TMI Blog2017 (11) TMI 921X X X X Extracts X X X X X X X X Extracts X X X X ..... count Company Limited, the obligation on the part of the assessee does not extend beyond fully and truly disclosing all primary facts. It is for the Assessing Officer to take an inference on facts and law based on such disclosure. If according to the respondent, his predecessor did not come to a proper inference on the facts disclosed, it is no ground to reopen the assessment, as if permitted and it would amount to a clear case of change of opinion. In the light of the above discussion, the first issue framed for consideration is answered in favour of the petitioner and against the revenue. On 29.12.2016, the petitioner through its authorized representative appeared before the respondent and submitted a written request to keep the notice under Section 143(3) of the Act in abeyance till a speaking order is passed on the petitioner's further representation dated 29.09.2016. However, on 30.12.2016 without any opportunity to the petitioner, the impugned assessment order has been passed. Thus the facts clearly demonstrate that the respondent has not followed the directives in the case of GKN Drive Shafts (India) Limited [2002 (11) TMI 7 - SUPREME Court]. The rebuttal dated 30.08.2016 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - T. S. Sivagnanam, J. For the Petitioner : Mr. Sathish Parasaran for M/s. C. Uma For the Respondent : M/s. Hema Muralikrishnan ORDER The petitioners in all these writ petitions have challenged the notices dated 31.03.2016 issued by the respondent under Section 148 of the Income Tax Act, 1961 (hereinafter referred to as the Act ) for the assessment year 2009-2010 and the consequential reassessment order dated 30.12.2016. Since the facts are identical and all the petitioners are owners of coffee estates in Coorg, State of Karnataka, the writ petitions were heard together and disposed of by this common order. 2.W.P.No.1855 of 2017 is taken up as a lead case and it would suffice to refer to the facts therein as the facts in the other cases are identical. The petitioner's case is that he grows coffee and after pulping and drying, sells the coffee as raw coffee and the process of pulping and drying is completely different from curing and mere pulping and drying the coffee seeds does not result in cured coffee. Proceeds of sale of raw coffee is an agricultural income exempted under Section 10(1) of the Act. In case of sale of cured coffee, 25% of the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 32(MDS)/2013 dated 18.09.2015 dealing with sun dried coffee which decision was re-considered by the ITAT and the matter has been remanded to the Assessing Officer for fresh consideration. It is further submitted that without disposing of the petitioner's objections to the reopening of assessment and without passing a speaking order, the assessment could not have been completed and this is in violation of the law laid down by the Hon'ble Supreme Court in GKN Drive Shafts (India) Limited vs. Income Tax Officer - 2002 Supp (4) SCR 359. Thus, it is submitted that the instant case is a classical case of abuse of power under Section 147 of the Act. 5.It is further submitted that on receipt of the reasons for reopening the assessment, the petitioner submitted their objections dated 24.05.2016 through their authorized representative. The respondent by reply dated 30.08.2016 terming it as rebuttal for the objection did not agree with the submissions made by the petitioner and in case the petitioner wants to provide further submissions in support of his claim, the petitioner was directed to provide the same by 08.09.2016. The petitioner's authorized representative addressed th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of TC Abraham, which case has been remanded to the Assessing Officer for fresh consideration. Therefore that cannot be a reason to reopen the proceedings. This was specifically pointed out by the petitioner vide their representation dated 29.09.2016 submitted through the authorized representative. 7.Referring to the decision in the case of Commissioner of Income Tax, Delhi vs. Kelvinator of India Limited reported in (2010) 2 SCC 723, Mr.Sathish Parasaran, learned senior counsel for the petitioner submitted that the concept of change of opinion is an in-built test to check abuse of power by the Assessing Officer and from the reasons for reopening, it is clear that it is a change of opinion and nothing else. Further, it is submitted that in the absence of any tangible material to come to the conclusion that income chargeable to tax has escaped assessment, the reassessment has to be held to be illegal. It is further submitted that the petitioner has been singled out and a discriminatory treatment has been adopted in respect of the assessment year 2009-2010. Several hundreds of coffee growers are not engaged in curing coffee seeds like the petitioner and they filed returns of i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ricultural income form part but the Assessing Officer did not form an opinion and therefore, the petitioner should file an appeal against the impugned assessment order. To support her contentions, the learned Senior Panel Counsel referred to the findings recorded by the Assessing Officer in the impugned assessment order. Thus, it is submitted that in the absence of full and true disclosure of all material facts, the respondent was justified in reopening the assessment by issuing the impugned notice and the respondent having fulfilled the directions issued in the case of GKN Drive Shafts (India) Limited, there is no ground to interfere with the impugned notice/assessment order. 10.Heard the learned counsels for the parties and carefully perused the materials placed on record. 11.Broadly three issues fall for consideration in this writ petition, namely, 1)Whether the impugned notice issued under Section 148 of the Act is on account of change of opinion of the Assessing Officer when the petitioner's case is that he has fully and truly disclosed all the details at the time of scrutiny assessment and whether any tangible material was available with the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssess has to be kept in mind. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of change of opinion is removed, then in the garb of reopening the assessment, review would take place. It was further pointed out that the concept of change of opinion should be treated as an in-built test to check abuse of power by the Assessing Officer. Hence, after 01.04.1989 the Assessing Officer has the power to reopen, provided there is tangible material to come to the conclusion that there is an escapement of income from assessment. The reasons must have a live link with the formation of the belief. 14.In the case of Calcutta Discount Company Limited, the Hon'ble Supreme Court examined the words used in the provision omission or failure to disclose fully and truly all material facts necessary for assessment for that year and held as follows: 10.Does the duty however extend beyond the full and truthful disclosure of all primary facts ? In our opinion, the answer to this question must be in the negative. Once all the primary facts are before the assessing authority, h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... examination either by the same officer or by a successor, the inference arrived at appears to be erroneous, mere change of opinion would not be a justification to reopen the assessment. 16.In the instant case, the petitioner's assessment for the subject assessment year was taken up for scrutiny. All primary facts were available with the Assessing Officer. The Assessing Officer completed the scrutiny assessment vide order dated 30.12.2011. After the expiry of four years, the impugned notice dated 31.03.2016 was issued. The petitioner requested for the copy of the reasons for reopening vide representation dated 13.04.2016. The respondent by communication dated 19.04.2016 furnished the reasons for reopening. On a perusal of the reasons, I find that the respondent on verification of the assessment records and the order sheet entries inferred that the Assessing Officer on scrutiny had failed to examine and deliberate on the correctness of the income reported under the head agricultural income. Further, the respondent would state that even though the assessee had derived the predominant portion of the agricultural income from sale of coffee seeds, the aspect as to whether the inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n is to pass a speaking order on the objections. Unfortunately, the respondent did not do so, but sent a communication to the petitioner dated 30.08.2016 terming it as a rebuttal for objections for reopening the assessment. 18.The revenue's case is that the communication dated 30.08.2016 is an order with reasons and it is a speaking order and the respondent has complied with the directives in the case of GKN Drive Shafts (India) Limited. While it may be true that the rebuttal dated 30.08.2016 has given certain reasons and the merits of which cannot be gone into at this stage, but the respondent has not rejected the objections outright but afforded further opportunity to the petitioner to make further submissions and fixed the outer time limit as 08.09.2016 to make further submissions. This rebuttal dated 30.08.2016 cannot be treated to be an order as required to be passed in terms of the directives in the case of GKN Drive Shafts (India) Limited as the respondent himself did not attach any finality to it. The petitioner sought for extension of time to make further submissions and accordingly the same was made on 29.09.2016. This submission appears to be an elaborate submissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of coffee growers who are only doing pulping and drying of coffee seeds and not engaged in curing coffee seeds and not in a single case for the assessment year 2009-2010, reopening has been done. Though such an averment has been specifically raised by the petitioner, the same has not been controverted in the counter affidavit, thereby deemed to have been accepted. In the reply affidavit filed by the petitioner to the counter affidavit filed by the respondent in paragraph No.20 therein, the petitioner has referred to an application filed under the Right to Information Act by one Mr.Radhakrishnan who had made an application on 25.01.2017 requesting information as to in how many cases notice under Section 148 of the Act has been issued for reopening the assessment beyond four years of the relevant assessment years for the reason that sale proceeds of coffee seeds after drying and pulping in effect amounts to sale of cured coffee seeds, in how may cases the Department construed that an assessee who has sold raw coffee after pulping and drying and has disclosed in the return that the coffee was subjected to pulping and drying disclosing the expenditure incurred thereon and claimed ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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