TMI Blog2011 (1) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... SHAR P. HEMANI for Petitioner MR M.R. BHATT FOR MS MAUNA M. BHATT for Respondent (Per: HONOURABLE MS.JUSTICE HARSHA DEVANI) ORAL ORDER 1. Rule, Mrs. M.M. Bhatt, learned senior standing counsel waives service of rule on behalf of the respondent. Having regard to the controversy involved in the present case, the petition was taken up for hearing and final disposal. 2. By this petition under Article 226 of the Constitution of India, the petitioner, an association of persons, has challenged the notice dated 28th July 2010 issued by the respondent under section 148 of the Income Tax Act, 1961 [the Act] seeking to re-open the petitioner's assessment for the Assessment Year 2006-07. 3. The facts of the case as appearing in the petition are that the petitioner filed its return of income on 28.07.2006 declaring total income of Rs.1,34,47,493/- which included capital gains of Rs.1,30,21,230/-. The return was selected for scrutiny assessment. During the course of scrutiny assessment, in response to notice dated 17.10.2008 issued under section 142(1) of the Act, the petitioner filed a revised statement of total income at Rs.99,45,288/- which included capital gains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Act whereby the Assessing Officer had called for various particulars from the petitioner with regard to the details of lands on which capital gain of Rs.1,30,21,230/- had arisen, etc. Referring to the communication dated 18.11.2008 given in response to the notice under section 142(1) of the Act, it was pointed out that in the said statement the petitioner had pointed out that there was some mistake in the working of long term capital gain and as such revised computation of total income was attached therewith. Referring to the assessment order framed under section 143(3) of the Act, it was pointed out that the only issue discussed therein was with regard to capital gain on sale of land which had been submitted by the petitioner and accepted by the Assessing Officer. It was, accordingly, submitted that as the then Assessing Officer had formed an opinion with regard to the very issue on the basis of which assessment is now sought to be re-opened by the Assessing Officer, it is not open for the respondent now to change that opinion and take a different stand based on the very same set of facts and circumstances. It was contended that the petitioner had not filed a revised re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a revised statement submitted beyond the time limit stipulated under section 139 (5) of the Act. According to the learned counsel, in view of the decision of the Supreme Court in the case of Goetze (India) Ltd. v. Commissioner of Income-tax, [2006] 284 ITR 323 (SC) the Assessing Officer had no power to entertain any claim made otherwise then by way of a revised return. It was urged that in the circumstances, the petitioner was not entitled to computation of its income on the basis of the revised statement filed by it and as such the Assessing Officer, in view of the aforesaid decision of the Supreme Court, which would constitute tangible material for the purpose of re-opening of the assessment, had reason to believe that income had escaped assessment. Inviting attention to the original assessment order, it was submitted that the same does not reflect any application of mind as regards the issue in question. What had been claimed by the petitioner has been accepted. No opinion has been formed as regards the admissibility of the revised computation. It was submitted that income in the return filed under section 139(1) of the Act bears the character of self-assessment of income and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment was completed on the same date. Nevertheless, it is opposed to normal human conduct that an officer would complete the assessment without looking at the material placed before him. It is not as if the assessment record contained a large number of documents or the case raised complicated issues rendering it probable that the ITO had missed these facts. It is a case where there is only one contention raised before the ITO and it is, we think, impossible to hold that the Income Tax Officer did not at all look at the return filed by the assessee or the statements accompanying it. The more reasonable view to take would, in our opinion, be that the Income Tax Officer looked at the facts and accepted the assessee s contention that the surplus was not taxable. But, in doing so, he obviously missed to take note of the law laid down in Ramachari which there is nothing to show, had been brought to his notice. When he subsequently became aware of the decision, he initiated proceedings under Section 147(b). The material which constituted information and on the basis of which the assessment was reopened was the decision in Ramachari2. This material was not considered at the time of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... formed at the first instance, the question of change of opinion would not arise. 8. In rejoinder, Mr. Hemani, learned advocate for the petitioner submitted that the only issue which finds place in the order of the Assessing Officer is the issue which is sought to be re-opened by the Assessing Officer. To say that the Assessing Officer had not applied its mind would amount to giving premium to wrong doing. It was submitted that benefit of doubt cannot be given to the revenue since this was the only item in the assessment order. As regards the contention that formation of opinion was not reflected in the assessment order, it was submitted that under the Income Tax Act, one is not concerned with the opinion. The conclusion arrived at by the Assessing Officer is the opinion. It was submitted that in the light of the decision of the Supreme Court in the case of Commissioner of Income-tax v. Kelvinator India Ltd. (supra) there has to be tangible material which has to be from an outside source for the purpose of forming an opinion regarding escapement of assessment. In the facts and circumstances of the present case, there is no tangible material on the basis of which the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the Court may look into the conclusion arrived at by the Income Tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income Tax Officer and further whether that material had any rational connection or a live link for the formation of the requisite belief. It would be immaterial whether the Income Tax Officer at the time of making the original assessment could or, could not have found by further enquiry or investigation, whether the transaction was genuine or not, if on the basis of subsequent information, the Income Tax Officer arrives at a conclusion, after satisfying the twin conditions prescribed in Section 147(a) of the Act, that the assessee had not made a full and true disclosure of the material facts at the time of original assessment and therefore income chargeable to tax had escaped assessment. 12.The Supreme Court in the case of Commissioner ofIncome-tax v. Kelvinator of India Ltd. (supra) has held thus: 5. On going through the changes, quoted above, made to Section 147 of the Act, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to review; he has power to reassess. But the reassessment must be based on fulfilment of certain pre-conditions. The concept of change of opinion must be treated as an inbuilt test to check abuse of power by the Assessing Officer. The Assessing Officer has power to reopen, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. 14.This High Court in the case of VXL India Ltd. c. Assistant Commissioner of Income-tax, (1995) 215 ITR 295 has held thus: The essential requirement for initiating proceedings under section 148 of the Act is that the Assessing Officer must have reason to believe that any income chargeable to tax has escaped assessment for any assessment year. Explanation 2 to section 147 of the Act as appended to newly substituted section 147 makes certain provisions where, in certain circumstances, the income is deemed to have escaped assessment giving jurisdiction to the Assessing Officer to act under the said provision. Another requirement which is necessary for assuming jurisdiction is that the Assessing Officer shall record his reasons for issuing notice. This requirement necessarily postulates that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd that during the assessee has furnished revised statement of income on 18/11/2008 in which the capital gain on transfer of property situated at City Survey No. 3445/2 alias 3445/B in Shahpur Ward No.2 Registration District and Sub-District, in the revised statement of income capital gain was worked out to Rs.99,45,288 as against Rs.1,35,47,493 shown in the original return of income. As per provision u/s 139(5) of the IT Act, if after furnishing a return, any omission or wrong statement is discovered, a revised return can be filed at any time before the expiry of one year from the end of the relevant A.Y., or before the completion of the assessment, whichever is earlier. Further as per decision of Gopaldas Parsottamdas Vs CIT [(1941) 9 ITR (All)] and Waman Padmanabh Dande Vs CIT [(1952) 22 ITR 339 (Nag)] an application or letter to the Assessing Officer for correcting or making amendments in original return already filed would not constitute revised return. Therefore, the assessee is not entitled to file revise statement beyond the statutory period allowed u/s 139(5) of the Act. In view of the above, I have reason to believe that income of Rs.35,06,575 [1,34,47,493 - 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which came to be accepted by the Assessing Officer while framing assessment under section 142(3) of the Act. In terms of the aforesaid decisions referred to in the reasons recorded such revised computation could not be treated a revised return. Even of the same were to be treated as a revised return, the same had been filed beyond the prescribed period of limitation, hence the consequences would follow. However, a perusal of the assessment order indicates that this was the only issue before the Assessing Officer while framing assessment under section 143(3) of the Act. The petitioner had initially filed return of income and pursuant to the queries raised by the Assessing Officer had submitted a revised computation of income, which had in terms been accepted by the Assessing Officer. In the circumstances, when this was the only issue before the Assessing Officer, it cannot be said that the Assessing Officer has not applied his mind to this aspect. Applying the concept of change of opinion as the inbuilt test as laid down in the case of Kelvinator of India Ltd. (supra), it is apparent that the Assessing Officer while framing the original assessment has examined the claim of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was filed or not, once an assessee is in a position to show that the assessee has been over-assessed under the provisions of the Act, regardless of whether the over-assessment is a result of the assessee's own mistake or otherwise, the Commissioner has power to correct such an assessment under section 264 (1) of the Act. The Court referred to an unreported decision of this Court in the case of Vinay Chandulal Satia vs. N.O. Parekh, CIT in Special Civil Application No. 622 of 1981 wherein after placing reliance on several decision of the Supreme Court, this Court held that the State authorities should not raise technical pleas if the citizens have a lawful right and the lawful right is being denied to them, merely on technical grounds. The State authorities cannot adopt the attitude which private litigants might adopt. 22.In the present case, the respondent has nowhere stated that the corrected computation submitted by the petitioner is incorrect or that the petitioner is not entitled to be taxed on the said income. The only ground for re-opening is that the petitioner was not entitled to file revised statement beyond the statutory period under section 139(5) of the Act and the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
