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TMI Blog2014 (7) TMI 457X X X X Extracts X X X X X X X X Extracts X X X X ..... close that the income from bonded warehouses was accounted for on realization basis and not on accrual basis – Decided against Revenue. - ITA No.215,216/Del/2013 - - - Dated:- 2-6-2014 - S V Mehrotra And R P Yadav, JJ. For the Appellant: Smt Sudha Kumari, CIT, DR For the Respondent : Prof S Sampath, CA ORDER:- PER : S V Mehrotra This appeal has been filed by revenue against the order of Ld. Commissioner of Income Tax (appeals) VI, New Delhi dated 15/10/2012 for assessment year 2005-06. 2. Brief facts of the case are that the assessee, a Government of India undertaking, filed its return of income declaring nil income. The assessing officer observed that the assessment was completed u/s 143(3) at total income of ₹ 20,89,7,31,154/-. From the perusal of records, he noticed that accrued income of ₹ 91.6 crores of bonded stock had not been offered to tax in the relevant assessment year. Therefore, the case had been reopened u/s 147 after recording the reasons and obtaining necessary approval from the competent authority. The assessee vide its letter dated 6th December, 2010, submitted that the original return filed on 31st October, 2005 may be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustified in treating the warehousing charges receivable to it on realization basis. The assessee's contention regarding acceptable of this issue in the original assessment proceedings is also not acceptable since Assessing Officer can under the amended provision legitimately reopen the asstt. In respect of an income which has escaped asstt. Viewed in that angle power to reopen asstt. Is much wider under the amended provision and can be exercised even after assessee has disclosed fully and truly all the material facts, so similar view were the conclusion of this Court (Delhi) in 142 CTE (Delhi) 272, 225 ITR 496. In Praful Chunilal Patel Vs. Makwana ACIT (1999) 236 ITR 832, it has been held that in cases where an error or mistake is detected, it can never be said that there is only a mere change of opinion. The mistake or error which is detected and which constituted a valid decision or cause to form a belief in the first asstt. As a result of which the income has escaped asstt. Would constitute a reason to believe that the income had escaped asstt. And such cases when mistake and errors are detected and which constitute a valid justification or cause form to belief sought to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ident from the text of reasons recorded by Assessing Officer. Ld. Commissioner of Income Tax (appeals) relied of following decisions :- (A) Legato systems (India) (Pvt.) Ltd. Vs. DCIT (2010) 231 CTR (Del.) 526. (B) D.T. T.D.C, Ltd. Vs. AC1T (2010)324 ITR 234 (Delhi). (C) CIT Vs. Kelvinator of India Ltd. (2002) 256 ITR 1 (Delhi) (FB). 4. Being aggrieved with the order of Ld. Commissioner of Income Tax (appeals), the department is in appeal before us and has taken following grounds of appeal :- 1. The Ld. Commissioner of Income Tax (appeals) has erred in law and on facts in holding that the order passed u/s 147/143(3) is invalid and a mere change of opinion by failing to consider :- (a) The finding of the Hon'ble SC in the case of M/s P.V.S. Beedies (Pvt.) Ltd. 237 ITR 13 that reopening of the case on the basis of a factual error pointed out by the audit party is permissible under law is squarely applicable in the instant case. (b) The decision of the Hon'ble SC in the case of Phool Chand Bajrang Lal Vs. ITO (1993) 203 ITR 456 (SC) that one of the purpose of section 147 is to ensure that a party cannot get away by willfully making a false or untrue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ves. If he discovers or finds or satisfies himself that the taxable income has escaped assessment, it would amount to saying that he had reason to believe that such income had escaped assessment. The justification for his belief is not to be judged from the standards of proof required for coming to a final decision. A belief though justified for the purpose of initiation of the proceedings under section 147, may ultimately stand altered after the hearing and while reaching the final conclusion on the basis of the intervening enquiry. At the stage where he finds a cause or justification to believe that such income has escaped assessment, the Assessing Officer is not required to base his belief on any final adjudication of the matter. In the present case, from the first assessment it appeared to the Assessing Officer, while making an order in respect of the assessment year 1993-94, that the amount of taxable income in the form of capital gains in respect of the transfer of the land which was treated as stock-in-trade on September 19, 1990, in favour of the firm and the tax payable thereon not being ascertained, there was escapement of income. Since the Assessing Officer at the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lely on the basis of change of opinion. He submitted that decisions relied upon by Ld. Departmental Representative are distinguishable on facts inasmuch as the re-opening in those cases was done within four years. He relied on the order of CIT Appeal. 6. We have considered the rival submissions and perused the record of the case. The Assessing Officer had recorded the following reasons for reopening the case u/s 148. REASONS FOR REOPENING THE CASE U/S 148 IN THE CASE OF M/S CENTRAL WAREHOUSING CORPORATION A.Y. 2004-05. The assessment of M/s Central Warehousing Corporation for the Assessment Year 2004-05 was processed in Summary Manner in November, 2004 and further rectified under section 154 in June, 2005 at an income of Rs. Nil/- after adjusting of brought forward losses of earlier years amounting to ₹ 26,45,65,670/- under normal provisions of the Act and at a book profit of ₹ 28,06,20,762/- under special provisions of the Act. The case was selected for scrutiny an order u/s 143(3) of the I.T. Act, 1961 completed on 29.12.2006 at total income of ₹ 56,58,984/-. Book profit u/s 115JB was computed at ₹ 62,81,57,738/-. The perusa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. United Trust Ltd. that proportionate management expenses should be deducted from gross dividend for the purpose of the deduction. In view of the above of the above facts, I have reason to believe that income chargeable to tax has escaped assessment owing to the failure on the part of the assessee to disclose fully and truly all material facts relevant for the assessment. Issue notice u/s 148 of the I.T.Act, 1961 for the Assessment Year 2004-05. (R.R. Agarwal) Dy. Commissioner of Income Tax Circle 3(1), New Delhi 7. In course of original assessment proceedings, the assessing officer had required the assessee to explain vide order dated 16 August, 2007 as to why income from bonded warehouses be not accounted for on accrual basis. The assessee vide its reply dated 24th September, 2007, had elaborately dealt with this issue. The relevant point regarding accrued income from bonded warehouse had been disclosed in note no. 11 of the notes forming part of the accounts which were available in the printed accounts of the Corporation. The Assessing Officer completed the assessment after considering the assessee's reply. Therefore, it was clearly a case ..... X X X X Extracts X X X X X X X X Extracts X X X X
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