TMI Blog2019 (11) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... es for the year 2011 were made available only a few years later. The assessee could not have peeped into the future while submitting its return of income. One can have the benefit of hindsight but nature has not endowed the assessees with prophetic abilities. Lex non cogit ad impossibilia (Law does not compel a man to do that which he cannot possibly perform) is a well known legal maxim. There is also no substance in the contention that writ remedy under Article 226 of the Constitution of India is not available for the petitioner. The petitioner has demonstrated that the conditions precedent to the exercise of jurisdiction u/s 147 did not exist and the first respondent had therefore no jurisdiction to issue the impugned notice in respect of the assessment year 2011-12 after the expiry of 4 years. When the issue touches on the jurisdiction of the authority, the existence of alternative remedy is no ground to deny relief to the petitioner. The divergent stand of the parties revolves around Section 14 A of the Act. The true object, scope and meaning of Section 14 A of the Income Tax Act has been authoritatively laid down by the Hon'ble Supreme Court in the decision in Maxo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act proposing to initiate proceedings under Section 147 and calling upon the petitioner to file its return of income in response to the said notice. The petitioner submitted a letter dated 11.07.2018 raising their objections for reopening of assessment under Section 147 of the Act. It was contended by the petitioner that the notice was issued beyond four years from the end of the assessment year ie., 31.03.2012. The petitioner also pointed out that there has been no failure on the part of the bank in submitting the material facts for assessment. The petitioner had orally gathered information that the reasons for initiating the proceedings under Section 147 was that the disallowance made under Section 14 A of the Act was not computed as per the method prescribed under the Income Tax Rules, 1962. Therefore, in their letter dated 11.07.2018, the petitioner pointed out that even in the order of original assessment, the issue of disallowance has been discussed and disallowance was made as per the method adopted in the previous year. An issue once decided in the regular assignment cannot be reopened by way of reassessing. The petitioner, however submitted the return of income in respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. Disallowance under Section 14 A of the Act could not be correctly computed as a result. Even though the statutory provision clearly states that the method for determining the amount of expenditure in relation to income not includable in total income must be done in accordance with Rule 8 D of the Income Tax Rules, 1962, in the assessment order dated 14.03.2014, the disallowance was calculated at 2% of the exempted income. Likewise, disallowance under Section 36 could not be properly computed in the original order of assessment due to non furnishing of full and true particulars concerning the bad debt provisioning for Rural Branches vis-a-vis Urban Branches. The action taken by the Revenue are based on facts and not on change of opinion . Drawing the court's attention to Explanation 1 to Section 147 of the Act, the learned standing counsel submitted that mere production of account books before the assessing officer will not necessarily amount to disclosure. He would also refute the stand of the petitioner that the time limit for notice to be issued under Section 148 is 4 years. According to him, the limitation is 6 years in this case. 8.The lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 14 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment for any assessment year: Provided also that the Assessing Officer may assess or reassess such income, other than the income involving matters which are the subject matters of any appeal, reference or revision, which is chargeable to tax and has escaped assessment. Explanation 1 ... Explanation 2 ... Explanation 3 ... Explanation 4 . -For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Hon'ble Mr.Justice Rajiv Shakdher during his ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961 reads as under : Expenditure incurred in relation to income not includible in total income. 14A. (1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2)The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the assessee, is not satisfied with the correctness of the claim of the assessee in respect of such expenditure in relation to income which does not form part of the total income under this Act. (3)The provisions of sub-section (2) shall also apply in relation to a case where an assessee claims that no expenditure has been incurred by him in relation to income which does not form part of the total income under this Act. If sub-section (2) is parsed, it can be divided into two component par ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15.Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. 16.To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The word change of opinion implies formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t does not address itself to a given aspect sought to be examined in the re-assessment proceedings. In a recent decision pertaining to land acquisition proceedings, the Hon'ble Supreme Court held that the power of review must be expressly conferred (2019) 9 SCC 416 (Naresh Kumar vs. State ). 13.In this case, there is no failure on the part of the assessee. On the other hand, there appears to be a failure on the part of the assessing officer to make an appropriate determination of the amount of expenditure in terms of Section 14 A of the Income Tax Act. In such a case, the remedy for the Revenue is elsewhere and not in assuming jurisdiction under Section 147 of the Act. That would amount to exercising the power of review which the statute has not conferred on the authority. This is particularly because the attempt to reopen is made after the expiry of 4 years from the end of the assessment year and the original assessment was made under Section 143(3). The authority cannot take advantage of their own wrong. If they failed to perform their statutory duty, the consequence of default cannot fall on the assessee. 14.The other reason c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here are too many law journals. We have web editions and e-libraries. In the deluge of decisions, pearls get lost in the heap of pebbles. Lord Neuberger in his talk while commemorating the ICLR's 150th Anniversary remarked that in the legal world, just as in most other fields, a significant present day problem is information overload. As early as in 1863, Lindley identified the four criteria for reporting a case. They are 1.it must introduce a new principle, 2.modify an existing principle, 3.settle a disputed or uncertain issue, 4.or particularly instructive. 18.T.S.Eliot asked where is the knowledge we have lost in information? . This pitfall can be avoided if the law officers of the various departments bring it to the notice of their respective heads of the departments the rulings that meet the aforesaid criteria laid down by Lindley. The same could then percolate down the line. Such a sharing of knowledge will definitely go a long way in improving the quality of adjudication. 19.For the foregoing reasons, the impugned proceedings are liable to be quashed. They are accordingly quashed. This writ petition is allowed. No costs. Consequently, conne ..... X X X X Extracts X X X X X X X X Extracts X X X X
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