A.C.I.T. - 3(1)(2), MUMBAI V. CITILIGHTS ESTATES PVT. LTD., MUMBAI

ITA 6454/MUM/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 2442 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: C
• Assessment Year: 2006-2007
• Appeal Filed On: 02-11-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Tangible material; Reason to believe
• Section: 147

Judgement Text

7 ITA NO6454/MUM/2017 C.O.NO.43/MUM/2019 ASSESSMENT YEAR 2006-07 HONBLE BOMBAY HIGH COURT IN THE CASE OF PURITY TE CHTEXTILE PVT LTD VS ACIT, 325 ITR 459 (BOM), WHEREIN, THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS KELVINATOR OF INDIA LTD, 320 ITR 561 (SC) HAS BEEN FOLLOWED AND HONBLE BOMBAY HIGH COURT HELD AS UNDER: 12. SEC. 147 PROVIDES THAT IF THE AO HAS REASON TO BELIEVE THAT ANY INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR, HE MAY, SUBJECT TO THE PROVISIONS OF SS. 148 TO 153 ASSESS OR REASSESS SUCH INCOME AND ALSO ANY OTHER INCOME CHAR GEABLE TO TAX WHICH HAS ESCAPED ASSESSMENT AND WHICH COMES TO HIS NOTICE SUBSEQUENTLY IN THE COURSE OF THE PROCEEDINGS UNDER THE SECTION. UNDER THE FIRST PROVISO, WHERE AN ASSESSMENT HAS BEEN MAD E UNDER SUB-S. (3) OF S. 143 OR S. 147 FOR THE RELEVANT ASSESSMENT YEA R, NO ACTION CAN BE INITIATED U/S. 147 AFTER THE EXPIRY OF FOUR YEARS F ROM THE END OF THE RELEVANT ASSESSMENT YEAR UNLESS THE INCOME CHARGEAB LE TO TAX HAS ESCAPED ASSESSMENT BY REASON OF THE FAILURE OF THE ASSESSEE INTER ALIA TO DISCLOSE FULLY AND TRULY ALL MATERIAL FACTS NECE SSARY FOR HIS ASSESSMENT, FOR THAT ASSESSMENT YEAR. THE JURISDICTIONAL CONDIT ION U/S. 147 IS THE FORMATION OF BELIEF BY THE AO THAT INCOME CHARGEABL E TO TAX HAS ESCAPED ASSESSMENT FOR ANY ASSESSMENT YEAR. THE REASONS WHI CH ARC RECORDED BY THE AO ARE CRUCIAL AND IT IS ON THE BASIS OF THO SE REASONS ALONE THAT THE VALIDITY OF THE ORDER REOPENING AN ASSESSMENT H AS TO BE DECIDED. WHERE AN ASSESSMENT HAS BEEN MADE U/S. 143(3), ACTI ON CAN BE INITIATED AFTER THE EXPIRY OF FOUR YEARS FROM THE E ND OF THE RELEVANT ASSESSMENT YEAR IF THE INCOME CHARGEABLE TO TAX HAS ESCAPED ASSESSMENT BECAUSE OF THE FAILURE OF THE ASSESSEE T O MAKE FULLY AND TRULY A DISCLOSURE OF THE MATERIAL FACTS. THE PROVI SIONS OF S. 147 HAVE BEEN INTERPRETED IN A RECENT JUDGMENT OF THE SUPREM E COURT IN CIT VS. . KELVINATOR OF INDIA LTD. (2010) 228 CTR (SC) 488 : (2010) 34 DTR (SC) 49 : (2010) 320 ITR 561 (SC). THE SUPREME COURT NOT ED THAT AFTER 1ST APRIL, 1989, THE POWER TO REOPEN IS MUCH WIDER THAN EARLIER SINCE THE SUBSTANTIVE PART OF S. 147 ONLY IMPOSES ONE CONDITI ON NAMELY THAT THE AO MUST HAVE REASON TO BELIEVE THAT INCOME HAS ESCA PED ASSESSMENT. THE SUPREME COURT HELD THAT NONETHELESS, A MERE CHA NGE OF OPINION WOULD NOT JUSTIFY THE EXERCISE OF THE POWER TO REOP EN AN ASSESSMENT AND THERE MUST BE TANGIBLE MATERIAL BEFORE THE AO TO CO ME TO THE CONCLUSION THAT INCOME HAS ESCAPED ASSESSMENT. 11. IN VIEW OF ABOVE FACTS THAT THERE IS NO FAILUR E ON THE PART OF THE ASSESSEE TO DISCLOSE ALL MATERIAL FACTS IN ITS RETURN OF INC OME AND ALL THE INFORMATION WERE AVAILABLE BEFORE THE ASSESSING OFFICER DURING THE O RIGINAL ASSESSMENT PROCEEDINGS ABOUT ALL THE PROJECTS UNDERTAKEN BY TH E ASSESSEE AND ALSO WORK-IN- 8 ITA NO6454/MUM/2017 C.O.NO.43/MUM/2019 ASSESSMENT YEAR 2006-07 PROGRESS, WE ARE OF THE CONSIDERED VIEW THAT THE C IT(A) IS FULLY JUSTIFIED IN QUASHING THE REASSESSMENT ORDER AND WE AFFIRM THE SAME AND DISMISS THE GROUND OF APPEAL OF THE REVENUE. 12. THE CROSS OBJECTION FILED BY THE ASSESSEE IS IN SUPPORTIVE TO THE ORDER OF THE CIT(A). AS WE HAVE CONFIRMED THE ORDER OF THE CIT(A) IN QUASHING THE REASSESSMENT ORDER, THERE IS NO NEED TO ADJUDICATE THE CROSS OBJECTION OF THE ASSESSEE. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED AND CROSS OBJECTION OF THE ASSESSEE IS ALLOWED. SD/- ORDER PRONOUNCED IN THE OPEN COURT ON 12- - 03-2019. SD/- SD/- (MANOJ KUMAR AGGARWAL) (MAHAVIR SI NGH) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 12-03- 2019 BKP/SR.PS COPY OF THE ORDER FORWARDED TO : BY ORDER, ASSISTANT REGISTRAR ITAT, MUMBA 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT (A), MUMBAI. 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//