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TMI Blog2011 (3) TMI 718X X X X Extracts X X X X X X X X Extracts X X X X ..... e said assessment has become infructuous - Decided in favour of assessee. - 3539 (MUM.) OF 2007 - - - Dated:- 9-3-2011 - D. MANMOHAN, P.M. JAGTAP, JJ. Vijay Mehta and P.D.M. Agarwal for the Appellant. A.P. Singh for the Respondent. ORDER P.M. Jagtap, Accountant Member This appeal by the assessee is directed against the order of the learned Commissioner of Income-tax (Appeals)-XXX, Mumbai, dated 28-2-2007 for the assessment year 2000-01, whereby he upheld the validity of assessment made by the Assessing Officer under section 143(3) read with section 147 and also confirmed the addition of Rs. 4,09,13,500 made therein under section 68. 2. The assessee, in the present case, is an individual, who filed his return of income for the year under consideration on 20-10-2000 declaring total income of Rs. 3,55,980. In the assessment originally completed under section 143(3), vide an order dated 31-2-2003 (sic) the total income of the assessee was determined by the Assessing Officer at Rs. 3,27,32,650. Against the said order, an appeal was preferred by the assessee before the learned CIT(A), who vide his order dated 13-10-2004, allowed the said appeal of the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any books of account." 3. On the basis of the above observations, the Assessing Officer held that the statement Shri Swarn Singh Mor, was a clear evidence to show that the loan transaction, of the assessee with M/s. Peero Exports Ltd., are not genuine. Since the assessee could not furnish any details or documents to establish the genuineness of the said transactions, the Assessing Officer added the loan amount of Rs. 4,09,13,500 to the total income of the assessee treating the same as unexplained cash credits under section 68, in the assessment completed under section 143(3) read with section 147, vide an order dated 27-6-2006. 4. Against the order passed by the Assessing Officer under section 143(3) read section 147, an appeal was filed by the assessee before the learned CIT(A) challenging therein the validity of the said assessment as well as disputing the addition made therein under section 68 on merits. It was contended on behalf of the assessee before the learned CIT(A) that the reopening by the Assessing Officer of the assessment originally completed under section 143(3) in the absence of any new material coming to his possession and on the same set of facts was based me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n-consideration of the said statement had resulted in under assessment to the extent of the amount involved in the transactions of loan received by the assessee from M/s. Peero Exports Ltd. He held that the only condition for validly reopening the assessment as per the amended provisions of section 147 to have the reasons to believe that income has escaped assessment, was satisfied in the case of the assessee and the Assessing Officer was fully justified. In initiating the reassessment proceedings under section 147 by issuing notice under section 148. Accordingly, the validity of re-assessment made by the Assessing Officer under section 143(3) read with section 147 was upheld by the learned CIT(A). He also confirmed the addition of Rs. 4,09,13,500 made by the Assessing Officer under section 68, treating the loan amounts received by the assessee from M/s. Peero Exports Ltd., as unexplained cash credit under section 68. Aggrieved by the order of the learned CIT(A), the assessee has preferred this appeal before the Tribunal. 6. In ground Nos. 1 and 2, the assessee has raised a preliminary issue challenging the validity of assessment made by the Assessing Officer under section 143(3) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted in the case of the assessee under section 143(3) has already been held to be invalid by the Tribunal vide its order dated 16-9-2008 passed in ITA No. 1267/M/04. He contended that the assessment passed in the case of the assessee under section 143(3) thus no more survives and there is no question of reassessment being based on any change of opinion as the opinion, if any, expressed by the Assessing Officer in the original assessment no more survives. In this regard, he cited the decision of the Supreme Court in the case of CIT v. Sheni Products 129 Taxman 121 (sic), wherein the effects of cancellation of assessment have been explained by the Hon'ble Apex Court. He contended that as a result of the Tribunal's order cancelling the assessment made originally in the case of the assessee under section 143(3), what would survive is only the intimation issued under section 143(1) and there being no expression of opinion in the said intimation by the Assessing Officer, the question of reopening based on change of opinion does not arise. 9. The learned Departmental Representative further submitted that even though the statement of Shri Swarn Singh Mor, was available with the Assessi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ontended that the loan amount shown to be received by the assessee from M/s. Peero Exports Ltd., was clearly liable to be added to the total income of the assessee under section 68, keeping in view of the decision of the Hon'ble Kerala High Court in the case of P.R. Palpu v. Asstt. CIT [2007] 163 Taxman 500, wherein it was held that once the creditor disowns the credit, addition under section 68 can justifiably be made. 10. As regards the objection of the learned counsel for the assessee that the specific objections raised before the Assessing Officer in regard to the reopening of assessment were not considered and disposed of by the later, the learned Departmental Representative submitted that if at all the Assessing Officer has not dealt with the objection of the assessee for reopening, the matter has to go back to the Assessing Officer for framing the assessment afresh after disposing of the objection of the assessee. In support of this contention, he relied on the decisions of the Bombay High Court in the case of Ajanta Pharma Ltd. v. Asstt. CIT [2007] 295 ITR 218, in the case of Allana Cold Storage Ltd. v. ITO [2006] 287 ITR 1 (Bom.) and IOT Infrastructure Energy Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iginal assessment, the learned counsel for the assessee submitted that both the propositions laid down by the Supreme Court in the said case and relied upon by the learned Departmental Representative in support of the revenue's case have been considered and disapproved by the Larger Bench of the Supreme Court in the case of Indian Eastern Newspaper Society v. CIT [1979] 119 ITR 996/2 Taxman 197. He submitted that in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR l/123 Taxman 433 (Delhi)(FB) the Full Bench of the Delhi High Court has relied on the decision of the Hon'ble Supreme Court in the case of Indian Eastern Newspaper Society (supra) to decide a similar issue in favour of the assessee and the said decision of the Full Bench of the Hon'ble Delhi High Court has been upheld by the decision of the Supreme Court in CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561/187 Taxman 312. 14. We have considered the rival submissions and also perused the relevant material on record. The validity of re-assessment made by the Assessing Officer in the present case under section 143(3) read with section 147 has been challenged by the learned counsel for the assessee mainly on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ough the medium of Peero Exports Ltd. In view of the above, the income of the assessee has escaped assessment to the extent of amounts which have been received from Peero Exports Ltd." A perusal of the above reasons recorded by the Assessing Officer clearly shows that the assessment originally completed under section 143(3) was reopened by the Assessing Officer on the basis of the statement of Shri Swarn Singh Mor, Director of M/s. Peero Exports Ltd., recorded under section 131. Admittedly, the said statement was available on record when the assessment came to be originally made by the Assessing Officer under section143(3) and there being no other information or material coming to the possession of the Assessing Officer after completion of the said assessment, the learned counsel for the assessee has contended that the reopening was made by the Assessing Officer merely on the basis of change of opinion which is not permissible. In support of this contention, he has relied, inter alia, on the decision of the Hon'ble Bombay high Court in the case of Asian Paints Ltd. (supra) and on the decision of the Hon'ble Delhi High Court in the case of Kelvinator of India Ltd. (supra). The l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are reproduced below : " .Reliance is placed on Kalyanji Mavji Co. v. CIT [1976] 102 ITR 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 ITO 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 insofar as it can be said to lay down that if on reappraising the material considered by him during the original assessment the ITO 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 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 Co. v. CIT [1976] 102 ITR 287 (SC) suggesting th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... passed in terms of section 143(3), a presumption can be raised that such order has been passed on an application of mind. It was also held that if non- application of mind by the Assessing Officer in passing an order would itself confer jurisdiction upon the Assessing Officer to reopen the assessment without anything further, it would amount to giving a premium to an authority exercising quasi judicial function to take benefit of its own wrong. It was held that the legislature has not conferred the power on the Assessing Officer to review his own order. The reassessment proceedings initiated in the said case, therefore, was held to be invalid by the Hon'ble High Court on the ground that the same was based on change of opinion of the Assessing Officer as it was based merely on fresh application of mind by the Assessing Officer to the same set of facts. In the case of Andhra Bank Ltd. v. CIT [1997] 225 ITR 447/92 Taxman 534 (SC), the Hon'ble Supreme Court has held that it is not permissible for the Income-tax Officer or his successor to reopen the assessment at a later point of time under section 147 of the Act unless any information comes to his possession from an extraneous sources ..... X X X X Extracts X X X X X X X X Extracts X X X X
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