TMI Blog2014 (8) TMI 794X X X X Extracts X X X X X X X X Extracts X X X X ..... it is for this reason that the comparative cases assumed prime relevance - The exercise was made even for the current year - Even though in all the cases so compared there was a deposit by the tenant accompanying the rental arrangement, it was lower than that obtaining so that the rental being higher, the same was adopted in the assessee's case on 'best available information' basis - the rent fetched without or a lower deposit is to that extent more comparable and nearer to the requirement of law, i.e., the fair rental value of the property per se - there is a valid assumption of jurisdiction u/s.147 of the Act. Power to review an order versus Power to reassessment – Held that:- There is a difference between the power to review and power to reassess - Placing such a restriction on the power of assessment of the assessing authority is contrary to the scheme of the Act, besides would operate to cause prejudice to the Revenue - Even the CBDT does not under law have the power to interfere with the A.O.'s independence in the matter of making the assessment, being precluded u/s. 119(1)(a) for requiring the A.O. to make the assessment or to dispose of a particular case in a particular ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 143(3) of the Act on 29.12.2008 at an income of ₹ 194.91 lacs by, inter alia, effecting disallowance u/s.14A and assessing the house property income at ₹ 42,37,301/- (as against the returned income of ₹ 39,06,101/- under the said head). Subsequently, notice u/s.148 was issued on 23.02.2011, seeking to reopen the assessment on two grounds (copy of reasons recorded at PB pgs. 22-23): a) the annual value of the Sahakar Bhavan property, one of the six properties let during the relevant year, had been assessed at ₹ 9,43,200/- by adopting a rental rate of ₹ 24/- per sq. ft.. The said property, letting of which was accompanied by an interest free deposit of ₹ 3.31 crores, had been assessed at a rental value of ₹ 37,25,000/- u/s.143(3) for A.Y. 2004-05. The annual value would have only witnessed an increase during the two year period since. There was thus, i.e., even adopting the value as assessed for A.Y. 2004-05, an escapement of income at least to the extent corresponding to the difference; b) maintenance charges paid to the housing society had been claimed at ₹ 3,75,755, which, though inadmissible, had been allowed in asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the impugned order). Ground # 1 (Income from house property - Sahakar Bhavan property): 3.1 The assessee's case is that the matter was duly enquired into by the A.O. while framing the original assessment; in fact, even subject to addition upon finding the returned income, based on agreement, to be lower than the rent being fetched by other properties in the same building with the same area by other, independent persons, and toward which reference was made during hearing to the assessee's letters dated 10.12.2008 (PB pgs.11-12) and 24.12.2008 (PB pgs. 13-17). So much so that even the assessment order u/s. 143(3) for A.Y. 2004-05 was furnished during the said assessment proceedings (PB pgs.4-9). The A.O. had, thus, formed a definite view upon consideration of all the relevant facts. The subsequent invocation of the assessment for A.Y. 2004-05, confirmed in first appeal (PB pgs. 42-45), would be, under the circumstances, only a change of opinion, precluding reassessment. Reliance was placed on Aroni Commercials Ltd. vs. Dy. CIT [2014] 362 ITR 403 (Bom) and Cartini India Ltd. vs. Addl. CIT [2009] 314 ITR 275 (Bom). The Revenue's case, on the other hand, is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ', which is itself a legislative check against any arbitrariness in reopening concluded assessments. The proposition is unexceptional, if not axiomatic, recommending itself to ready acceptance. If not so understood, any consideration of any matter, irrespective of facts, would degenerate into or be liable to be described as a 'review', defeating the very concept and notion of 'reason to believe' controlling and placing a limitation on the power of assessment. The same, besides being inconsistent with the meaning of the word 'review', both as understood in common parlance as well as judicially, would distort the meaning and sense of the word. The decision of the ld. CIT(A) is also based on the said understanding in-as-much as it is based on there being an examination and consideration of all the relevant material by the A.O. in the original assessment proceedings, including the assessment for A.Y. 2004-05, so that there is clarity and no dispute on this aspect of the matter, i.e., that only consideration of the same material would amount to a review. Why, for example, speaking again in context of the present case, the A.O. may receive information, post as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts or law. Where, however, the Income-tax Officer gets no subsequent information, but merely proceeds to reopen the original assessment without any fresh facts or materials or without any enquiry into the materials which form part of the original assessment, section 34(1)(b) would have no application.' The hon'ble court clarified that the information or material may be external to or a part of the record. It was further explained that the information though must come in the possession of the A.O. after the assessment, but even if it is such that it could have been obtained during the assessment itself, i.e., from an investigation of the materials on record, or the facts disclosed thereby or from other enquiry or research into facts or law, but was not in fact obtained, the jurisdiction of the assessing authority is not affected. True, one could argue that the word 'information' is absent in the extant law, but then the law has been thus only further relaxed and, in any case, the interpretation accorded by the hon'ble court, which itself represents a continuum, signifies the purposive manner in which it reads the provision. (also refer para 6(a)) 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said opinion as an opinion in the eyes of law, even as, as afore-stated, there is no whisper or even an iota of evidence to suggest a consideration of the said material by him in framing the original assessment. The impugned order, imputing so, inasmuch as the ld. CIT(A) does not state so explicitly, is thus itself without any application of mind, being sub silentio in the matter, so that it does not inform us as to the basis for the ld. CIT(A) in so stating. Rather, considering that the said material itself forms the basis of the ground for reopening the assessment, one would have expected the first appellate authority to have been more circumspect, i.e., than one normally is or is wont to, and issue his finding/s in the matter upon due consideration of the material on record, while we find he does so most causally, taking it, i.e., the consideration of the said material by the A.O., as a 'given'. It does not perhaps even occur to him that in doing so he is implicitly holding the A.O. guilty of capriciousness and a conduct contumacious and malicious, i.e., besides dereliction of duty. The most we are able to concede, i.e., on the basis of the material on record, is that t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under such a situation, except of course of reason to believe, and which brings us to our next step (b) afore-noted. (also refer para 6(a)) The reason to believe in the instant case is, again, striking; there being a marked difference between the rent rate assessed and that assessable, i.e., based on the assessment u/s. 143(3) for the preceding year, and which would itself be based on materials. The apex court in Pooran Mal vs. Director of Inspection [1974] 93 ITR 505 (SC) has clarified relevancy to be the prime factor in deciding the admissibility or otherwise of evidence under the Indian jurisprudence. This gets imported in the Act by the consideration of the material or information bearing a rational and live link or nexus with the formation of the belief as to escapement of income. The fact of the assessment having been concluded at a much higher rate is itself a strong persuasive ground, an objective basis, for forming the belief, even if it may have some subjective element to it, for inferring under assessment of income. Sufficiency of reasons, it is trite, is not an aspect that is relevant, at this stage, which is the existence of a reasonable belief, held in good faith, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 037/Mum(L)/2010 dated 04.12.2013/copy on record). In fact, it has been held that even if the Department was in appeal before the higher appellate authority, the order of the lower appellate authority being binding on it, it would prevail; the appellate order merging with that of the subordinate authority/s (refer para 12 of the said order). 4.2 The ld. Departmental Representative (DR) would, on the other hand, contend that, true, the Revenue had not preferred an appeal against the order by the first appellate authority in the assessee's case for A.Y. 2006-07, but that should not be inferred as an acceptance by the Revenue of his view in the matter. The non-preference of an appeal by the Revenue was on account of section 268A, which places a monetary limit for preferring appeals against the orders of the various appellate authorities before the higher forum. The scrutiny note put up by the concerned A.O. in the matter was placed by him on record in this regard. 5.1 The issue, thus, on merits that arises is not a consideration of this aspect by the A.O. at the time of the original assessment, which he decidedly did not, prompting us to state that the order of the ld. CIT(A) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the apex court, that constitutes a binding precedent. Further on, as we shall presently see, the said order by the tribunal is in direct conflict with the settled law in the matter of assumption of jurisdiction u/s.147, as well as the decision by the apex court in the case of C. K. Gangadharan v. CIT [2008] 304 ITR 61 (SC). We shall, accordingly, proceed to examine the issue on merits, taking the said decision by the co-ordinate Bench as persuasive in nature. The first thing that strikes us in the matter is that the assessee's challenge is to the assumption of jurisdiction, i.e., the validity thereof in law. Toward the same, a reasonable ground would clothe the A.O. with the requisite jurisdiction. The adequacy or sufficiency of the reason/s is not an issue or germane; in fact not being a justiciable issue for the court to examine the same. Conclusiveness is not a condition or relevant at that stage which would follow later. Why, the A.O., where convinced may not proceed to effect the addition/ disallowance under contemplation even for the relevant year, but that would have been no bearing relevant on the jurisdiction per se. As such, the very basis of the decision by the tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... effect take away the Revenue's right of appeal, a statutory right, in the case of the assessee for years other than for which the order of the first appellate authority has been rendered in the first instance. The apex court in C. K. Gangadharan (supra) clarified that the non-filing of an appeal by the Revenue in one case could not be considered as an acceptance on its part of the issue decided by a lower appellate forum, so that it is at liberty to prefer an appeal before the high court or the apex court on the same issue. The Revenue has established that there was no acceptance by it of the view of the first appellate authority in the present case, but was constrained in appealing there-against per force s. 268A. In fact, a provision prescribing a procedure for preventing repetitive appeals (before the high court or apex court) u/s.158A of the Act is made in law only to ease the tedium involved in making repetitive appeals on the same question of law. The argument as made amounts to importing the principle of res adjudicata to the proceedings under the Act, which it is trite does not apply thereto (refer: New Jehangir Vakil Mills Ltd. v. CIT [1963] 49 ITR 137 (SC); S. Naraya ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so state our consideration of the decisions by the high courts relied upon by the parties, if only to exhibit so, as below, and particularly that by the hon'ble jurisdictional high court: a) Aroni Commercials Ltd. (supra): This decision is based on the consideration of the relevant facts by the A.O. at the time of original assessment, and therefore to that extent supportive of our decision. The purport of the decision is that raising a query in the matter itself implies a consideration of the matter by the A.O. This is almost the truism, as it cannot but be presumed so, so that the absence of any reference to the matter in the assessment order cannot be decisive of the matter. In other words, non-consideration cannot be lightly inferred. We understand this to be the ratio of the decision, which would thus prevail and guide us in application of the relevant law in the wide variety of facts and circumstances that arise and obtain in the different fact settings presented in different cases. Consideration or otherwise of a matter, it needs to be appreciated, is a matter of fact, which though tempered with some guidelines, as for instance provided by the hon&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the CIT(Administration) u/ss. 263 and 264 of the Act. The said case, thus, would be of no assistance to the assessee. d) Idea Cellular Ltd. (supra): The decision is again a case of reassessment proceedings initiated after four years, dilating the scope of full and true disclosure of all the material facts, aspect which is absent in the instant case. The other elements of this decision find mention in Aroni Commercials Ltd. (supra), discussed hereinbefore. The said decision, therefore, has no application in the instant case. On the contrary, we find the decisions by the hon'ble court, as in the case of Export Credit Guarantee Corporation of India Ltd. vs. Addl. CIT [2013] 350 ITR 651 (Bom) and Eleganza Jewellery Ltd. vs. CIT (in WP No. 2763 of 2013 dated 18.02.2014 /copy on record), following it; the Special Leave Petition (SLP) against the latter having been in fact dismissed by the apex court, as confirmatory of the position that within a period of four years disclosure by the assessee is not relevant, and what all has to be seen if the A.O. has applied his mind to the relevant aspect or material. If a material has been considered, there is no questio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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