TMI Blog2018 (9) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... interest paid to Global Trust Bank and Madhavpura Mercantile Co-op Bank, the complete details were filed before the AO during the course of original assessment proceedings in response to the queries raised by the AO. Admittedly, the assessment was completed under section 143(3) of the Act and reopening by issuing notice under section 148 of the Act is beyond four years - decided in favour of assessee - ITA No. 1326/Mum/2012 - - - Dated:- 31-8-2018 - SRI MAHAVIR SINGH, JM AND SRI N.K. PRADHAN, AM For The Appellant : Shri Rajiv Khandelwal, AR For The Respondent : Shri Dr . P Daniel , DR ORDER PER MAHAVIR SINGH, JM: This appeal by the assessee is arising out of the order of Commissioner of Income Tax (Appeals)-37, Mumbai [in short CIT(A)], in appeal No. CIT(A)-37/I.T.-110/ACCC-40/11-12 dated 09.01.2012. The assessment was framed by the Asst. Commissioner of Income Tax, Circle-40 Mumbai (in short ACIT / AO ) for the A.Y. 2003-04 vide order dated 27.12.2010 under section 143(3) read with section 147 of the Income Tax Act, 1961 (hereinafter the Act ). 2. The first issue in this appeal of assessee is regarding assumption of jurisdiction by the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expenses) of ₹ 4,89,06,057/- and the balance of ₹ 3,06,78,407/- was shown as prior period item below the line of balance sheet. On verification of the previous year's assessment records and financial statements of A.Y.'s 2000-01, 01-02, 02-03 it was seen that the assessee company had never credited any brokerage income. On the contrary expenses were claimed towards brokerage and commission payment. Since the above brokerage income was not taxed in the earlier years as claimed by the company, it should have been treated as income arising during the relevant financial year and should have been taxed, instead of adjusting it against prior period expenses. The tax on the above income escaping assessment works out to ₹ 2,76,31,149/- (Rs. 2,63,1 5,380(tax) + ₹ 13,1 5,769(SC) 2. While going through the financial statements it was seen that Ks. 19,27.71.401/- was debited to profit and loss etc towards Interest paid to Global Trust Bank and Madhavpura Mercanitle co-op bank. On perusal of the assessment records i.e. the list of secured loans and the bank statements of both the above banks, it was noticed that the interest of Ks. 10,4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the appellant fails. 2.4.23 In view of the above binding precedents of the Hon ble Supreme Court, I am of the view that the Ld. AO. had valid reasons to initiate reassessment proceedings which were duly recorded and communicated to the appellant and therefore, there is no merit in the arguments advanced by the Ld. AO. on this ground. Accordingly, this ground of appeal is dismissed. Aggrieved, now assessee is in appeal before Tribunal. 6. Before us, the learned Counsel for the assessee stated that the assessee before AO during the course of original assessment proceedings filed details of prior period adjustment vide letter dated 06.02.2006 and the relevant details are as under: - Details of prior Period Adjustment Sr. No. Particulars Amount A Prior Period of Income Brokerage Refund a) Woodstock Securities Pvt. Ltd 42,263,033 b) Vimla S. Jajoo 2,147,013 c) Herald Equities Pvt. Ltd 3,269 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO also allowed the claim of refund of brokerage for prior periods and the details were filed before the Assessing Officer. In view of the above, the learned Counsel for the assessee argued that the original assessment was completed under section 143(3) of the Act and the AO has raised the queries regarding both the issues and replies were filed and even the AO has considered the same. According to the learned Counsel, the relevant Assessment Year is 2003-04 and the original assessment was completed under section 143(3) of the Act vide order dated 17.02.2006 and the notice under section 148 was issued dated 29.01.2010. Hence, in view of these facts, the learned Counsel for the assessee stated that admittedly this reopening is beyond four years and assessee s case falls under the first proviso to section 147 of the Act. He took us through the reasons recorded and argued that from the very reasons it cannot be enumerated whether there is any failure on the part of the assessee to disclose fully and truly all material facts necessary for this assessment year. The learned Counsel for the assessee accordingly stated that once there is no failure on the part of the assessee to disclo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 47 of the Act, no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. In case, there being no whisper in the reasons supplied to assessee that income escaped assessment by reason of assessee s failure to make a full and true disclosure of all material facts necessary for assessment, notice under section 148 of the Act issued beyond four years from the end of relevant assessment year was barred by limitation under proviso to s. 147 of the Act, hence without jurisdiction. If either of these conditions is not fulfilled the notice is without jurisdiction. If the notice issued u/s 148 fails to satisfy either of the conditions, it deserves to be quashed. However, the officers have many time issued notices for reopening the assessments even beyond four years from the end of the assessment year without fulfillment of any of the legal conditions as stipulated in the first proviso to this section. Such an action of the revenue authorities is strictly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ad been made under section 143(3), then in view of the proviso to section 147 the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO[2000] 242 ITR 612. In our opinion, we have to see the law prevailing on the date of issue of the notice under section 148, i.e., 20-11-1998. Admittedly, by that date, the new section 147 has come into force and, hence, in our opinion, it is the new section 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. Hence, the proviso to the new section 147 squarely applies, and the impugned notices were barred by limitation mentioned in the proviso. 11. The learned departmental counsel relied on section 153(3)(ii) of the Act and submitted that there was no bar of limitation in view of the said provision. We do not agree. Section 153 relates to passing of an order of assessment and it does not relate to issuing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the basis of a mere change of opinion by the income-tax authorities, which would not be valid as held by the Supreme Court in Indian Eastern Newspaper Society v. CIT[1979] 119 ITR 996 1 ;Gemini Leather Stores v. ITO[1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Dy. CIT[1998] 234 ITR 1702(Delhi), etc. 12. In the decision of the Tribunal in the assessee's own case O.N.G.C.'s (supra), it has been held that the income from the contract between the parties was business income and not fee for technical services. 13. Although we are of the opinion that the law existing on the date of the impugned notice under section 147/148 has to be seen, yet even in the alternative even if we assume that the law prior to the insertion of the new section 147 will apply, even then it will make no difference since even under the original section 147 notice for reassessment could not be given on the mere change of opinion as held in numerous cases of the Supreme Court, some of which have been mentioned above. Since the Tribunal in the appeal relating to the assessee-company had considered the Tribunal's earlier decision in Boudier Christian's case, it will obvious ..... X X X X Extracts X X X X X X X X Extracts X X X X
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