TMI Blog2020 (2) TMI 839X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirmation of tax in the course of re-assessment under Section 147 of the Income Tax Act, 1961 has to again satisfy the well-settled principles of law i.e only if there was a failure on the part of the assessee to truly and fully disclose, all material facts that was required at the time of original assessment. No merits in interfering with the reassessment procedure hitherto undertaken by the 2nd respondent assessing officer. At the same time, it is made clear that while passing orders under Section 147 of the Income Tax Act, 1961, the 2nd respondent assessing officer will have to pass an appropriate order on merits considering the decision of the Hon'ble Supreme Court rendered in Commissioner of Income Tax and Another Vs. M/s. Yokogawa India Ltd. [ 2011 (8) TMI 845 - KARNATAKA HIGH COURT] and the other well-settled principles of law. It is made clear that the order to be passed cannot be based on change of opinion if there was true and full disclosure by the Petitioner at the time of filing of the return. Writ Petition disposed by directing the Petitioner to participate in the adjudicatory mechanism before the concerned Respondent. The respondent shall pass appropriate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... learned counsel for the petitioner drew my attention to the decision of the full bench of the Delhi High Court in Commissioner of Income Tax Vs. Kelvinator of India Ltd., [2002] 256 ITR 1, which was affirmed by the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Kelvinator of India Ltd. , [2010] 320 ITR 561. He submits that the position of law has been explained as follows by the Full Bench of the Delhi High Court in paragraph 7 which is reproduced below:- 7 From a bare perusal of the provisions contained in section 147 of the said Act, as it stood up to 31-3- 1989, it is evident that to confer the Act two conditions were required to be satisfied viz., (i) the assessing officer must have reason to believe that income chargeable to the tax has escaped assessment; and (2) he must also have a reason to believe that such escapement occurred by reason of either (a) omission or failure on the part of the assessed to make a return of his income under section 139; or (b) omission or failure on the part of the assessed to disclose fully and truly all material facts necessary for his assessment for that year The afore-mentioned requirements of law must be held to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not recorded his reasons. In the second and third situation, the Revenue is not without remedy. In case the assessment order is erroneous and prejudicial to the interest of the Revenue, they are entitled to and can invoke power under section 263 of the Act. This aspect and position has been highlighted in CIT v. DLF Power Ltd. I.T.A. No. 973 of 2011 decided on November 29, 2011-since reported in [2012] 345 ITR 446 (Delhi) and BLB Ltd. v. Asst. CIT Writ Petition (Civil) No. 6884 of 2010 decided on December 1, 2011- since reported in [2012] 343 ITR 129 (Delhi). In the last decision it has been observed (page 135): The Revenue had the option, but did not take recourse to section 263 of the Act, in spite of audit objection. Supervisory and revisionary power under section 263 of the Act is available, if an order passed by the Assessing Officer is erroneous and prejudicial to the interest of the Revenue. An erroneous order contrary to law that has caused prejudiced can be correct, when jurisdiction under section 263 is invoked. Thus, where an Assessing Officer incorrectly or erroneously applies law or comes to a wrong conclusion and income chargeable to tax has es ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that year;] [(C) If four years, but not more than sixteen years, have elapsed from the end of the relevant assessment year unless the income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped assessment.] 13. Once the assessment has been re-opened, the Assessing Officer can take a prima-facie view that he was entitled to proceed further. However, while passing orders under Section 147 of the Income Tax Act, 1961, the Income Tax Officer he has to keep in mind of the express provisions of Section 147 of the Income Tax Act, 1961, particularly the proviso to Section 147 of the Income Tax Act, 1961 which reads as under:- 147. If the [Assessing] Officer [has reason to believe] that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act, 1961, redundant which is not intended. At the same time, confirmation of tax in the course of re-assessment under Section 147 of the Income Tax Act, 1961 has to again satisfy the well-settled principles of law i.e only if there was a failure on the part of the assessee to truly and fully disclose, all material facts that was required at the time of original assessment. 17. The Full Bench of the Delhi High Court in case of Commissioner of Income Tax Vs. Usha International Limited , (2012) 348 ITR 485 has summarised the position as follows:- 13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assesse. Reassessment proceedings in the said cases will be hit by principle of change of opinion . (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of change of opinion . Factual information or material which was incorrect or was not available with the Assessing Officer at the time of original assessment would justify initiation of reassessment proceedings. The requirement in such cases is that the information or material available should relate to material facts. The expression material facts means those facts which if taken into account would have an adverse affect on the assessee by a higher assessment of income than the one actually made. They should be proximate and not have remote bearing on the assessment. The omission to disclose may be deliberate or inadvertent. The question of concealment is not relevant and is not a precondition which confers jurisdiction to reopen the assessment. 18. The decisions of the Hon'ble Supreme Court rendered in the case of Commissioner of Income Tax Vs. Yokogava India Limited , (2017) 2 SCC 1 cited by the learned counsel for the Petitioner over-whelming answer the issue in favour of the Petitioner on merits. The relevant passages from the aforesaid Judgments are extracted below:- 15. The difference between the two expressions exemption and dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... From a reading of the relevant provisions of Section 10-A it is more than clear to us that the deductions contemplated therein are qua the eligible undertaking of an assessee standing on its own and without reference to the other eligible or non-eligible units or undertakings of the assessee. The benefit of deduction is given by the Act to the individual undertaking and resultantly flows to the assessee. This is also more than clear from the contemporaneous Circular No. 794 dated 9-8-2000 which states in para 15.6 that, The export turnover and the total turnover for the purposes of Sections 10-A and 10-B shall be of the undertaking located in specified zones or 100% export-oriented undertakings, as the case may be, and this shall not have any material relationship with the other business of the assessee outside these zones or units for the purposes of this provision . 18. If the specific provisions of the Act provide [first proviso to Sections 10-A(1); 10-A(1-A) and 10- A(4)] that the unit that is contemplated for grant of benefit of deduction is the eligible undertaking and that is also how the contemporaneous circular of the department (No. 794 dated 9-8-2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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