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TMI Blog2015 (4) TMI 942X X X X Extracts X X X X X X X X Extracts X X X X ..... ereunder by 1st respondent that deferment of revenue has not been accepted even by the DRP and what has been stated in the said communication is that reply submitted by petitioner does not demonstrate or establish that total amount of ₹ 216,89,00,773/- had been offered to tax in the assessment year 2010-11. The issue involved is the escapement of income to tax for the assessment year 2009-10. As such, the burden is on the assessee to demonstrate that said deferred revenue totaling to ₹ 216,89,00,773/- has been offered to tax in the assessment year 2010-2011 or in any subsequent year/s. In that view of the matter, do not find any jurisdictional error having been committed by the Assessing Officer to reopen the assessment for the assessment year 2009-10 by issue of impugned notice and also over-ruling of objections raised by the petitioner assessee to such notice. - As decided in WHIRLPOOL CORPORATION VS. REGISTRAR TRADE MARKS, MUMBAI AND OTHERS [1998 (10) TMI 510 - SUPREME COURT] & T.T. PVT. LTD. Vs. INCOME TAX OFFICER, COMPANY CIRCLE-III, BANGALORE reported in (1978 (9) TMI 23 - KARNATAKA High Court) has held that availability of alternate remedy under the Act woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 147 of the Act petitioner-assessee was called upon to file the return in the prescribed form within 30 days from the date of service of notice. Petitioner by communication dated 15.04.2014 Annexure-L intimated the first respondent that return of income filed on 30.09.2009 be treated as the return of income filed in response to notice issued under section 148 of the Act. At the same time petitioner also called upon the first respondent to furnish reasons for initiating reassessment proceedings. Pursuant to the same, Assessing officer namely first respondent intimated the petitioner by communication dated 25.04.2014 Annexure- M, reasons for reopening indicating thereunder that deferred revenue totaling ₹ 216,89,00,773/- which was deferred in the assessment year 2009-10 was not added while computing total income for the relevant assessment year and petitioner ought to have admitted said revenue in the assessment year 2010-11 and having not offered same to tax in the subsequent assessment year i.e., assessment year 2010-11. Similarly reconciliation between sale of goods as per sale tax return and sale of goods as per Income Tax return had been requested which was furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mere change of opinion' would not be a ground for reopening assessment order and particularly when no new material is detected, so as to arrive at a conclusion that there is escaping of declaration by the assessee at the time of filing of return of income. He would contend that it is only on the reason to believe that there is escaping of income Assessing officer will get jurisdiction to issue notice under section 148 and to assume the jurisdiction for reassessment under section 147 and there must be material available to him on the basis of which he would have reason to believe that income has escaped from assessment and contends there has been total non application of mind in this regard by Assessing officer. He would also contend that there should be rational nexus between the reasons and the belief that income has escaped from assessment and there should be existence of reasons on which a belief can be entertained by Assessing officer that income has escaped assessment and mere belief being in existence without backed by reasons would not be sufficient to reopen the assessment. He would also contend that reasoning provided by first respondent for reopening the assessment fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted. He would also submit that subsequently for the assessment year 2010-11 Assessing officer took a different view and has held that there was no concept of deferred revenue under the Act. By virtue of such change of view the assessment order for the assessment year 2009-10 is sought to be reopened by invoking section 147 and issuing notice under section 148 of the Act which is based purely on the changed opinion and change of opinion would not be a ground for re-opening of the assessment. He would draw the attention of court to section 147 which has undergone change by Direct Tax Laws Amendment (1989) with effect from 01.04.89 where under for the words Rs. for reasons to be recorded by him in writing, is of the opinion' came to be substituted by the words Rs. has reason to believe' and as such change of opinion would not be a ground for reopening the assessment. In support of his submission he has relied upon the following Judgments: 1. (2010) 320 ITR 561 (SC)- Commissioner of Income Tax Vs (1) Kelvinator of India Ltd., (2) Eicher Ltd. 2. (2007) 295 ITR 333 (Bom) - Siemens Information System Ltd. Vs Assistant Commissioner of Income Tax and others 3. (1997) 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that inspite of several particulars being given it was not furnished and as such assessing officer had reason to believe that deferred payment had escaped assessment and for purposes of reassessment impugned notice has been issued. 9. He would also contend that the petitioner has not proved when notice came to be issued about the amounts which it sought for being treated as deferred revenue, of having been offered to tax at any subsequent stage or in the subsequent assessment years and in that view of the matter reassessment is proposed to be done and in the event of petitioner is able to establish, petitioner would be entitled for such allowances as is permissible under the Act. He would draw the attention of the court to 2nd proviso of section 147(1) of the Act to contend that it is incumbent upon the assessee to disclose fully and truly all material facts and during the assessment proceedings and despite calling upon petitioner by issuance of notice to furnish details of smart debits deferred revenue and same having not been furnished a sum of ₹ 124,88,69,986/- was added to the income of assessee as could be seen from the assessment order dated 25.03.2014 Annexure-J an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section(1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year. Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment . 12. Perusal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . At the stage of issuing notice the only question is whether there was relevant material available before Assessing officer on which the Assessing officer would have formed such belief or in other words whether Assessing officer had reason to believe that income chargeable to tax had escaped assessment which confers upon him jurisdiction under section 147 to re-open the assessment. Hon'ble Apex Court in the case of Commissioner of Income Tax Vs Kelvinator of India Ltd., reported in (2010) 320 ITR 561 (SC) which has been very heavily relied upon by Learned Senior Counsel appearing for petitioner has held that power to reopen or reassess post 01.04.1989 is much wider than the pre 1989 amendment. It has been held that assessing officer has power to reopen the concluded assessment provided there is Rs. tangible material' before him to come to a conclusion that there is escaping of income chargeable to tax. It has also been held that the reasons have nexus or link to the formation of belief. It has been held by Apex Court in said Judgment to the following effect: 6. On going through the changes, quoted above, made to section 147 of the Act, we find that, prior to the Direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. Ltd. v. ITO (1991) 98 CTR (SC)161:(1991) 191 ITR 662 (SC), for initiation of action under section 147(a) (as the provision stood at the relevant time) fulfillment of the two requisite conditions in that regard is essential. At that stage, the final outcome of the proceeding is not relevant. In other words, at the initiation stage, what is required is reason to believe , but not the established fact of escapement of income. At the stage of issue of notice, the only question is whether there was relevant material on which a reasonable person could have formed a requisite belief. Whether the materials would conclusively prove the escapement is not the concern at that stage. This is so because the formation of belief by the Assessing Officer is within the realm of subjective satisfaction (see ITO v. Selected Dalurband Coal Co. Pvt. Ltd. (1996) 132 CTR (SC) 162: (1996) 217 ITR 597 (SC); Raymond Woollen Mills Ltd. v. ITO (1999) 152 CTR (SC) 418: (1999) 236 ITR 34 (SC). 17. The scope and effect of section 147 as substituted with effect from 1st April, 1989, as also sections 148 to 152 are substantially different from the provisions as they stood prior to such substitution. Under th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hedule of other liabilities as smart debits deferred revenue account. In the reasons furnished by 1st respondent for reopening the assessment vide reply dated 25.04.2014 Annexure-M it has been noticed by the Assessing officer that deferred revenue in the reconciliation statement and the deferred revenue in the balance sheet -other liabilities were more or less same. It was noticed by Assessing officer that petitioner-assessee in the schedule of other liabilities, had indicated further break-up of smart debits deferred revenue account was as under: Deferred revenue account - Short term deferred revenue warranty - ₹ 58,23,47,873 SnP deferred revenue ST-Short term deferred revenue - ₹ 31,97,04,229 Deferred revenue -Long term deferred revenue - ₹ 90,75,75,789 SnP deferred revenue LT- Long term deferred revenue - ₹ 35,95,76,044 16. The Assessing officer noticed that deferred revenue in the reconciliation statement and deferred revenue in the balance sheet namely as reflected as Rs. other liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng been offered to tax in the subsequent year/s. 18. As already noticed hereinabove, the words used in Section 147 of the Income Tax Act, 1961 empowers the Assessing Officer to issue notice for reopening the assessment, if he has reason to believe and it would not be in his domain at that stage to conclusively prove the escapement of such income to tax and if there is subjective satisfaction for issuance of notice for such reopening it would be fully within his domain to issue such notice. Hence, it would not be necessary for him to arrive at any conclusion at that stage particularly when there is no material whatsoever available before him to accept the contention of the assessee. As such, if Assessing Officer has reason to believe income having escaped to tax it would give him the power to reopen the assessment and change of opinion would not. 19. In the instant case, the deferred revenue for the assessment year 2009-10 according to the Assessing Officer ought to have been admitted or included by the assessee in the assessment year 2010-11 and on account of same having not been offered, has given rise for reopening of the assessment. Nothing prevented the petitioner to pl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o accept the said contention inasmuch as in catena of Judgments, this Court as well as the Hon'ble Apex Court has held that exercise of extraordinary jurisdiction is available where the petitioner assails action of the authorities on the following grounds: i) without jurisdiction, ii) violation of principles of natural justice, iii) without authority of law, iv) validity or vires of the statutory provision being under challenge. 21. This view is also fortified by law laid down by Apex Court in the case of WHIRLPOOL CORPORATION VS. REGISTRAR TRADE MARKS, MUMBAI AND OTHERS reported in 1998 (8) SCC 1. In fact the Division Bench of this Court in the case of T.T. PVT. LTD. Vs. INCOME TAX OFFICER, COMPANY CIRCLE-III, BANGALORE reported in (1980) 121 ITR 551 has held that availability of alternate remedy under the Act would not be a bar for this Court to examine the notice issued under section 148 of the Income Tax Act, 1961, if it is challenged on the ground of jurisdictional error. In that view of the matter, the contention raised by Sri.K.V.Aravind cannot be accepted with regard to maintainability of the writ petition and same stands rejected. It is made clear tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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