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TMI Blog2020 (3) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... exure by the petitioner in response to notice during scrutiny assessment by itself may or may not have been sufficient to come to the conclusion that there was full and true disclosure by the petitioner if the information furnished was neither complete nor true. It is therefore best left open for the petitioner to demonstrate before the 1st respondent that the details furnished by the petitioner vide letter dated 03.03.2016 in annexure 2 meets the requirements of full and true disclosure for the Assessing Officer to drop the proceedings in terms of 1st proviso to Section 147 of the Income Tax Act, 1961. In case there is a change of opinion, the 1st respondent cannot proceed in the light of the decision of the Hon ble Supreme Court in CIT Vs. Kelvinator of India Ltd. [ 2010 (1) TMI 11 - SUPREME COURT] In case indeed there is a mere change in opinion, the 1st respondent will be obliged to drop the proceeding. However, to ascertain whether is a mere change of opinion or not first it has to be established that the there was true and full disclosure by the petitioner. This can be demonstrated by the petitioner only before the 2nd respondent and not in a proceeding under Art.226 of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,64,68,238 towards disallowance u/s 14A. The assessee has claimed deduction u/s 80JJAA amounting to ₹ 17,93,76,639/-. It was noticed that the assessee had treated many persons as a workmen, who were working in managerial or administrative capacity such as Senior Project Lead, Senior consultant, etc. As these employees are not regular "workmen", as contemplated in the Industrial Dispute Act, (hereinafter read as I.D.Act), 1947, the payment mode do not qualify for the deduction u/s 80JJAA of the I.T.Act. Further, the assessee failed to substantiate whether the said employees were actually receiving wages from the company less than ₹ 6500 per month. As the said conditions (iii) & (iv) of the Section 2(s) of I.D.Act are not satisfied, the said payments do not qualify for deduction u/s 80JJAA of the I.T.Act. The intention of the legislature as per the finance Act, 2013 was to provide deduction on the wages paid to blue collar workers employed in industrial undertakings & not to white collar employees like the employees of the assessee company. Therefore, the payments made as wages to such employees who do not come under the purview of I.D.Act are also not eligible for dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 80JJAA of the Income Tax Act was claimed by the petitioner. The learned counsel appearing for the petitioner relied on the following decisions:- i. Calcutta Discount Co. Ltd. V. Income Tax Officer, AIR 1961 SC 372. ii. Jeans Knit P. Ltd. V. CIT, 2018(12) SCC 36. iii. The Income Tax Officer V. Lakhmani Mewal Das, 1976(3) SCC 757. iv. Jindal Photo Films Ltd. V. The Deputy Commissioner of Income Tax, 1998 (46) DRJ (DB). v. Income Tax Officer V. Techspan India P. Ltd., (2018) 6 SCC 685. vi. CIT V. Kelvinator of India Ltd., (2010) 2 SCC 723 vii. Deputy CIT V. Gay Travels (P) Ltd., in W.P.No.35606 and 35607 of 2002 viii. CIT V.Usha International Ltd., (2012) 348 ITR 485 ix. Asianet Star Communications Pvt. Ltd. V. Assistant Commissioner of Income Tax in reported judgment in W.P.Nos.25328 of 2018 etc. 11. On the other hand, the learned counsel appearing for the respondents submits that the impugned notice and the impugned communication overruling the objection cannot be interfered, inasmuch as it impedes the re-assessment proceedings under Section 148 of the Income Tax Act, 1961. It is submitted that it is open for the petitioner to make all its submissions on me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o satisfy two conditions co-exist, namely:- i. that he must have reason to believe that income, profits or gains had been under-assessed; and ii. that such under-assessment was due to non-disclosure of material facts by the assessee. 17. It must also be remembered that Section 148 of the Income Tax Act, 1961 as it stands now and Section 34 of the Income Tax Act, 1922 as it stood when the decision was rendered read differently. They are reproduced below for easy reference:- Section 34 of the Income Tax Act, 1922 Section 148 of the Income Tax Act, 1961 Section 34(1) "If- (a) the Income Tax Officer has reason to believe that by reason of the omission or failure on the part of an assessee to make a return of his income under Section 22 for any year or to disclose fully and truly all Section 148. Issue of notice where income has escaped assessment. (1) Before making the assessment, reassessment or recomputation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any material facts necessary for his assessment for that year, incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b- Section (2) of Section 153, every such notice referred to in this clause shall be deemed to be a valid notice: Provided further that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on Provided that- (i) the Income Tax Officer shall not issue a notice under this sub-Section, unless he has recorded his reasons for doing so and the Commissioner is satisfied on such reasons recorded that it is a fit case for the issue of such notice; (ii) the tax shall be chargeable at the rate at which it would have been charged had the income, profits or gains not escaped assessment or full assessment, as the case may be; and (iii) where the assessment made or to be made is an assessment made or to be made on a person deemed to be the agent of a non-resident person under Section 43, this sub-Section shall have effect as if for the periods of eight years and four years a period of one year was substituted. Explanation.-Production before the Income Tax Officer of account books or other evidence from which material facts could with due diligence have been discovered by the Income Tax Officer will not necessarily am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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." 20.It was further observed as follows:- "14. The position therefore is that if there were in fact some reasonable grounds for thinking that there had been any non-disclosure as regards any primary fact, which could have a material bearing on the question of "under-assessment" that would be sufficient to give jurisdiction to the Income Tax Officer to issue the notices under Section 34. Whether these grounds were adequate or not for arriving at the conclusion that there was a non disclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income Tax Officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some nondisclosure of material facts." 21. Thus, it is clear that for issuing a notice under Section 148 of the Income Tax Act, 1961 as it stands today, the Assessing Officer has to satisfy the requirements of Section 149 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure on the part of an assessee to make a return under Section 139 for any assessment year to the Income Tax Officer or to disclose fully and truly all material facts necessary for his assessment for that year, income chargeable to tax has escaped assessment for that year, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Income Tax Officer has in consequence of information in his possession reason to believe that 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 or recompute the loss or the depreciation allowance, as the case may be, for the assessment year concerned (hereafter in Sections 148 to 153 referred to as the relevant assessment year). Explanation 1.- For the purposes of this Section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (a) where income chargeable to tax has been under-assessed; or (b) where such income has been that any income chargeable to tax has escaped assessment for any assessment year, he may, su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so. Explanation 2.-For the purposes of this Section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely :- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return ; (ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under Section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been under-assessed; or (ii) such income has been assessed at too low a rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he end of that year, unless the case falls under sub-clause (ii); (ii) for the relevant assessment year, where eight years, but not more than sixteen years, have elapsed from the end of that year, unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to rupees fifty thousand or more for that year; period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139 : Provided that in a case- (a) where a return has been furnished during the period commencing on the 1st day of October, 1991 and ending on the 30th day of September, 2005 in response to a notice served under this Section, and (b) subsequently a notice has been served under sub-Section (2) of Section 143 after the expiry of twelve months specified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Court merely followed the views of the Hon'ble Supreme Court in Calcutta Discount Company Ltd. Vs. Income Tax Officer, Companies District I, Calcutta and Others, (1961) 2 SCR 241. 30. Whether the notice that has been issued to the petitioner was on account of change of opinion or on account of failure on the part of the petitioner to fully and truly disclose all material required for the assessment is to be determined by the Assessing Officer while passing order under Section 147 of the Income Tax Act, 1961. 31. In the recent decision, the Honourable Supreme Court in Jeans Knit Private Limited Vs. Deputy Commissioner of Income Tax, (2018) 12 SCC 36, has held that the Karnataka High Court had taken a view contrary to the law laid down by the Honourable Supreme Court in Calcutta Discount Co-Limited Vs. CIT referred to supra. At the same time, the Hon'ble Supreme Court has also refrained from making any observation on the merits of the case and remitted the case back to the concerned High Court. Therefore, the said decision does not further the case of the petitioner. 32. In Asianet Star Communications Pvt. Ltd. V. Assistant Commissioner of Income Tax, order dated 16.04.2019 pas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The Assessing Officer has no power to review, he has the power to re-assess. But re-assessment has to be based on fulfilment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing Officer." 37. In case indeed there is a mere change in opinion, the 1st respondent will be obliged to drop the proceeding. However, to ascertain whether is a mere change of opinion or not first it has to be established that the there was true and full disclosure by the petitioner. This can be demonstrated by the petitioner only before the 2nd respondent and not in a proceeding under Art.226 of the Constitution of India as scope of judicial review is limited and it is not possible to conduct roving enquiry on facts ..... X X X X Extracts X X X X X X X X Extracts X X X X
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