TMI Blog2021 (4) TMI 796X X X X Extracts X X X X X X X X Extracts X X X X ..... order. The order dated 07.11.2018 issued by the Deputy Commissioner of Income Tax, disposing of the objections raised against the initiation of action under Section 147 of the Act, reveals that the issue involved in the original assessment under Section 143(3) of the Act and the reasons for reopening of assessment under Section 147 of the Act, are different. Deputy Commissioner of Income Tax, in clear terms, formed an opinion that the issue involved during the original assessment was dis-allowance of slump sale and the reasons for reopening of assessment under Section 147 of the Act, was to reassess the income of ₹ 82,49,045/-, which has escaped assessment being entirely different. When factually, the Deputy Commissioner of Income Tax formed an opinion by assigning reasons that the issue involved during the original assessment was different from that of the reasons for reopening of assessment, then there is no reason for the High Court to go into the further details by conducting a roving enquiry and it is for the Competent Authorities to adjudicate the issues on merits and by affording opportunity to the writ petitioner in the manner prescribed under the Statute. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner states that the Assessment Year was taken by way of an appeal before the ITAT and the ITAT also passed an order on 03.02.2017 with reference to the Assessment Year 2011-2012 and therefore, the issues were already concluded and the respondents now cannot sit on appeal in respect of the order passed by the ITAT and reopening of assessment was already concluded. Thus, the reasons furnished in the order impugned is nothing but change of opinion and not based on any new material, suppression of material or otherwise as required under the Statute for reopening of assessment. 4. Learned counsel for the petitioner solicited the attention of this Court with reference to the grounds of appeal filed by the Income Tax Department before the Income Tax Appellate Tribunal. Referring the said grounds, it is contended that the grounds raised and the issues adjudicated are one and the same as far as the reasons stated in the impugned order of reopening of assessment and there is no other new material empowering the Authorities Competent to issue notice under Section 148 of the Income Tax Act. 5. Learned counsel for the petitioner relied on the Third Proviso to Section 147 of the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spondent to show cause as to why the expenses claimed with regard to the allocation of common expenses between the two heads viz. software development and human resource development do not reveal any basis for such allocation. The issue was duly contested and decided vide order dated 29-11-2004 and the proceedings ended with a rectification of the assessment order under Section 154 of the IT Act while arriving at an income of ₹ 31,63,570 which was fully set-off against the loss brought forward and the income was assessed as nil for Assessment Year 2001-2002. (d) Further, on 10-2-2005, a notice was served upon the respondent by the Revenue for reopening the assessment under Section 148 on the ground that the deduction under Section 10-A of the IT Act has been allowed in excess and the income which escaped assessment works out to ₹ 57,36,811 in the original assessment. The respondent filed a detailed reply objecting to the reassessment. However, by order dated 17-8-2005, the objections were rejected and reassessment was approved by the Revenue. (e) Being aggrieved, the respondent challenged the above said show-cause notice dated 10-2-2005 as well as the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Prasad vs. Assistant Commissioner of Income Tax [(2018) 405 ITR 491 (T AP)] , the Telangana and Andhra Pradesh High Court, in paragraphs 21 to 27 and 35, observed as under:- 21. Section 147 deals with Income escaping assessment . It states to the effect that if the AO has reason to believe that any income chargeable to tax escaped assessment for any assessment year, he may, subject to the provisions of Sections 148 to 153, assess or reassess such income. The first proviso thereto stipulates that where an assessment under Section 143(3) or under Section 147 has been made for the relevant assessment year, no action shall be taken under Section 147 after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under Section 139 or in response to a notice issued under Section 142(1) or Section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. The third proviso to Section 147 states that the AO may assess or reassess such income, other than the income invol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for consideration before this Court in the appeals filed by the Revenue under Section 260A of the Act of 1961 against the common order dated 09.12.2016 of the Appellate Tribunal. Sri. K. Raji Reddy, learned senior standing counsel, has no information as to whether any appeals have been preferred therefrom to the Supreme Court. That being so, the orders of dismissal of these appeals filed by the Revenue are binding and it is not open to it to once again seek to re-agitate any issue that stands covered by the said adjudication. As already pointed out, relevance of the Investment Agreement dated 12.08.2009 was explicitly raised by the Revenue in the said appeals by framing a specific question of law. Despite the same, this Court was not persuaded to agree and confirmed the common order of the Appellate Tribunal holding that the date of transfer of the shares by the petitioners was 24.11.2009, the date on which they submitted declarations in Form No. 7B to the purchaser company. Sri. K. Raji Reddy, learned senior standing counsel, is unable to explain as to how the Revenue can reopen the subject assessments basing on the Investment Agreement dated 12.08.2009, when the Appellate Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rused the details furnished by the petitioners, upon being issued show-cause notices dated 13.12.2012 and 28.12.2012 calling for specific details about their share transfers, computation of capital gains and proof of investments to claim exemptions. The Appellate Tribunal also recorded that the petitioners had filed detailed replies along with supporting documents to justify the exemptions claimed and it was only then, that the AO completed the assessments and accepted the returns. Therefore, in the absence of any clear evidence of actual suppression of the Investment Agreement by the petitioners, the question of the Revenue falling back on this clause in Section 147 does not arise. All the more so, when it seeks to invoke the extended limitation of six years. 35. In the cases on hand, as already stated supra, neither in the notices dated 31.03.2017 nor in the reasons furnished in September/October, 2017, did the AO record the presence of the aforestated jurisdictional conditions for reopening the subject assessments. Even thereafter, when she rejected the petitioners objections under her letters dated 17.11.2017, the AO did not do so. Thus, as matters stand, the AO never opi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ber 2012. As regards AY 2006-07 and 2008-09, the notices under Section 148 of the Act were issued on 28th March 2013 at a stage when the Revenue's appeal against the order of the CIT(A) for the said two AYs was still pending before the ITAT. As already noticed, the decision of the ITAT in those pending appeals was rendered on 4th April 2014. The third proviso to Section 147 of the Act mandates that the AO would not assess or re-assess income involving matters which are the subject matter of any appeal, reference or revision . This mandate of the third proviso to Section 147, which was inserted with effect from 1st April 2008, appears to have been completely overlooked by the AO when he proceeded to issue the notices under Section 148 of the Act for the above AYs. 36. In fact, in the order rejecting the objections preferred by the ALF, the AO rejects this plea only on the ground that the earlier orders only made a cursory reference to the issue. This understanding by the AO of what constitutes reasons for reopening an earlier assessment order is both factually and legally erroneous. As long as the earlier assessment order made a reference to an issue, it did not matter, as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment, which is allegedly escaped as per the Income Tax Department and therefore, the present writ petition is to be allowed. 13. Learned counsel for the petitioner further contended with reference to the facts that transfer of property is made in accordance with the provisions, which was accepted by the Assessing Officer, while passing an order of assessment and the said assessment order was confirmed by the ITAT and the appeal filed by the Income Tax Department was dismissed. 14. This being the factum, there is no reason whatsoever to reopen the assessment at this length of time. 15. Learned Senior Panel Counsel, appearing on behalf of the respondents, disputed the said contention of the learned counsel for the petitioner, by stating that, undoubtedly, the reopening of assessment is to be made with reference to the provisions of the Income Tax Act. 16. The reason to believe and the requirements for reopening of assessment are well enumerated under Section 147 of the Income Tax Act. However, in the present case, the petitioner has failed to establish that the reason for reopening is connected with the facts adjudicated originally by the Assessing Officer. Thu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18. Relying on the above judgment, the learned Senior Panel Counsel made a submission that understatement of income or a claim of excessive loss, deduction, allowance or relief in the return furnished by the assessee, will also be deemed to be a case of income escaping assessment, in cases where a return is filed but no assessment is made; 19. This apart, the High Court cannot make a roving enquiry in respect of the reasons, which are otherwise based on some materials objects were not scrutinised or adjudicated by the Assessing Officer in the original assessment order. 20. The learned Senior Panel Counsel made a submission that the reopening of the assessment was made strictly complying with the provisions of Section 147 of the Act and the notice was issued by following the procedures contemplated and the reasons also are furnished. The reasons for reopening of assessment with reference to the impugned order, which reads as under:- In the return of income filed for the A.Y. 2011-2012, the assessee has debited an amount of ₹ 82,49,045/- under the head Administrative Expenses towards share of profit payable to M/s.Miracle Cars India Pvt Ltd in pursuance to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmed by the CIT(A), this agreement did not fructify due to non receipt of approval from SKODA. In view of the fact that the agreement did not go through there was no liability on the part of the assessee to pay the share of profit to M/s.Miracle Cars India Pvt Ltd. In the assessment order passed under Section 143(3) on 31.03.2014, the income chargeable to tax has therefore been under assessed to the extent of ₹ 82,49,045/-. The case has now been reopened under Section 147 to reassess the income of ₹ 82,49,045/0 which has escaped assessment for the AY 2011-2012. 23. The Deputy Commissioner of Income Tax, in clear terms, formed an opinion that the issue involved during the original assessment was dis-allowance of slump sale and the reasons for reopening of assessment under Section 147 of the Act, was to reassess the income of ₹ 82,49,045/-, which has escaped assessment being entirely different. 24. When factually, the Deputy Commissioner of Income Tax formed an opinion by assigning reasons that the issue involved during the original assessment was different from that of the reasons for reopening of assessment, then there is no reason for the High Court to go ..... X X X X Extracts X X X X X X X X Extracts X X X X
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