9911796707
TMI Blog2024 (12) TMI 1276X X X X Extracts X X X X X X X X Extracts X X X X ..... a period of four years. 2. The relevant facts need to be noted:- The petitioner is a Public Trust deemed to be constituted and governed under the State Legislation namely under the provisions of the "Shri Saibaba Sansthan Trust (Shirdi) Act, 2004" (for short, "2004 Act"). It is the petitioner's case that the petitioner manages and administers the "Sai Baba Temple", at Shirdi which is worshiped by millions of devotees from all over the world. Also, the petitioner is stated to be involved in religious and charitable activities. The petitioner has described the history in relation to Shirdi temple and the faith, which the people have in worshiping "Shri Sai Baba" who departed from the mortal world on 15 October 1918. 3. The formation of the petitioner trust and its aims, objectives were inter alia to spread the universal religion of Saibaba. It is the case of the petitioner that the devotees of Saibaba started worshiping the 'Samadhi' from 27 October 1918 being the "Bhandara Day". They also started a fund known as the "Samarth Sainath Kothi" for continuing the worship at the Samadhi Mandir where his worldly remains were interred and consequently, the Samadhi Mandir as well as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peal No. 320 of 1982 decided on 23 July 1984), the management of the trust was vested in the Board of Management constituted by the Charity Commissioner of Maharashtra. It is stated that under such scheme, several Trustees of the Board of Management were appointed. The Board of Trustees were appointed for a period of five years i.e. from 1984-89, 1989-94, 1994-99 and 1999-2004. 6. The petitioner has contended that with a view to provide for better management, administration and control of the Saibaba Trust and to enable it to undertake wider welfare activities for the benefit of the public, the Maharashtra Legislature passed the 2004 Act (supra). It is stated that on account of the promulgation of the said Act, the existing public trust was reconstituted and the Shri Saibaba Sansthan Management Committee, under the Trust Act, was appointed under the provisions and control of the Government of Maharashtra, to enable the trust to carry out its activities more effectively and efficiently. It is stated that Sections 19 and 21 of the 2004 Act specify the manner of the utilization and/or expenditure to be made of the Trust funds by the Managing Committee. The petitioner makes a referenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Section 11 (1) (a) and 11 (2) of the IT Act as 'Nil'. The total income of the petitioner as assessed under Section 143 (3) was shown as 'Nil' in the said original assessment order. In such order, the Assessing Officer also recorded that the petitioner had submitted all the details which were called for, which were examined and discussed during the course of the proceedings, when it was held that the exemption claimed by the petitioner under Section 11 of the IT Act was found to be correct and the same was allowed. 10. The petitioner thereafter had continued to file its return for the subsequent assessment years. The petitioner was continued to be assessed pursuant to scrutiny under Section 143 (3) of the IT Act on similar basis. However, for AY 2015-16, a notice under Section 142 (1) of the IT Act was issued to the petitioner. The same was duly replied. There were also further notices issued and information/documents with respect to the assessment provided by the petitioner. Despite past assessments, namely for the AY 2014-15, the petitioner was issued a show cause notice as to why the income of the petitioner received by way of anonymous donations in the Hundi Boxes, should n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The petitioner replied to the said notice as also requested respondent no. 4 to furnish to the petitioner the reasons for reopening of the assessment. The request as made by the petitioner was complied by respondent no. 4. The only reason as furnished to the petitioner for reopening of the assessment was that the anonymous donations received by the petitioner had escaped assessment. 14. The petitioner filed its objections to the reasons as furnished to it to reopen the assessment. Such objections filed by the petitioner were dismissed by respondent no. 4. Hence, the petitioner again approached this Court in the proceedings of writ petition being Writ Petition (L.) No. 3278 of 2018 being aggrieved by the rejection of its objections. An order dated 24 October 2018 came to be passed on such writ petition disposing of the said writ petition, clarifying that the Court has kept open the challenge as raised by the petitioner to be raised in the appropriate legal proceedings. The petitioner being aggrieved by the order dated 24 October 2018 passed by this Court, approached the Supreme Court in the proceedings of Special Leave Petition No. 30475 of 2018. The Supreme Court while granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order dated 19 March 2019 passed by respondent no. 4 for the assessment year 2013-14, filed an appeal before the CIT (Appeals). It is contended by the petitioner that in the meantime, respondent no. 4 initiated recovery proceedings against the petitioner for the recovery of tax payable under order dated 19 March 2019. The petitioner responding to these proceedings, addressed a letter dated 18 January 2019 inter alia recording that under the orders passed by the Supreme Court, the recovery proceedings were stayed, till the appeal filed by the petitioner before the CIT (Appeals) for AY 2013-14 was decided. 19. The petitioner contends that both the appeals filed by the petitioner i.e. for the AY 2013-14 and AY 2015-16 were pending and no dates for hearing were granted. It is on such backdrop, although when the proceedings were pending, for the assessment year in question an assessment order dated 24 November 2016 was passed. On such backdrop, on 31 March 2019, the petitioner was issued the impugned notice under Section 148 of the IT Act proposing to reopen its assessment for the AY 2014-15 and calling upon the petitioner to file its revised return. In pursuance thereto, on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oner to reopening and order on objections dated 8th December 2019 rejecting petitioner's objections, which, alongwith the notice dated 31st March 2019 issued under Section 148 of the Income Tax Act 1961 (the said Act), is impugned in this petition. 2. Mr. Ganesh pointed out that the entire reopening is based on change of opinion and all the points have been scrutinized and discussed in detail during the assessment proceedings. Mr. Ganesh also submitted that the stand of petitioner in the order on objections have not been denied in toto but the Assessing Officer simply states what is submitted by petitioner is not discernible from return of income. 3. Having considered the order on objections, in our view, the concerned officer has not been able to really appreciate the submissions of petitioner and it would have helped, had a personal hearing been granted. The advantage of giving a personal hearing is, this doubt that the concerned officer had that he was unable to discern from return of income what petitioner has submitted, would not have arisen. Therefore, we, without making any observations on merits of the case set aside the order dated 8th December 2019 which is impugned i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nations required to be taxed as per the provisions of Section 115BBC, and on the issue of donations being received of ornaments and jewellery in regard to which the petitioner not investing in the prescribed modes of investment as mandated by the provisions of Section 11 (5) of the IT Act. There are other grounds of opposition to the writ petition including to contend that the petition is premature. Submissions on behalf of the petitioner :- 26. On behalf of the petitioner, Mr. Ganesh, learned senior counsel would submit that the impugned notice issued to the petitioner under Section 148 as also the impugned order dated 28 June 2022 rejecting the objections of the petitioner against reopening of the assessment are issued/passed on the basis of material which was already available with the Assessing Officer at the time of the assessment and not on any new tangible material as derived by respondent no. 4. It is hence submitted that the impugned reopening of the assessment by respondent no. 4 is without forming any 'reason to believe' that the income has escaped assessment. It is submitted that the impugned order has been passed merely on a change of opinion. In supporting such cont ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceipt of these donations in kind was expressly set out/revealed in the petitioner's balance-sheet, a copy of which is placed on record. It is submitted that after considering the audited balance sheets, the Assessing Officer did not apply Section 11 (5) read with Section 13 (1) (d) to these donations and no query was raised to the petitioner in this issue. Mr. Ganesh would submit that if such a query was to be raised by the Assessing Officer, then the petitioner would have certainly placed reliance on such material already available, as also to point out an injunction order dated 16 October 2012 passed by this Court in the proceedings of Civil Application No. 12056 of 2012 by which the petitioner was restrained from selling any valuables received by it in kind. It is submitted that therefore it was not possible for the petitioner to sell these valuables, and to convert the same into the investments required by Section 11 (5) of the IT Act as this would lead to the petitioner acting contrary to the orders passed by this Court. In supporting such contention, Mr. Ganesh has placed reliance on the decisions in case of Shipra Srivastava & Anr. vs. Assistant Commissioner of Income Tax (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essment is sought to be reopened within a period of four years of the end of the relevant assessment year, the test to be applied is whether there is tangible material to do so. What is tangible is something which is not illusory, hypothetical or a matter of conjecture. Something which is tangible need not be something which is new. An Assessing Officer who has plainly ignored relevant material in arriving at an assessment acts contrary to law. If there is an escapement of income in consequence, the jurisdictional requirement of Section 147 would be fulfilled on the formation of a reason to believe that income has escaped assessment. The reopening of the assessment within a period of four years is in these circumstances within jurisdiction." Reasons and Conclusion :- 30. As seen from the facts to which we have made a reference in some detail, it appears to be clearly not in dispute that the assessment order under Section 143 (3) of the IT Act was passed by the Assessing Officer on 24 November 2016 and after such assessment was completed, the petitioner was issued with the impugned notice dated 31 March 2019 under Section 148 of the IT Act, whereby respondent no. 4 sought to open ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n his lifetime, which prima facie shows that the assessee is a charitable trust on which exclusion u/s. 115BBC (2) does not apply. Importantly, even in the earlier reply dated 07/07/2016 also, it has been clearly stated that Shree Sai Baba Sansthan Trust is registered 'Charitable Trust' having the objects of charity to poor, to support, to education, to give free and concessional facility of medical to poor and needy people. As per these two letters, the assessee is admittedly a charitable Trust which is not covered by exclusion of sub-section (2) of Section 115BBC. Therefore, the above donation should have been disclosed by the assessee in its Return of Income, which it has failed to do, leading to escapement of income of assessee from assessment. The records also show that the AO did not apply mind to the issue. 4. In the Return of Income in Col. 8, the voluntary contribution forming part of corpus as per section 11(1) (d), has been claimed at Rs. 20,63,12,494/-. However, the Balance Sheet of assessee shows the trust-corpus fund same as it was in the previous year at Rs. 48,82,52,868/-. No accretion to corpus fund in Balance Sheet shows that the claim of corpus donation of Rs.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the basis on which such satisfaction was derived by respondent no. 4 as seen from the reasons as furnished to the petitioner was nothing more but from the records of the original assessment in the proceedings under Section 143 (3) which stood concluded vide an order dated 24 November 2016, which was passed by respondent no. 4. In regard to all such reasons as informed to the petitioner, forming part of the decision to reopen the assessment, it was pointed out that there was complete absence of any fresh material that was received/ obtained by the Assessing Officer on the completion of the impugned assessment under Section 143 (3). The petitioner stated that the assessment under Section 143 (3) was completed accepting the view consistently adopted for the previous undisputed assessments. It was also pointed out that the power for reopening was not akin to having a review and that the existence of true, complete and tangible new material received after completion of the assessment, was necessary to ensure against an arbitrary exercise of power. The decision supporting such proposition was also placed for consideration in the objections. Such objections as raised by the petitioner w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as applicable to the assessment year in question and as it stood on the date of notice i.e. 31 March 2019, which read thus: "Income escaping assessment. 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 case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section 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 se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder sub-section (2) of section 133C, it is noticed by the Assessing Officer that the income of the assessee exceeds the maximum amount not chargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss, deduction, allowance or relief in the return; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3. For the purpose of assessment or reassessment" under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. 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." (emphasis supplied) 36. The present case would fall under Section 147 of the IT Act in the part preceding the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pened by any other authority except on fresh material, and as the notice was issued in the "absence of any new material", the Assessing Officer was not empowered to reopen an assessment irrespective of the fact whether it is made under section 143 (1) or 143 (3) of the Act. 39. In the Commissioner of Income-tax-V vs. Orient Craft Ltd. (supra) a Division Bench of the Delhi High Court was dealing with the question whether reopening of the assessment made under Section 143 (1) is without jurisdiction in the absence of any tangible material available with the Assessing Officer so as to form the requisite belief regarding escapement of income. It was observed that in the absence of any new tangible material with the Assessing Officer, there was no ground for reopening of the assessment. 40. The Division Bench of the Karnataka High Court in The Pr. Commissioner of Income Tax, Bengaluru & Ors. Vs. Fibres and Fabrics International Pvt. Ltd. (supra), in an appeal under Section 260A of the IT Act was dealing with the question whether the Tribunal was right in law to hold that the re-assessment order passed in the case of assessee was null and void, on the ground that the said proceedings a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation of the word would have the consequece of conferring arbitrary power on the Assessing Officer who may initiate such reassessment proceeding merely on the change of opinion on the basis of the same facts and circumstances which have already been considered by him during the original assessment proceedings. It was held that such could not be the intention of the legislature, as, the said provision was incorporated in the scheme of the IT Act so as to empower the assessing authorities to reassess 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. It was further held that 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. The Court observed that doing so would have the effect of giving the Assessing Officer the power to review and Section 147 confers the power to reassess and not the power to revi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessing Officer to reopen the assessment proceedings in the facts of the present case. The reasons offered by the Assessing Officer while rejecting the objection that the issues involved in reassessment proceedings were never examined by the Assessing Officer are not tenable. No particulars whatsoever has been relied upon by the Assessing Officer while rejecting the objections. 19. The facts reveal and we are satisfied that in the present case, the order of reopening of the assessment will not be justified. The decision to reopen assessment is not based on proper reasons but obviously is a result of change of opinion. This is impermissible. In the case of ECGC, there was specific finding that there existed tangible material and reason to reopen the assessment and that was evident from the record in that case. It is not the case of the Revenue that in this case any new material was forwarded to the Assessing Officer. In any event we are not called upon to decide on the merits of the case and the proposed reopening is not justifiable in the facts and circumstances of the present case. Accordingly, the petition must succeed. We, therefore, pass the following order: The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nalizing the petitioner's assessment for the assessment year in question. On such backdrop, on a plain reading of the reasons for reopening as furnished to the petitioner, it is clear that the Assessing Officer has sought to reopen the assessment on a change of opinion in the application of the provisions of the IT Act or on interpretation of law differently, on facts which were abundantly within his knowledge at the time of original assessment. This is certainly not permissible. Hence, such reopening of the assessment, being not on any fresh tangible material, the Assessing Officer would not have jurisdiction to proceed with the re-assessment, as this would be purely in the realm of a review and / or on a mere change of opinion. If such course of action is recognized, it would lead to arbitrary consequences and result in multiple assessment orders being passed on the same materials available with the Assessing Officer, which is not the legislative intention Section 147 would wield. 46. There is another significant aspect on which there appears to be a consensus that qua both the principal issues on the basis of which the assessment of the petitioner in the present case is being r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the respondents is accepted, an assessment order would become vulnerable to be arbitrarily reopened, merely on the ground that the Assessing Officer on the very material intends to take a different view/opinion on the assessment order passed by him. This would lead to a regime of total uncertainty. In our opinion, this is neither the object nor the intention of the provisions of Section 147. The provision is a special power, so as to check, discern and recall concluded assessments, hence, such power cannot be exercised when it is not a case, where the assessee had not withheld any information and/or the Assessing Officer did not have any fresh tangible material. A second bite at the cherry is not what is contemplated under Section 147, on the basis of materials already available with the Assessing Officer, as the provision would become applicable in the present facts. Also, Section 147 certainly does not postulate a review jurisdiction so that the assessment can be reviewed, on the Assessing Officer intending to form a different and/or a new opinion. 49. In the light of the above discussion, the petition needs to succeed. It is accordingly allowed in terms of prayer clause ..... X X X X Extracts X X X X X X X X Extracts X X X X
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