Sahara Housingfine Corporation Ltd. , Kolkata V. DCIT,CIR-7(1), Kol. , Kolkata

ITA 504/KOL/2023

AI Insights

The case involves M/s. Sahara Housingfina Corporation Limited, which appealed against the order of the Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi, for the Assessment Year 2010-11. The primary legal issue was the validity of the reassessment proceedings under Section 147 of the Income Tax Act, initiated after four years from the end of the relevant assessment year. The assessee argued that the reopening was bad in law as it did not meet the conditions laid down under the first proviso to Section 147, which requires a failure to disclose material facts for reopening after four years. The Tribunal, referencing a decision by the Hon'ble Apex Court in ACIT Vs. CEAT Ltd., agreed with the assessee, noting that the reasons recorded for reopening did not indicate any non-disclosure of material facts by the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 128774 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 24-07-2023
• Assessment Year: 2010-2011
• Appeal Filed On: 21-05-2023
• Other Referred Cases: ACIT Vs. CEAT Ltd. [2022] 449 ITR 171 (SC), Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR -996 (SC), Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC), Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC), Dell India (P.) Ltd. v. Joint CIT (LTU) [2021] 432 ITR 212 (Karn)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Difference of opinion; Change of opinion; Set aside
• Section: 148; 143(3); 37(1); 119

Judgement Text

आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता म ें IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री राज े श क ु मार, ल े खा सदस्य एवं श्री संजय शमा ा , न्याधयक सदस्य क े समक्ष Before SRI RAJESH KUMAR, ACCOUNTANT MEMBER & SONJOY SARMA, JUDICIAL MEMBER I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited.........Appellant [PAN: AAACL 4104 H] Vs. DCIT, Circle-7(1), Kolkata......................................Respondent Appearances by: Sh. S.M. Surana, Adv., appeared on behalf of the Assessee. Sh. P.P. Barman, Addl. CIT, Sr. D/R, appeared on behalf of the Revenue. Date of concluding the hearing : July 25 th , 2023 Date of pronouncing the order : August 22 nd , 2023 ORDER Per Rajesh Kumar, Accountant Member: This appeal preferred by the assessee is against the order passed by Learned Commissioner of Income-tax (Appeals)-NFAC, Delhi [hereinafter referred to Ld. ‘CIT(A)’] dated 30.03.2023 for the Assessment Year (in short ‘AY’) 2010-11. I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 2 of 9 2. At the time of hearing, ld. Counsel for the assessee pressed the legal issue raised in ground no. 1 which is reproduced as under: “1. For that the re-assessment is bad in law because the proceedings u/s 147 itself was bad in law since the assessee Trust was originally completed u/s 143(3) vide order dated 19.11.2012 and the conditions laid down under first proviso to section 147 were not fulfilled while recording the reasons for reopening of the assessment.” 3. The facts in brief are that the assessment of the assessee was framed u/s 143(3) of the Act vide order dated 19.11.2012 assessing total income at Rs. 2,52,24,225/-. Subsequently, the case of the assessee was re-opened u/s 147 of the Act by issuing notice u/s 148 of the Act on 30.03.2017 which was duly served upon the assessee. The said notice was complied with by the assessee vide letter dated 01.05.2017 submitting that the return of income was filed originally on 29.09.2010 may be treated as return in response to notice u/s 148 of the Act. The statutory notices were duly issued and served upon the assessee. Thereafter, the proceedings were conducted on various dates and information/details were sought which were duly filed by the assessee before the AO. Finally, the assessment was framed vide order dated 30.10.2017 u/s 143(3) r.w.s. 147 of the Act assessing the total income at Rs. 3,12,25,159/-. The assessee challenged the assessment framed by The Assessing Officer (in short Ld. 'AO') before the first appellate authority. Ld. CIT(A) dismissed the appeal of the assessee upholding the order of Ld. AO. 4. Now, Ld. A/R vehemently argued before us that the case of the assessee was apparently opened after the lapse of four years I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 3 of 9 from the end of the relevant assessment year and therefore, the re- opening could only be made in terms of first proviso to Section 147 of the Act. Ld. A/R submitted that re-opening after a period of four years can only be made in accordance with the first proviso which provides that where there assessment has been framed u/s 143(3) of the Act, then the re-opening after a period of four years can only be made if there is a failure on the part of the assessee to disclose any material fact either in the return of income or in the assessment proceedings and not otherwise. Ld. A/R stated that in the reasons recorded u/s 148(2) of the Act, a copy of which is attached at page no. 1 of the PB, nowhere Ld. AO has mentioned that there was any failure on the part of the assessee to disclose any material fact which has ultimately led to the escapement of income. Ld. A/R therefore, submitted that the re-opening on the basis of said reasons is nullity and bad in the eyes of law. In defence of his argument, Ld. A/R relied on the decision of Hon'ble Apex Court in the case of ACIT Vs. CEAT Ltd. reported in [2022] 449 ITR 171 (SC). Ld. A/R pointed out that in the case before the Hon'ble Apex Court the issue was whether the notice issued after a period of four years after relevant assessment year where the assessment has been framed u/s 143(3) of the Act, proviso to Section 147 of the Act shall apply. In that case Hon'ble Apex Court has held that the AO has to first demonstrate the failure on the part of the petitioner failing which the re-opening is bad in law. Ld. A/R referred to the last para of the decision of the Hon'ble Apex Court wherein the Court has upheld the decision of the Hon'ble High Court setting aside the re-opening notice issued u/s 148 of I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 4 of 9 the Act. Ld. A/R therefore, prayed that in view of the latest decision of the Hon'ble Apex Court, the re-opening may be quashed. 5. Ld. D/R on the other hand, relied heavily on the order of the authorities below and has also filed a written submission dated 08.07.2023 pointing out therein that the time limit for issue of notice u/s 148 of the Act as given in Section 149 of the Act and is applicable to the year under consideration. No notice u/s 148 of the Act shall be issued if four years but more than six years have elapsed from the end of the relevant assessment year unless income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more in that year. Ld. D/R therefore, questioned that there was no such requirement of recording a satisfaction by the AO that there has been any failure to disclose any material fact and fully which laid to escapement of income. 6. After hearing rival contentions and perusing the material on record we note that undisputedly the case of the assessee was re- opened after elapse of four years from the end of the relevant assessment year in which the assessment u/s 143(3) of the Act dated 19.11.2012 was framed. We have also perused the proviso appended to Section 147 of the Act which provides that re-opening, after a period of four years from the end of the relevant assessment year in which the assessment u/s 143(3) of the Act was framed, can only be made for the failure on the part of the assessee to disclose any material fact either in the return of income or in the assessment proceedings which has led to the escapement of income and not otherwise. In the present case, we have perused I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 5 of 9 the order of Ld. AO and found that nowhere Ld. AO has recorded any satisfaction that escapement of income is due to non- mentioning/non-disclosure of any material fact by the assessee. For the sake of ready reference, the reasons are extracted below: “Sub: Reason for re-opening the assessment proceedings for the A.Y. 2010-11 in the case of M/s Sahara Housingfina Corporation Ltd. (PAN: AAACL4104H)-matter reg. As requested vide your letter dated 01.05.2017, the reason(s) recorded in ' writing, before issuing notice u/s 148 in your case with prior approval of Pr. Commissioner of Income-tax - 3, Kolkata, is quoted below for your information: Name of assessee: M/s Sahara Housingfina Corporation Ltd. PAN: AAACL4104H Asst. Year: 2010-11 "It has been noticed from the notes to account vide point No. 2 that the interest income accounted for on accrual basis other than on non- performing assets which was accounted for on cash basis in accordance with the NBH (National Housing Bank) guidelines. In this connection, it was seen from the Balance Sheet that housing loans worth Rs. 2,06,73,624/- was identified as substandard. It was seen from schedule-8 the total unrecognized interest was worked out to Rs. 38,00,125/-. From the notes to account, it is clear that the above unrecognized interest of Rs. 38,00,125/- was not offered to tax as the same had to be accounted for on cash basis under NHB guidelines. It is pertinent to mention that NHB guidelines do not over-ride the provisions of 1. T. Act. Thus unrecognized interest of Rs. 38,00,125/- needs to be brought to tax. However, deduction u/s 36(viiia) is available to this amount. 2. Further, it was noticed from the schedule-7 of the balance sheet that the assessee has classified loan assets in Iwo parts (1) Housing Loan Rs. 130,40,01,263/- (2) Other loans Rs. 11,00,40,443/-. As per provisions of Section 36(1)(viii) of the Act income from housing finance is only eligible for deduction. The accrued interest on other loan (when work out to Rs. 1,10,04,044/- @ 10%) is not eligible for relief u/s 36(l)(viii) of the Act. I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 6 of 9 3. It was also seen from the director’s report that the assessee was under the process of dematerialization of its shares in Stock Exchange under the direction of SEB1. In this process, assessee has incurred following expenses as detailed below: (a) Listing and Filling Fee : Rs. 95,371/- (b) Share Transfer Fee : Rs. 66,180/- Total : Rs. 1,61,551/- As this expenditure was incurred to strengthen capital base of the company, the same is capital in nature and required to be disallowed u/s 37(1) of the Act.” 7. In our opinion, the re-opening has not been made in terms of the first proviso to Section 147 of the Act and therefore, cannot be sustained. The case of the assessee is squarely covered by the decision of Hon'ble Apex Court in the case of CEAT Ltd. (supra) wherein the Hon'ble Apex Court has held as under: “1. The petitioner is impugning the notice dated March 27, 2019 issued under section 148 of the Income-tax Act, 1961 (the Act) for assessment year 2012-13 and the order dated October 31, 2019 rejecting the petitioner’s objections. Since the notice issued is after expiry of four years from the end of the relevant assessment year and assessment under section 143(3) of the Act was completed, the proviso to section 147 of the Act shall apply. The respondent has to first show that there was failure on the part of the petitioner to fulfil and there are non-disclosure of material facts required for assessment. 2. We have considered the reasons annexed at exhibit F to the petition. In our view, the respondent has miserably failed to disclose any facts, material or otherwise which has not been disclosed. In our view, first of all the reasons indicated change of opinion which is impermissible in law and secondly, the entire basis for reopening is due to mistake of the Assessing Officer that resulted in under- assessment. 3. The hon’ble apex court in Indian and Eastern Newspaper Society v. CIT [1979] 119 ITR -996 (SC) has held that an error discovered on I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 7 of 9 a reconsideration of the same material (and no more) does not give power to the Assessing Officer to reopen the assessment. Paragraph 14 of the said judgment read as under (page 1004 of 119 ITR): 'Now, in the case before us, the Income-tax Officer had, when he made the original assessment, considered the provisions of sections 9 and 10. Any different view taken by him afterwards on the application of those provisions would amount to a change of opinion on material already considered by him. The Revenue contends that it is open to him to do so, and on that basis to reopen the assessment under section 147(b). Reliance is placed on Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC), where a Bench of two learned judges of this court observed that a case where income had escaped assessment due to the “oversight, inadvertence or mistake” of the Income-tax Officer must fall within section 34(1)(b) of the Indian Income-tax Act, 1922. It appears to us, with respect, that the proposition is stated too widely and travels farther than the statute warrants in so far as it can be said to lay down that if, on reappraising the material considered by him during the original assessment, the Income-tax Officer discovers that he has committed an error in consequence of which income has escaped assessment, it is open to him to reopen the assessment. In our opinion, an error discovered on a reconsideration of the same material (and no more) does not give him that power. That was the view taken by this court in Maharaj Kumar Kamal Singh v. CIT [1959] 35 ITR 1 (SC), CIT v. A. Raman and Co. [1968] 67 ITR 11 (SC) and Bankipur Club Ltd. v. CIT [1971] 82 ITR 831 (SC) and we do not believe that the law has since taken a different course. Any observations in Kalyanji Mavji and Co. v. CIT [1976] 102 ITR 287 (SC) suggesting the contrary do not, we say with respect, lay down the correct law.’ 4. This view has been followed by a Full Bench of the Karnataka High Court in Dell India (P.) Ltd. v. Joint CIT (LTU) [2021] 432 ITR 212 (Karn). 5. The petition therefore is allowed in terms of prayer clause (A) which reads as under: (A) that this hon'ble court may be pleased to issue a writ of cer tiorari or any other writ, order or direction under article 226 of the Constitution of India calling for the records of the case leading to the issue of the impugned notice and passing of the impugned order and after going through the same, and examining the question of legality I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 8 of 9 thereof, quash, cancel and set aside the impugned notice (exhibit C) dated March 27, 2019 and the impugned order (exhibit H) dated October 31, 2019. 6. The petition disposed of.” Balbir Singh, Additional Solicitor General, (Rupesh Kumar, Naman Tandon, Rupinder Singhmar and Raj Bahadur Yadav, Advocates, with him) for the petitioners. Vanita Bhargava, Ajay Bhargava, Shantanu Chaturvedi, Ms. Prerna Singh and M/S. Khaitan and Co., Advocates, for the respondent. JUDGMENT Page No: 173 1. We have heard Mr. Balbir Singh, learned Additional Solicitor General appearing on behalf of the petitioners. 2. It is not in dispute that the assessment was sought to be reopened beyond four years. Therefore, all the conditions under section 148 of the Income-tax Act, 1961 for reopening the assessment beyond four years are required to be satisfied. Having gone through the reasons recorded for reopening, we are of the opinion that the conditions precedent for reopening of the assessment beyond four years are not satisfied. The reassessment was on change of opinion. There are no allegations of suppression of material fact. Under the circumstances, no error has been committed by the High Court in setting aside the reopening notice under section 148 of the Income-tax Act. We are in complete agreement with the view taken by the High Court. The special leave petition stands dismissed.” 8. Since the facts of the instant case are materially same as that of the decision taken by the Hon'ble Apex Court in the above decision, accordingly, we are inclined to quash the re-opening of assessment by allowing ground no. 1 raised by the assessee. 9. Since we have allowed the appeal of the assessee on the legal issue, the other grounds raised on merit are not adjudicated and I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. Page 9 of 9 are left open to be adjudicated at some later point of time if need arises for the same. 10. In the result, the appeal filed by the assessee is allowed. Kolkata, the 22 nd August, 2023. Sd/- Sd/- [Sonjoy Sarma] [Rajesh Kumar] Judicial Member Accountant Member Dated: 22.08.2023 Bidhan (P.S.) Copy of the order forwarded to: 1. M/s. Sahara Housingfina Corporation Limited, 46, Dr. Sundari Mohan Avenue, Kolkata-700 014. 2. DCIT, Circle-7(1), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata