9911796707
TMI Blog2005 (2) TMI 46X X X X Extracts X X X X X X X X Extracts X X X X ..... epairs spread over in four years in all its assessments for several assessment years under the Income-tax Act and the said claim was all along allowed by the respondents. Learned counsel for the petitioner submits that the petitioner duly filed its return of incomes with the appropriate assessing authority having jurisdiction over the petitioner's assessments and all the assessments for the aforesaid assessment years excepting the assessment year 1994-95 were duly completed under section 143(3) of the Income-tax Act. It has been urged on behalf of the petitioner that in the course of the assessment proceedings for all the aforesaid six assessment years and also in the returns filed in all the said assessment years, the petitioner herein had duly and properly disclosed all the materials and relevant facts necessary for the purpose of assessment and according to the petitioner, there was no omission or failure of any nature whatsoever. The assessment for the assessment year 1994-95 was made under section 143(1)(a) by issuing an intimation. In its assessment for the assessment year 1998-99, the-relevant accounting year being the year ended on March 31,1998, which is not the subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 148 of the Income-tax Act. Mr. R. N. Bajoria, learned senior counsel appearing on behalf of the petitioner, submits that respondent No. 1 had no reason to believe that any income of the petitioner for any of the assessment years had escaped assessment. According to Mr. Bajoria, there is no material or ground whatsoever for the formation of any belief as mentioned in the aforesaid notices issued by the respondent authorities under section 148 of the Income-tax Act. Section 147 of the Act confers jurisdiction on the Assessing Officer to reopen a completed assessment subject to the conditions laid down therein. The relevant provisions of section 147 of the Act are as under: "147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistant Commissioner or Deputy Commissioner, unless the Joint Commissioner is satisfied on the reasons recorded by such Assessing Officer that it is a fit case for the issue of such notice. Provided that, after the expiry of four years from the end of the relevant assessment year, no such notice shall be issued unless the Chief Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer aforesaid, that it is a fit case for the issue of such notice. (2) In a case other than a case falling under sub-section (1), no notice shall be issued under section 148 by an Assessing Officer, who is below the rank of Joint Commissioner, after the expiry of four years from the end of the relevant assessment year, unless the Joint Commissioner is satisfied, on the reasons recorded by such Assessing Officer, that it is a fit case for the issue of such notice." Thus, before initiation of any proceeding under section 147 of the Act for reassessment, the Assessing Officer is required to record his reasons in writing under section 148 and get necessary sanction of the Commissioner in terms of section 151(1) and thereafter issue notice under section 148 of the Act. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Bench of five learned judges of the Supreme Court in the case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 in support of his arguments. Mr. Bajoria also referred to and relied upon the subsequent decisions of the hon'ble Supreme Court wherein the law laid down by the hon'ble Supreme Court in the case of Calcutta Discount Co. Ltd. [1961] 41 ITR 191 has been followed: (1) Gemini Leather Stores v. ITO [1975] 100 ITR 1 (SC); (2) Parashuram Pottery Works Co. Ltd. v. ITO [1977] 106 ITR 1 (SC); (3) Ganga Saran and Sons P. Ltd. v. ITO [1981] 130 ITR 1 (SC); and (4) Indian Oil Corporation v. ITO [1986] 159 ITR 956 (SC). Mr. Bajoria also submits that the aforesaid principles laid down by the hon'ble Supreme Court have been applied by this hon'ble court in the undernoted decisions and the proceedings where there has been no omission or failure on the part of the assessee to disclose the facts and therefore, reassessment proceedings were quashed. The said decisions are noted hereunder: (1) Tantia Construction Co. Ltd. v. Deputy CIT [2002] 257 ITR 84 (Cal); (2) Mercury Travels Ltd. v. Deputy CIT [2002] 258 ITR 533 (Cal); and (3) Simplex Concrete Piles (India) Ltd. v. Depu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [1961] 41 ITR 191, the apex court held as hereunder: "To confer jurisdiction under this section to issue notice in respect of assessments beyond the period of four years, but within a period of eight years, from the end of the relevant year two conditions have therefore to be satisfied. The first is that the Income-tax Officer must have reason to believe that income, profits or gains chargeable to income-tax have been under-assessed. The second is that he must have also reason to believe that such 'under assessment' has occurred by reason of either (i) omission or failure on the part of an assessee to make a return of his income under section 22, or (ii) omission or failure on the part of an assessee to disclose fully and truly all material facts necessary for his assessment for that year. Both these conditions are conditions precedent to be satisfied before the Income-tax Officer could have jurisdiction to issue a notice for the assessment or reassessment beyond the period of four years but within the period of eight years, from the end of the year in question." At page 201 of the Reports it as held as under: "Does the duty, however, extend beyond the full and truthful di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of section 147 of the Income-tax Act, 1961. In the case of Simplex Concrete Piles (India) Ltd. [2003] 262 ITR 605, the Division Bench of our High Court at page 612 held as under: "Now, so far as the amended provision is concerned, on a comparison between these two provisions, it does not appear that there has been any substantial change in the principle or the scheme envisaged either under the 1922 Act or the 1961 Act before April 1, 1989, and thereafter under the amended provision. The power to reopen is prescribed under section 147 with effect from April 1, 1989, in a little different manner from the earlier provisions. It has provided that reopening can be done in case where the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for the relevant assessment year. He can reassess after reopening the case and proceed to recompute the same. But this power is subject to the proviso provided therein. The proviso prescribes certain restrictions with regard to the power of reopening limiting it to the period of four years from the end of the relevant assessment year, unless the escapement of the taxability of the income is due to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , therefore, evident that even according to the Central Board of Direct Taxes, a mere change of opinion cannot form the basis for reopening a completed assessment." At page 19 of the said Reports it was held as under: "In the event it is held that by reason of section 147 if the Income-tax Officer exercises his jurisdiction for initiating a proceeding for reassessment only upon a mere change of opinion, the same may be held to be unconstitutional. We are therefore, of the opinion that section 147 of the Act does not postulate conferment of power upon the Assessing Officer to initiate reassessment proceeding upon his mere change of opinion." The undisputed facts in the instant case are that in the balance-sheets which were filed along with the returns, all the facts relating to the said expenses incurred on repair were fully disclosed in several assessment years for more than a decade and the Assessing Officer after considering such facts had allowed the deduction for the expenditure as a revenue expenditure on a spread over basis. The balance-sheet which is statutorily required to be filed along with the return is a part of the return itself and the facts disclosed therein amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... looked into for determining the validity of the notice is the report on the basis of which the sanction of the Commissioner of Income-tax has been obtained. The Income-tax Department cannot rely on any other material apart from the report. In the case before it, the Calcutta High Court refused to take into consideration the affidavit filed by the Income-tax Department giving some additional reasons." Scrutinising the recorded reasons, it is clearly evident that the basic conditions, namely, alleged escapement on account of the omission or failure to disclose the material facts by the assessee do not exist in the instant case and accordingly, the proceedings initiated are wholly without jurisdiction. The Assessing Officer has no power to initiate any proceeding on mere change of opinion on the same set of facts. Furthermore, in the recorded reasons, it is stated that "there is no concept of deferred revenue expenditure under the Income-tax Act." This view also is clearly unsustainable in view of the law laid down by the Supreme Court approving the decision of this court on the point in the case of Madras Industrial Investment Corporation Ltd. v. CIT [1997] 225 ITR 802 (SC). At pag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the expiry of four years from the end of the assessment year the proceedings for reassessment cannot be justified even for those years since the recorded reasons for all the assessment years are the same and for all the assessment years the facts are identical. Such expenditure has been allowed over a decade and also for the assessment years 1990-91 to 1996-97 involved in the present writ proceedings. As held by the Delhi High Court in the case of Kelvinator of India Ltd. [2002] 256 ITR 1 [FB], no proceedings on a mere change of opinion can be initiated even within the period of four years. On behalf of the respondents, it has been contended by relying on the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 that the assessee should have approached the Assessing Officer instead of approaching this hon'ble court. I am unable to accept the aforesaid submissions made on behalf of the respondents as the aforesaid decision of the Supreme Court of a Bench of two learned judges does not in any way affect the jurisdiction of this hon'ble court to grant relief under article 226 of the Constitution when on the admitted facts the proc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufficient reason for refusing quick relief in a fit and proper case." Mr. Shome, learned counsel of the respondents, placed reliance on the following decisions in order to justify the reopening of the assessment in the present case. (1) Ess Ess Kay Engineering Co. P. Ltd. v. CIT [2001] 247 ITR 818 (SC); (2) Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC); and (3) Praful Chunilal Patel v. M. J. Makwana, Asst. CIT [1999] 236 ITR 832 (Guj). In my view, none of the aforesaid decisions support the contention of the Revenue and on the other hand, from the said decisions it would be apparent that those were not cases of mere change of opinion on the same materials but cases where fresh materials were found in the subsequent assessment year and on the basis of such fresh materials, reopening of the earlier year was sought to be justified. The other decision relied upon on behalf of the Revenue is that of the Gujarat High Court reported in Praful Chunilal Patel [1999] 236 ITR 832 (Guj). The said decision seeks to lay down that in a case which is within four years from the end of the relevant assessment year, the reassessment proceedings can be initiated on a mere change of op ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law. The above decision of the Gujarat High Court was considered by the Full Bench of the Delhi High Court in the case of Kelvinator of India Ltd. [2002] 256 ITR 1. The Full Bench of the Delhi High Court dissented from this decision. While dissenting with the decision of the Gujarat High Court in the case of Praful Chunilal Patel [1999] 236 ITR 832 (Guj), the Full Bench of the Delhi High Court at page 15 of the Reports observed as under: "We are, with respect, unable to subscribe to the aforementioned view. If the contention of the Revenue is accepted the same, in our opinion, would confer an arbitrary power upon the Assessing Officer. The Assessing Officer who had passed the order of assessment or even his successor officer only on the slightest pretext or otherwise would be entitled to reopen the proceeding. Assessment proceedings may be furthermore reopened more than once. It is now trite that where two interpretations are possible, that which fulfils the purpose and object of the Act should be preferred.... It is a well settled principle of law that what cannot be done directly cannot be done indirectly. If the Income-tax Officer does not possess the power of review, he cann ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
