2016 (6) TMI 113 - HC - Income Tax

Reopening of assessment - 90% of the mining franchise fee in computing the tax liability of the assessee - Commissioner of Income Tax (Appeals) has categorically held that the deduction under Section 80HHC of the Act was the subject matter of scrutiny in assessment proceedings under Section 143(3) of the Act; re-computation of the same deduction, on the basis of existing information, is only a change of opinion also affirmed by ITAT - Held that - As the jurisdiction, which this Court can exercise under Section 260-A of the Act, is only if a substantial question of law arises for consideration, and as the findings recorded by the Commissioner of Income Tax (Appeals) and the Tribunal, on the inapplicability of the proviso to Section 147 of the Act to the case on hand, are findings of fact, we are satisfied that no question of law, much less a substantial question of law, arises for consideration necessitating the present appeal being entertained under Section 260-A of the Act. - Decided against revenue

Summary

Issues: Reopening of assessment under Section 147 of the Income Tax Act, 1961 based on failure to disclose all material facts necessary for assessment; Recomputation of deduction under Section 80HHC; Application of proviso to Section 147 after four years from original assessment.

Reopening of Assessment under Section 147:
The case involved the re-opening of assessment under Section 147 of the Income Tax Act, 1961 for the assessment year 2003-04. The Assessing Authority re-opened the assessment under Section 147 and added 90% of the mining franchise fee to the tax liability of the assessee. The Commissioner of Income Tax (Appeals) observed that there was no failure on the part of the assessee to fully and truly disclose all material facts necessary for assessment. It was noted that more than four years had passed since the original assessment under Section 143(3), and no new information had come forth. The Tribunal also held that the re-computation of the deduction under Section 80HHC, based on existing information, was merely a change of opinion, and there was no failure to disclose all material facts.

Proviso to Section 147 and Four-Year Limitation:
Section 147 of the Act pertains to "income escaping assessment," allowing the Assessing Authority to reassess income that has escaped assessment. The proviso to Section 147 restricts such action after four years from the end of the relevant assessment year, unless there is a failure to disclose all material facts by the assessee. The proviso clarifies that the mere production of account books or evidence may not constitute disclosure. In this case, it was argued that since the assessee had filed returns, the question was whether there was a failure to fully and truly disclose all material facts necessary for assessment. The Assessing Authority did not find any such failure in this regard.

Judicial Review and Substantial Question of Law:
The Court noted that its jurisdiction under Section 260-A of the Act is limited to substantial questions of law. Since the findings by the Commissioner of Income Tax (Appeals) and the Tribunal regarding the inapplicability of the proviso to Section 147 were factual findings, the Court found no substantial question of law for consideration. The Court, therefore, dismissed the appeal, emphasizing that no question of law, let alone a substantial one, arose for consideration.

In conclusion, the Court upheld the decisions of the Commissioner of Income Tax (Appeals) and the Tribunal, dismissing the appeal and any pending petitions. No costs were awarded in the matter.