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TMI Blog2023 (12) TMI 216X X X X Extracts X X X X X X X X Extracts X X X X ..... y the Division Bench of this Court in the case of ACIT vs. Seshasayee paper and Board Ltd. [ 2023 (3) TMI 1111 - MADRAS HIGH COURT ] and Durr India (P.) Ltd. [ 2022 (8) TMI 1340 - MADRAS HIGH COURT ] that finding as to failure on the part of the assessee to disclose fully truly material particulars is a condition precedent for invoking extended period and in the absence of such finding, initiation of invoking extended period would stand vitiated. Thus finding that income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment is a sine qua non and a condition precedent to invoke power of reassessment under Section 147 read with Section 148 of the Act beyond 4 years from the relevant assessment year and failure to render such a finding would prove fatal to the validity of such proceeding. Assessee appeal allowed. - Honourable Mr.Justice Mohammed Shaffiq For the Petitioner : Ms.Vandana Vyas For the Respondents : Mrs.Premalatha Standing Counsel ORDER The writ petition is filed challenging the impugned notice dated 20.03.2020 primarily on two grounds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s towards construction of residential house in anticipation of cash payment mode to the suppliers, contractors and other construction related jobs. d. As most of the parties have accepted cheques / RTGS transfers mode of payment towards their supplies and payments prior to cash deposits by way of RTGS transfers Cheques and Demand Draft pertaining to the financial year 2013-14. 3.1. The assessment was thereafter completed under section 143(3) of the Act dated 29.12.2016 by making an addition of Rs. 3,00,000/- which was not challenged by the petitioner. While so, after more than 4 years from the end of the relevant assessment year, a notice dated 20.03.2020 under Section 148 of the Act was issued stating that the respondent has reason to believe that the income chargeable to tax for the assessment year 2014-15 has escaped assessment within the meaning of Section 147 of the Act. The petitioner sought for reasons for reopening. In response, the 2nd respondent vide letter dated 03.03.2021 furnished the reasons for reopening which reads as under : It is seen that the computation statement of income, the assessee had claimed exemption under Section 54E of the IT Act, in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment is nothing but an attempt to exercise power of reassessment on a mere change of opinion. 4. To the contrary, it is submitted by Mrs.Premalatha, learned counsel for the respondent that the finding that income chargeable to tax has escaped assessment by reason of failure to disclose fully and truly material particulars is not a condition precedent and even in the absence of such finding, there is no restriction under Section 147 and 148 of the Act to exercise the power of reassessment. It was also submitted that the question as to whether there is change of opinion or otherwise is a question of fact which ought to be examined by the statutory authority. 5. Heard Both sides and perused the material on record. 6. This Court finds that the issue that arises for consideration viz., whether absence of a finding that the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment would vitiate / prove fatal to a reassessment invoking the extended period of limitation under Section 147 of the Act is no longer res-integra . It has been decided by the Division Benc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... being invoked not under (a) or (b) set out above but only in view of (c) i.e., failure to disclose fully and truly all material facts necessary for assessment. It is submitted by the learned counsel for the respondent/assessee that while furnishing the reasons for reassessment vide its communication dated 06.01.2014, there is no finding that there was failure on the part of the appellant to fully and truly disclose all material facts necessary for assessment. It is submitted that in the absence of any finding on the above jurisdictional fact, the entire proceeding would be void and a nullity. We find there is merit in the above submission inasmuch as the normal period of limitation for exercising the power of reassessment under Section 147 of the Act is four years. The extended period of six years could be invoked only under three circumstances set-out/ mentioned above. Admittedly, the only circumstance which could have enabled the respondents to invoke the extended period of 6 years in the present case is to bring the proceedings under clause (c). To invoke the extended period of six years for reassessment, the reasons furnished for reassessment ought to contain a finding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of a tribunal is dependent on the existence of a particular state of affairs, that state of affairs may be described as preliminary to, or collateral to the merits of, the issue. If, at the inception of an inquiry by an inferior tribunal, a challenge is made to its jurisdiction, the tribunal has to make up its mind whether to act or not and can give a ruling on the preliminary or collateral issue; but that ruling is not conclusive. 76. The existence of jurisdictional fact is thus sine qua non or condition precedent for the exercise of power by a court of limited jurisdiction. (emphasis supplied) 10. The Hon-ble Supreme Court in the case of Arun Kumar, thereafter proceeded to rely upon the decision in the case of White Collins vs. Minister of Health reported in (1939) 2 BK 838 and observed as under: 80. The Court relied upon a decision in White Collins v.Minister of Health [(1939) 2 KB 838 : 108 LJ KB 768 : (1939) 3 All ER 548 (CA) sub nom Ripon (Highfield) Housing Order, 1938, Re] wherein a question debated was whether the court had jurisdiction to review the finding of administrative authority on a question of fact. The relevant Act enabled the local au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ovision is not sufficient to attract the extended period of limitation. 69. The question of limitation involves a question of jurisdiction. The finding of fact on the question of jurisdiction would be a jurisdictional fact. Such a jurisdictional question is to be determined having regard to both fact and law involved therein. The Tribunal, in our opinion, committed a manifest error in not determining the said question, particularly, when in the absence of any finding of fact that such short-levy of excise duty related to any positive act on the part of the appellant by way of fraud, collusion, wilful misstatement or suppression of facts, the extended period of limitation could not have been invoked and in that view of the matter no show-cause notice in terms of Rule 10 could have been issued. (emphasis supplied) 12. From the above decisions, it is clear that existence of -- jurisdictional fact-- is sine qua non for the exercise of power. If the jurisdictional fact exists, only then the authority can proceed with the case and take an appropriate decision in accordance with law. It leaves no room for any doubt that to invoke the extended period, the Assessing Officer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt year can be sustained only if it is established that there is a failure on the part of the assessee to disclose fully and truly all material facts. In this case there is no finding that there is failure on the part of the assessee to disclose fully and truly all material facts. Further, all the material facts are available at the time of making original assessment. The Tribunal has correctly followed the principles enunciated in the Supreme Court judgment reported in CIT v. Foramer France, [2003] 264 ITR 566, as well as this court judgment reported in the case of CIT v. Elgi Finance Ltd., [2006] 286 ITR 674 and came to the correct conclusion. (emphasis supplied) d) CIT v. A.V. Thomas Exports Ltd., (2008) 296 ITR 603: 6. The Tribunal has applied the correct principle of law and held as follows: But whether recourse to section 147 could be made beyond four years is the real question in the present appeal. Circumstances for extending limitation beyond four years do not exist in the facts of the present case. As such on the ground of limitation assumption of jurisdiction under section 147 is bad. In the case of CIT v. Foramer France, [2003] 264 ITR 566 (SC), i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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