AI Insights
The case involves Himachal Pradesh Tourism Development Corporation Ltd. appealing against the decisions of the Commissioner of Income Tax and the Income Tax Appellate Tribunal regarding reassessments for the assessment years 1994-95 to 1996-97 under the Expenditure Tax Act, 1987. The primary legal questions revolved around the applicability of Section 11(a) of the Act, which allows for reassessment if the assessee fails to disclose material facts. The appellant argued that the reassessments were barred by time and that no regular assessments had been made for the years in question. However, the court found that the appellant had indeed failed to disclose material facts, thus justifying the reassessments.
Appeal Details
Counselvise Citation
[2013] 140 COUNSELVISE.COM (IT) 727780 (HC-HIMACHAL_PRADESH)
Assessee PAN
Bench
Appeal Number
Appellant
Respondent
Appeal Type
Others
Pronouncement Date
12-06-2013
Assessment Year
misc
Judgement Text
"IN THE HIGH COURT OF HIMACHAL PRADESH SHIMLA ITA No. 53 of 2006 alongwith ITA No.54 and 55 of 2006. Date of Decision: 12.6.2013 Himachal Pradesh Tourism Dev. Corp. Ltd. ( in all cases) …Appellants. Versus. Commissioner of Income Tax and another ( in all cases) .. Respondents. Coram: The Hon’ble Mr.Justice A.M. Khanwilkar, Chief Justice. The Hon’ble Mr. Justice Kuldip Singh, Judge. Whether approved for Reporting? Yes For the Appellants: Mr. M.M. Khanna, Senior Advocate with Mr.Goverdhan Sharma, Advocate. For the Respondent: Mr. Vinay Kuthiala, Senior Advocate with Mrs.Vandana Kuthiala, Advocate. A.M. Khanwilkar, Chief Justice. Heard counsel for the parties. 2. All these appeals have been admitted on the following four common substantial questions of law: “i) Whether the Hon’ble Tribunal was legally justified in upholding the orders of the lower authorities that the assessment for the years 1994-95 to 1996-97 are not barred by time as prescribed under the Act in view of the fact that no notice had ever been issued with in the time prescribed under the Act? ii) Whether there can be any re-assessment under Section 11(a) in view of the admitted fact that no regular assessment had ever been made for the years 1994-95 to 1996-97? iii) Whether the provisions of Section 11(a) are applicable in the present case in view of the fact that there is no failure on the part of the assessee appellant to disclose material facts and the notice being issued in pursuance to the order and judgment of 2 the Hon’ble High Court against which SLP filed by the respondents is pending before the Hon’ble Supreme Court of India? iv) That in view of the facts and circumstances of the case whether the provision of Section 11(a) or 11(b) or none of them of the Expenditure Tax Act, 1987 are applicable in the case of appellant or not?” 3. The appellant filed regular returns of expenditure tax for assessment years 1994-95 to 1996-97 declaring ‘nil’ chargeable expenditure. The said returns were accepted by the Assessing Officer under Section 9 of the Expenditure Tax Act, 1987 vide order sheet entry dated 30th March, 1998. However, subsequently, the Assessing Officer noticed that the appellant had omitted or failed to disclose wholly or truly all material facts necessary for assessment for the relevant periods, as a result, after recording reasons, the assessment was re-opened under Section 11(a) of the Act by issuance of notice to the appellant to furnish the return of expenditure tax in the prescribed form for the concerned assessment years. The Assessing Officer affirmed his opinion recorded in the reasons and found that it was a case of non-disclosure of material facts giving rise to the jurisdiction to re-assess the appellant for the relevant period towards the liability arising under the Act of 1987 vide order dated 5.3.2004. That decision was challenged by the appellant before the Commissioner of Income Tax (Appeals), Shimla who affirmed the opinion recorded by the Assessing Officer and dismissed the three appeals for the relevant period vide decision dated 9.6.2004. That decision was carried in appeal by the appellant before the Income Tax Appellate Tribunal, 3 Chandigarh Bench-A by way of appeals i.e. Expenditure Tax Appeals No.4,5, 6 & 7/Chandi/2004 which however came to be dismissed on 2nd March, 2006. 4. After having perused these decisions, we have no manner of doubt that all the authorities have concurrently found, as of fact, that it was a case of non-disclosure, omission and failure on the part of the appellant to make returns regarding the items covered under the Act of 1987 in the returns as filed on the basis of which assessment was done by the Assessing Officer. 5. Reverting to the first substantial question as to whether the proposed action of re-assessment was barred by limitation, that will have to be answered on the basis of the purport of Section 11 of the Act of 1987. The same reads, thus: “11. Chargeable expenditure escaping assessment. If— (a) the Assessing Officer has reason to believe that by reason of omission or failure on the part of the assessee to make a return under section 8 for any assessment year or to disclose wholly and truly all material facts necessary for his assessment for any assessment year, chargeable expenditure for that year has escaped assessment or has been under-assessed, or (b) notwithstanding that there has been no omission or failure as mentioned in clause (a) on the part of the assessee, the Assessing Officer has, in consequence of information in his possession, reason to believe that chargeable expenditure assessable in any assessment year has escaped assessment or has been under-assessed, he may, in cases falling under clause (a), at any time, and in cases falling under clause (b), at any time within four years from the end of that assessment year, serve on the assessee a notice containing all or any of the requirements which may be included in a notice under section 8 and may proceed to assess or reassess the chargeable expenditure, and the provisions of this Act shall, so far as may be, apply, as if the notice were a notice issued under that section.” 6. On a plain reading of the aforesaid provision, it is obvious that if the case was covered under clause (a) the question of reassessment being barred by limitation would not arise. It was only if the case was 4 covered under clause (b) of Section 11, the limitation of four years from the end of the assessment year has been specified by law. 7. In the present case, as aforesaid, the concurrent finding of fact is that it is a case of omission and failure of the appellant to disclose the liability to pay expenditure tax in respect of chargeable expenditure for the relevant period of assessment years 1994-95 to 1996-97. On this finding the case would be clearly covered by clause (a) of Section 11. As a concomitant of that finding, the reassessment opened by the Assessing Officer in terms of notice served on the assessee on 18th February, 2002, cannot be barred by limitation. 8. To get over this position, the argument of the appellant was that it was not a case of omission or failure. It is not possible for us in these appeals to differ with the concurrent finding of fact recorded by the three authorities. The first Appellate Authority has noticed in its decision in the following words: “…. As regards return of expenditure tax for A.Ys 1994- 95 to 1996-97, the appellant filed regular returns declaring nil chargeable expenditure. As no chargeable expenditure was disclosed in the returns of expenditure tax, the returns were accepted u/s 9(1) vide order sheet entry dated 30.3.1998. Thus, it is not correct to say that the proceedings u/s 11(a) have been initiated during pendency of the original returns. …….. …… The information contained in para 4.4 above clearly indicates that in the past appellant had been filing return of chargeable expenditure in accordance with the provisions of the Act and never in the past its claim regarding divisibility of the tariff by the no. of persons occupying the room has been accepted. If we compare the returns filed for A.Y. 1988-89 to 1991- 92 with the returns filed for year under consideration, it becomes obvious that chargeable expenditure has escaped assessment on account of appellant’s failure to furnish correct information in the returns. It is not a case 5 of change of opinion. Had the appellant truly disclosed the whole facts, its assessment would have been completed on the lines of the earlier assessments. Thus, in my considered view, the AO is justified in invoking of the provisions of section 11(a) of the Act.” 9. As aforesaid, it is not open for this Court to re-appreciate the evidence to record a different finding of fact even if another view was possible on the basis of the material on record. Taking any view of the matter, therefore, the substantial question of law formulated in clause (i) above will have to be answered in the negative against the appellant. 10. The second substantial question of law proceeds on the assumption that no regular assessment order was passed by the Assessing Officer for the assessment years 1994 -95 to 1996-1997. This assumption is founded on the observations found in the decision of the second appellate authority, in paragraph 9, wherein it is mentioned that though no regular assessment had been made by the Assessing Officer, the returns had been simply processed without any inquiry/scrutiny. The factual position, however, as can be discerned from the fact recorded in the decision of the first Appellate Authority, is that, on receipt of the returns filed by the appellant the Assessing Officer accepted the same as it is, and, contemporaneously recorded that fact in the order sheet being entry dated 30th March, 1998. This pre-supposes that the Assessing Officer completed the assessment in respect of the appellant for the relevant assessment years. 11. The argument of the appellant is that the assessment could not have been completed without giving notice to the assessee as is 6 required under Sub Section (1) of Section 9. This submission clearly over-looks that the requirement of notice would be necessary if the Assessment Officer was to disagree with the returns already filed by the assessee either wholly or in part. However, when the Assessing Officer proceeds to accept the returns filed by the Assessee as it is, the requirement of issuing notice would not arise. Without issuing such notice the assessment could still be completed by the Assessing Officer as has been done in the present case vide entry dated 30.3.1998 in the order sheet. Once it is found that the assessment was already completed by the Assessing Officer it would follow that it is open to the Assessing Officer to take recourse to re-assessment by invoking powers under Section 11 of the Act if the fact situation so required. For the aforesaid reasons, the substantial question of law as articulated in clause (ii) also does not merit consideration in the fact situation of the present case. 12. That takes us to the third question formulated on the basis of which the appeal has been admitted. Even this question proceeds on the assumption that the appellant had not failed to disclose the material facts in the returns as filed. It is not open for us to entertain that contention in view of the concurrent finding of fact of three authorities to the contrary. The fact that the SLP filed by the Department was pending in the Supreme Court would not give licence to the Appellant not to disclose the taxable items in the returns as filed as the operation of the Act was not interdicted by the pendency of the said proceedings. Taking any view of the matter, therefore, the 7 question under consideration will have to be answered against the Appellant. 13. That takes us to the 4th question formulated in the appeal which is on the hypothesis that it was not a case of failure or omission on the part of the appellant to disclose the relevant information. As aforesaid, considering the concurrent finding of fact on this aspect, it would follow that Section 11(a) was clearly attracted and the Assessing Officer was justified in invoking the action of re- assessment in the fact situation of the present case. In the circumstances, even the 4th question, as formulated, is devoid of merits and does not arise for consideration in the present case. 14. We place on record the argument raised by the counsel for the Department about the maintainability of this appeal in the light of the undertaking given by both the parties before the Appellate Tribunal as is noted in paragraph 12 of the impugned decision. As we have already dealt with the merits of the contention and decline to interfere, it is not necessary for us to dilate any further on this objection. 15. The appeals fail and the same are dismissed. ( A.M. Khanwilkar ), Chief Justice. June 12, 2013 ( Kuldip Singh ), PV Judge. "
Mehul