DCIT, CIR.-11(1), Kolkata, Kolkata V. M/s Bharat Bhari Udyog Nigam Ltd., Kolkata

ITA 2146/KOL/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6631 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2008-2009
• Appeal Filed On: 07-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SALLONG YADEN ADD
• Keywords: Tangible material; Difference of opinion; Reason to believe; Change of opinion; Reassessment proceedings
• Section: 143(3); 14A; 147; 148

Judgement Text

, A , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: KOL KATA ( ) . . , . ' # $% % , '( ) [BEFORE SHRI A. T. VARKEY, JM & DR. A. L. SAINI, A M] I.T.A. NO. 2146/KOL/2016 ASSESSMENT YEAR: 2008-09 DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-11(1), KOLKATA. VS. BHARAT BHARI UDYOG NIGAM LTD. (PAN: AABCB1891J) APPELLANT RESPONDENT DATE OF HEARING 12.06.2018 DATE OF PRONOUNCEMENT 27.06.2018 FOR THE APPELLANT SHRI SALLONG YADEN, ADD. CIT FOR THE RESPONDENT SHRI RAVI TULSIYAN, FCA ORDER PER SHRI A.T.VARKEY, JM THIS APPEAL PREFERRED BY THE REVENUE IS AGAINST THE ORDER OF THE LD. CIT(A)-4, KOLKATA DATED 22.08.2016 FOR ASSESSMENT YEAR 2008-0 9. 2. THE SOLE GROUND OF APPEAL OF REVENUE IS DIRECTED AGAINST THE ACTION OF LD. CIT(A) IN ANNULLING PROCEEDINGS OF AO U/S. 147 OF THE INCOME -TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). 3. BRIEFLY STATED THE FACTS ARE THAT IN THIS CASE O RDER U/S. 143(3) OF THE ACT WAS PASSED ON 29.12.2010 ON AN ASSESSED TOTAL INCOME OF RS.7,96,1 20/-. SUBSEQUENTLY, THE CASE WAS REOPENED U/S. 147 OF THE ACT AND ASSESSMENT WAS COM PLETED BY THE AO BY MAKING AN ADDITION OF AN AMOUNT OF RS.1,16,07,168/- U/S. 143( 3)/147 OF THE ACT DATED 30.03.2014 ON THE GROUND THAT DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D OF THE INCOME-TAX RULES, 1962 (HEREINAFTER REFERRED TO AS THE RULES) HAS N OT BEEN MADE IN THE ORIGINAL ASSESSMENT. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WHO, HELD THAT THE INITIATION OF REASSESSMENT PROCEEDINGS BY THE AO IT SELF IS BAD IN LAW AND ACCORDINGLY, HE 2 ITA NO.2146/KOL/2016 BHARAT BHARI UDYOG NIGAM LTD., AY 2008-09 2 ANNULLED THE NOTICE ISSUED U/S. 148 OF THE ACT AS U LTRA-VIRES. AGGRIEVED, REVENUE IS BEFORE US. 4. WE HAVE HEARD RIVAL SUBMISSIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE NOTE THAT THE ORIGINAL ASSESSMENT IN ASSE SSEES CASE WAS COMPLETED U/S. 143(3) OF THE ACT ON 29.12.2010. THEREAFTER, THE AO SOUGHT TO REOPEN THE ASSESSMENT ON THE GROUND THAT DISALLOWANCE UNDER SECTION 14A READ WITH RULE 8D HAS NOT BEEN MADE IN THE ORIGINAL ASSESSMENT AND THEREAFTER NOTICE U/S. 148 OF THE AC T WAS ISSUED PROPOSING TO REOPEN THE ASSESSMENT AND THEREAFTER HAS MADE THE IMPUGNED REA SSESSMENT. ON APPEAL, THE ASSESSEE BROUGHT TO THE NOTICE OF THE LD. CIT(A) THAT THE AO HIMSELF HAS ACKNOWLEDGED THE FACT THAT THE ASSESSEE VOLUNTARILY OFFERED A SUM OF RS.25,700 /- AS EXPENSES ATTRIBUTABLE TO EARNING DIVIDEND INCOME IN THE RETURN OF INCOME AND, THEREF ORE, THE AO AFTER GOING THROUGH THE RETURN OF INCOME AND COMPUTATION OF INCOME HAS ACCE PTED THE CLAIM OF THE ASSESSEE. THEREFORE, ACCORDING TO ASSESSEE, WITHOUT ANY TANGI BLE MATERIAL TO SUGGEST ESCAPEMENT OF INCOME, THE AOS ACTION IS AKIN TO CHANGE OF OPINIO N WHICH IS NOT PERMISSIBLE IN LAW BECAUSE AO DOES NOT ENJOY POWER TO REVIEW HIS OWN O RDER. WE NOTE THAT THE ASSESSEE IN ITS AUDIT REPORT HAD CLEARLY SHOWN RS.25,700/- AS AMOUN T OF DEDUCTION INADMISSIBLE IN TERMS OF SECTION 14A OF THE ACT IN RESPECT OF THE EXPENDITUR E INCURRED IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. THE AO DUR ING SCRUTINY ASSESSMENT HAS TAKEN NOTE OF THE CLAIM OF THE ASSESSEE AND HAS ACCEPTED THE F ACT THAT THE ASSESSEE HAD SUO-MOTO DISALLOWED RS.25,700/- AS EXPENSES ATTRIBUTABLE TO EARNING THE EXEMPT DIVIDEND INCOME. THEREFORE, WE NOTE THAT THE PURPOSE OF REOPENING WA S TO MAKE DISALLOWANCE AS PER RULE 8D IS, THEREFORE, AKIN TO REVIEW OF HIS OWN ACTION WHI CH NOT PERMISSIBLE AS PER LAW BECAUSE AO DOES NOT HAVE POWER TO REVIEW HIS OWN ORDER. IN TH E AFORESAID FACTS AND CIRCUMSTANCES, THE ACTION OF THE AO IS NOTHING BUT CHANGE OF OPINION W HICH IS NOT PERMISSIBLE AS HELD BY THE HONBLE SUPREME COURT IN CIT VS. KELVINATOR OF IND IA LTD. (2010) 320 ITR 561 (SC) WHEREIN HONBLE APEX COURT HAS HELD AS UNDER: THE CONCEPT OF CHANGE OF OPINION ON THE PART OF THE ASSESSING OFFICER TO REOPEN AN ASSESSMENT DOES NOT STAND OBLITERATED AFTER THE SUB STITUTION OF SECTION 147 OF THE INCOME-TAX ACT, 1961, BY THE DIRECT TAX LAWS (AMENDMENT) ACTS, 1987 AND 1989. AFTER THE AMENDMENT, 3 ITA NO.2146/KOL/2016 BHARAT BHARI UDYOG NIGAM LTD., AY 2008-09 3 THE ASSESSING OFFICER HAS TO HAVE REASON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT, BUT THIS DOES NOT IMPLY THAT THE ASSESSING OFFICER CAN REOPEN AN ASSESSMENT ON MERE CHANGE OF OPINION. THE CONCEPT OF CHANGE OF OPINION MUST BE TREATED AS AN IN-BUILT TEST TO CHECK THE ABUSE OF POWER. HENCE AFTER APRIL 1, 1989, THE ASSE SSING OFFICER HAS POWER TO REOPEN AN ASSESSMENT, PROVIDED THERE IS TANGIBLE MATERIAL T O COME TO THE CONCLUSION THAT THERE WAS ESCAPEMENT OF INCOME FROM ASSESSMENT. REASON MUST H AVE A LINK WITH THE FORMATION OF THE BELIEF. WE NOTE THAT THE LD. CIT(A) TAKING NOTE OF THE AFOR ESAID JUDICIAL PRECEDENT HAVE GIVEN RELIEF TO THE ASSESSEE, SO, WE ARE NOT INCLINED TO INTERFE RE IN THE ORDER PASSED BY THE LD. CIT(A) AND THE SAME IS HEREBY UPHELD. THEREFORE, THE APPEAL OF REVENUE IS DISMISSED. 5. IN THE RESULT, THE APPEAL OF REVENUE IS DISMISSE D. ORDER IS PRONOUNCED IN THE OPEN COURT ON 27.06.2018 SD/- SD/- (DR. A.L. SAINI) (ABY. T. VARKEY) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED :27 TH JUNE, 2018 JD(SR.P.S.) COPY OF THE ORDER FORWARDED TO: 1. APPELLANT DCIT, CIRCLE-11(1), KOLKATA. 2 RESPONDENT BHARAT BHARI UDYOG NIGAM LTD., 26, R AJA SANTOSH ROAD, KOLKATA-700 027. 3. THE CIT(A) - 4, KOLKATA (E-MAILED) 4. 5. CIT , KOLKATA DR, ITAT, KOLKATA. (E-MAILED) / TRUE COPY, BY ORDER, SR. PVT. SECRETARY