) and as such, there cannot be any escapement of income on the ground alleged. Petitioner submitted that none of the agreements for sale in question was registered within the year under consideration and the conveyance in favour of the ultimate purchasers were only registered within the period relevant to the Assessment Year 2015-16 in which the income from transfer of 'right to properties' have been duly....
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....lready accepted by the Assessing Officer in favour of the assessee petitioner in his order under Section 143 (3) of the Act, are not sustainable in law and are liable to be quashed. Relevant portion of the judgment in the case of Calcutta Club Ltd. -vs- Income Tax Officer and Ors reported in [2020] 426 ITR 157 (Cal) is quoted hereunder: "Considering the submission of the parties, relevant records, Provisions of law and the decisions relied upon by the parties, in my considered view the impugned notices under Section 148 of the Income Tax Act, 1961 and the proceedings under Section 147 of the Act are not sustainable in law and should be quashed for the reason that admittedly impugned proceeding initiated under Section 147 and notices issued under Section 148 of the Income Tax Act, 1961, which were issued after the expiry of four years from the end of the relevant assessment year and in view of the fact that there is no whispering in the recorded reason that there was any omission or failure on the part of the assessee in disclosing fully and truly material facts for assessment and in view of the fact that the Assessing Officer could not establish that the information of alleged es....
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....ular assessment has come to his knowledge. In view of these admitted factual position I am of the considered opinion that criteria for reopening of assessment under Section 147 of the Income Tax Act, 1961, has not been fulfilled in this case. (iii) It appears from the recorded reason itself that the payment on account of 'referral to doctors' was already considered and allowed under Section 37 (1) of the Income Tax Act, 1961 by the predecessor of the present Assessing Officer at the time of passing regular assessment order under Section 143 (3) of the Act, dated 28th February, 2014 and the present Assessing Officer himself has recorded in its recorded reason that those materials upon which he has formed his opinion after the expiry of four years from the end of relevant assessment year were already available at the time of regular assessment yet on the self-same material he has formed an opinion that the same should not have been allowed in view of Circular No. 5/2012 dated 1st August, 2012 and Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulation, 2002 which is nothing but mere change of opinion. Considering the facts and circumstances of the case as a....
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....at the time of regular assessment, on the basis of very same material and not on any another new material assessing officer wants to take a different view which is not permissible for reopening of an assessment particularly proceedings after regular assessment and after expiry of four years from the end of the relevant assessment year." Relevant portion of the judgment in the case of Commissioner of Income Tax-VI, New Delhi -vs- Usha International Ltd. reported in [2012] 25 taxmann.com 200 (Delhi) (FB), Paragraph Nos. 9-24 are quoted hereunder: 9. It was argued on behalf of the Revenue that for determining whether or not it is not a case of change of opinion, reference can and should be made only to the assessment order and the discussion or the reasons stated therein. Reliance was placed on the decision of this Court in Commissioner of Income Tax versus H.P. Sharma, 1980 (122) ITR 675 (Del.) and Consolidated Photo and Finvest Limited versus Assistant Commissioner of Income Tax, (2006) 281 ITR 394(Del.). The relevant portion of the judgment in H.P. Sharma (supra) reads as under:- "Adverting to the next question as to whether the resorts to reassessments under ss. 147(b) and 14....
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....does not reveal that the matters and controversies now sought to be raised by way of reassessment were at all before the ITO or considered by him, it would be entirely surmiseful and, therefore, not permissible to still import their existence and consideration. This can, however, be permissible only where the assessment record of that stage overwhelmingly brings out that the matter did come for due consideration and was in fact considered. Mere silence on a matter or absence of discussion in the original order does not imply that the ITO adjudicated upon the same one way or the other. (Emphasis supplied) 10. We may note that the said decision was not dealing with Section 147 of the Act as amended with effect from 1 st April, 1989, but was with reference to Section 147(b) of the Act under which an Assessing Officer could reopen assessment on the basis of "information. The term "to inform" it was observed means to impart knowledge and it does not mean mere availability. It gets transmuted into an item of information only when its existence is realized and its implications are recognized. However, it is not possible to agree with the observations made in paragraph 16, which have bee....
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....t. The Assessing Officer has in the reasoned order passed by him indicated the basis on which income exigible to tax had in his opinion escaped assessment. The argument that the proposed reopening of assessment was based only upon a change of opinion has not impressed us. The assessment order did not admittedly address itself to the question which the Assessing Officer proposes to examine in the course of reassessment proceedings. The submission of Mr. Vohra that even when the order of assessment did not record any explicit opinion on the aspects now sought to be examined, it must be presumed that those aspects were present to the mind of the Assessing Officer and had been held in favour of the assessee is too far-fetched a proposition to merit acceptance. There may indeed be a presumption that the assessment proceedings have been regularly conducted, but there can be no presumption that even when the order of assessment is silent, all possible angles and aspects of a controversy had been examined and determined by the Assessing Officer. It is trite that a matter in issue can be validly determined only upon application of mind by the authority determining the same. Application of m....
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....the said cases will be hit by 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 that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons. 14. In the second and third situation, the Revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the Revenue, they are entitled to and can invoke power under Section 263 of the Act. This aspect and position has been highlighted in CIT vs. DLF Powers Limited, ITA 973/2011 decided on 29th November, 2011 and BLB Limited vs. ACIT Writ Petition (Civil) No. 6884/2010 decided on 1st December, 2011. In the last decision it has been observed: "13. Revenue had the option, but did not take r....
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....he 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. Decision of this Court in Writ Petition (Civil) No. 6205/2010, Dalmia Private Limited versus Commissioner of Income Tax Delhi 10 and Another, dated 26th September, 2011 and decision of Bombay High Court in Writ Petition No. 1017/2011, The Indian Hume Pipe Company Limited versus The Assistant Commissioner of Income Tax, dated 8th November, 2011 are two such cases. In the first case, the Assessing Officer in the original assessment had made additions of Rs.19,86,551/- under Section 40(1) on account of unconfirmed sundry creditors. The reassessment proceedings were initiated after noticing that unconfirmed sundry creditors, of which details etc. were not furnished, were to the extent of Rs.52,84,058/- and not Rs.19,86,551/-. In Indian Hume Pipe Company Limited (supra), after verification the claim under Section 54-EC was allowed but subsequently on examination it trans....
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....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. 20. This brings us to the observations of Delhi High Court in Kelvinator of India Ltd. (supra) which read as under:- "The Board in exercise of its jurisdiction under the aforementioned provisions had issued the Circular on 31st October 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. Clause 7.2 as referred to hereinbefore is important. From a perusal of Clause 7.2 of the said Circular it would appear that in no uncertain terms it was stated as to under what circumstances the amendments had been carried out i.e. only with a view to allay the fears that the omission of the expression "reason to believe" from Section 147 would give arbitrary powers to the Assessing Officer to reopen past assessment on mere change of opinion. It is, Therefore, evident that even according to the CBDT a mere change of opinion cannot form the basis for re- opening a completed ....
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....er has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act the judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the assessing officer to reopen the proceeding without anything further, the same would amount to giving premium to an authority exercising quasi judicial function to take benefit of its own wrong. 21. In order to appreciate and understand the said observation, it is necessary to examine the facts of the said case. The assessment year in reference was 1987-88 but the reopening notice was issued on 20th April, 1990 after the amended Section 147 was applicable. Original return filed on 29th June, 1987 was revised on 5th October, 1989, along with a letter explaining why the return was being revised. In the letter the assessee had explained and submitted that rent of Rs.1,76,000/- and depreciation of Rs.66,441/- should be allowed in terms of Section 30 and 32 of the Act. This was the reason for revising the return and ....
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....o understand and apply the law. In such cases resort to reassessment proceedings is not permissible but in a given case where an erroneous order prejudicial to the Revenue is passed, option to correct the error is available under Section 263 of the Act. 23. The said observations do not mean that even if the Assessing Officer did not examine a particular subject matter, entry or claim/deduction and therefore had not formed any opinion, it must be presumed that he must have formed an opinion. This is not what was argued by the assessee or held and decided. There cannot be deemed formation of opinion even when the particular subject matter, entry or claim/deduction is not examined. 24. Distinction between disclosure/declaration of material facts made by the assessee and the effect thereof and the principle of change of opinion is apparent and recognized. Failure to make full and true disclosure of material facts is a precondition which should be satisfied if the reopening is after four years of the end of the assessment year. The explanation stipulates that mere production of books of accounts and other documents, from which the Assessing Officer could have with due diligence infe....
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.... of the Act are special powers and peculiar in nature where a quasi-judicial order previously passed after full hearing and which has otherwise become final is subject to reopening on certain grounds. Ordinarily, a judicial or quasi-judicial order is subject to appeal, revision or even review if statute so permits but not liable to be reopened by the same authority. Such powers are vested by the Legislature presumably in view of the highly complex nature of assessment proceedings involving a large number of assessees concerning multiple questions of claims, deductions and exemptions, which assessments have to be completed in a time fame. To protect the interests of the Revenue, therefore, such special provisions are made under section 147 of the Act. However, it must be appreciated that an assessment previously framed after scrutiny when reopened, results into considerable hardship to the assessee. The assessment gets reopened not only qua those grounds which are recorded in the reasons, but also with respect to the entire original assessment, of course at the hands of the Revenue. This obviously would lead to considerable hardship and uncertainty. It is precisely for this reason t....
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....ve formed any opinion on such a claim. Such a contention, in our opinion, would be devoid of merits. If a claim made by the assessee in the return is not rejected, it stands allowed. If such a claim is scrutinized by the Assessing Officer during assessment, it means he was convinced about the validity of the claim. His formation of opinion is thus complete. Merely because he chooses not to assign his reasons in the assessment order would not alter this position. It may be a non-reasoned order but not of acceptance of a claim without formation of opinion. Any other view would give arbitrary powers to the Assessing Officer. 43. We are, therefore, of the opinion that in a situation where the Assessing Officer during scrutiny assessment, notices a claim of exemption, deduction or such like made by the assessee, having some prima facie doubt raises queries, asking the assessee to satisfy him with respect to such a claim and thereafter, does not make any addition in the final order of assessment, he can be stated to have formed an opinion whether or not in the final order he gives his reasons for not making the addition." (i) Learned Advocate appearing for the respondents could not de....