ACI 10(1), MUMBAI V. ICICI GENERAL INSURANCE CO. LTD, MUMBAI

ITA 7777/MUM/2010

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83918 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-10-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 20-10-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 11-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVAN KUMAR BEER LA
• Keywords: Difference of opinion; Change of opinion; Ignorance of law
• Section: 147

Judgement Text

, , , , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES I, MUMBAI , ! , ' BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER ITA NO.7777/MUM/2010 (A.Y.2007-08) ASTT. COMMISSIONER OF INCOME TAX, RANGE-10(1), ROOM NO.455, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400 020. # # # # / VS. M/S. ICICI GENERAL INSURANCE CO. LTD. ICICI TOWERS, BANDRA KURLA COMPLEX, BANDRA (E) MUMBAI-400 051. ( %& / // / APPELLANT) ( '(%& / RESPONDENT) P.A. NO. %& ) * ) * ) * ) * /APPELLANT BY SHRI PAVAN KUMAR BEERLA '(%& ) * ) * ) * ) * /RESPONDENT BY MS. AARTI VISSANJI # ) +, / / / / DATE OF HEARING : 20.10.2014 -./ ) +, / DATE OF PRONOUNCEMENT : 21.10.2014 0 0 0 0 / / / / O R D E R PER JOGINDER SINGH (JUDICIAL MEMBER)/ : THE REVENUE IS AGGRIEVED BY THE IMPUGNED ORDER DATE D 25/08/2010 OF THE LD. FIRST APPELLATE AUTHORITY HOL DING THE RE-OPENING OF ASSESSMENT AS BAD IN LAW, WITHOUT APPRECIATING THE FACT BY CONCLUDING THE SAME TO BE ON THE BASIS OF CHANGE OF OPINION, I GNORING EXPLANATION - 1 TO SECTION 147 OF THE INCOME TAX ACT, 1961. I TA NO.7777/MUM/2010 ICICI LTD. 2 2. AT THE TIME OF HEARING SHRI PAVAN KUMAR BEERLA L D. DR DEFENDED THE CONCLUSION ARRIVED AT BY THE AO BY SUBMITTING T HAT FIRSTLY THERE WAS NO CHANGE OF OPINION AND SECONDLY THE ENTIRE INSURA NCE COMMISSION WAS RECEIVED IN THE YEAR UNDER CONSIDERATION, THEREFORE , THE LD. CIT(A) WHILE ARRIVING AT A PARTICULAR CONCLUSION IGNORED TRUE FA CTS. ON THE OTHER HAND, MS. AARTI VISSANJI, LD. COUNSEL FOR THE ASSESS EE DEFENDED THE CONCLUSION ARRIVED AT BY THE LD. CIT(A) BY SUBMITTI NG THAT THE BASIS ON WHICH RE-OPENING WAS DONE BY THE AO HAD ALREADY BEE N CONSIDERED BY HIM DURING ORIGINAL ASSESSMENT PROCEEDINGS, THEREFO RE, RE-OPENING OF ASSESSMENT ON SAME FACTS/BASIS IS CERTAINLY CHANGE OF OPINION. IT WAS ALSO ASSERTED THAT VIDE LETTER DATED 23/9/2005, ADD RESSED TO THE AO, TRUE FACTS WERE EXPLAINED. OUR ATTENTION WAS ALSO I NVITED TO ANOTHER LETTER DATED 26/12/2005 FILED BEFORE THE AO. 2.2 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PE RUSED THE MATERIAL AVAILABLE ON RECORD. IF THE BASIS OF RE-OP ENING BY THE LD. AO, CONCLUSION DRAWN IN THE IMPUGNED ORDER, ASSERTION M ADE BY THE LD. RESPECTIVE COUNSEL AND THE MATERIAL AVAILABLE ON RE CORD, IF, KEPT IN JUXTAPOSITION WE FIND THAT VIDE LETTER DATED 23/9/2 005, TO THE LD. AO REGARDING UNEARNED COMMISSION THE ASSESSEE EXPLAINE D AS UNDER :- THE COMPANY RECOGNIZES COMMISSION ON REINSURANCE BUSINESS OVER THE POLICY PERIOD. THE COMMISSION WHI CH PERTAINS TO SUCCEEDING ACCOUNTING PERIOD COVERED IN POLICY I TA NO.7777/MUM/2010 ICICI LTD. 3 IS TREATED AS UNEARNED COMMISSION. THE PRODUCT WISE BREAK UP IS ENCLOSED AS ANNEXURE-5. SIMILARLY, VIDE LETTER DATED 26/12/2005, ADDRESSED TO THE AO, THE ASSESSEE EXPLAINED AS UNDER :- UNEARNED COMMISSION UNEARNED COMMISSION REPRESEN TS PORTION OF REINSURANCE COMMISSION, COMPUTED IN PROP ORTION TO THE UNEXPLAINED RISK OF THE POLICY DURING THE FI NANCIAL YEAR. FOR EG. FOR POLICY PERIOD, 1 ST JUNE, 2002 TO 1 ST JUNE, 2003 WHERE THE COMMISSION RECEIVED FOR THE FINANCIA L YEAR 2002-3003 IS RS.12, THE UNEARNED COMMISSIONED WOULD BE RS.2 I.E. FOR THE UNEXPIRED PORTION OF THE RISK FOR THE MONTH OF APRIL 2003 AND MAY 2003. UNEARNED COMMISSION TO THE EXTENT OF RS.1,74,481/- THOUSANDS HAS BEEN OFFERED TO TAX IN ASSESSMENT YEAR 2004-05 AND THE BALANCE HAS BEEN OFFERED TAX IN THE FOLLOWING YEARS. PLEASE NOTE THA T AS PER THE METHOD OF ACCOUNTING FOLLOWED BY THE COMPANY A COMMISSION FOR RE-INSURANCE BUSINESS IS TO BE RECOG NISED OVER THE CONTRACT PERIOD. 2.3 IT IS ALSO NOTED THAT THE ASSESSEE VIDE LETTER DATED 23/9/2005 (PAGE-1 OF THE PAPER BOOK) ENCLOSED THE DOCUMENTS W HICH ARE AVAILABLE ON THE LETTER AND VIDE DOCUMENT NO.5 PRODUCT-WISE B REAK-UP OF UNEARNED COMMISSION WAS FURNISHED, THE EXPLANATION OF WHICH WAS MADE AVAILABLE AT PAGE-2 OF THE PAPER BOOK. THE PRO DUCT WISE BREAK-UP IS FURTHER AVAILABLE AT PAGE-5 OF THE PAPER BOOK WH ICH WAS MADE AVAILABLE TO THE AO DURING ORIGINAL ASSESSMENT PROC EEDINGS. THE AO RAISED VARIOUS QUERIES TO WHICH THE ASSESSEE VIDE L ETTER DATED 26/12/2005 FURNISHED A DETAILED REPLY (PAGES-5 TO 1 0 OF THE PAPER BOOK). THE TOTALITY OF FACTS ARE CLEARLY INDICATING THAT DURING ORIGINAL ASSESSMENT PROCEEDINGS THE MATERIAL FACTS WERE PROD UCED AND I TA NO.7777/MUM/2010 ICICI LTD. 4 SATISFACTORILY EXPLAINED BY THE ASSESSEE WHICH WERE DULY EXAMINED BY THE AO. THUS, AS DECIDED IN VARIOUS JUDICIAL PRECED ENTS, RE-OPENING ON THE BASIS OF CHANGE OF OPINION IS NOT PERMISSIBLE. EVEN DURING ORIGINAL PROCEEDINGS THE AO DID NOT MAKE ANY ADDITION/DISALL OWANCES, MEANING THEREBY, HE WAS SATISFIED WITH THE EXPLANATION OF T HE ASSESSEE. WHEN THE PRIMARY FACTS NECESSARY FOR ASSESSMENT ARE FULLY AN D TRULY DISCLOSED, THE ITO IS NOT ENTITLED TO RE-OPEN THE PROCEEDINGS MERE LY ON THE BASIS OF CHANGE OF OPINION. HAVING SECOND THOUGHT ON THE SAM E MATERIAL AND OMISSION TO DRAW THE CORRECT LEGAL PRESUMPTION DURI NG ORIGINAL ASSESSMENT DO NOT WARRANT THE INITIATION OF PROCEE DING U/S. 147 OF THE ACT. OUR VIEW IS FORTIFIED BY THE DECISION FROM HON'BLE APEX COURT IN CIT VS. BHANJI LAVJI (79 ITR 982)(SC) AND ITO VS. NAWAB MIR BARKAT ALI KHAN BAHADUR (97 ITR 239) . WE ARE AWARE THAT THE PROVISIONS OF SECTION 147, AS AMENDED WITH EFFECT FROM 1.4.1989 ARE CONTEXTUAL LY DIFFERENT AND THE CUMULATIVE CONDITIONS SPELT OUT IN CLAUSES (A) AND (B) OF SEC. 147, PRIOR TO ITS AMENDMENT, ARE NOT PRESENT IN THE AMENDED PR OVISION. THE ONLY CONDITION FOR ACTION IS THAT THE AO SHOULD HAVE REA SON TO BELIEVE THAT INCOME HAS ESCAPED ASSESSMENT. VIEWED IN THAT ANGLE , POWER TO RE-OPEN THE ASSESSMENT IS MUCH WIDER UNDER THE AMENDED PROV ISION. HOWEVER, SUCH POWER IS NOT UNBRIDLED ONE. IT IS HEDGED WITH SEVERAL SAFEGUARDS CONCEIVED IN THE INTEREST OF ELIMINATING ROOM FOR A BUSE OF THIS POWER BY THE AO. OUR VIEW IS FORTIFIED BY THE DECISION FROM HON'BLE APEX COURT IN I TA NO.7777/MUM/2010 ICICI LTD. 5 ITO VS. LAKHMANI MEWAL DAS (103 ITR 437) AND SHRI KR ISHNA (P.) LTD. VS. ITO (221 ITR 538)(SC) . THE HONBLE ANDHRA PRADESH HIGH COURT IN SIRPUR PAPER MILLS LTD. VS. ITO (114 ITR 404) EVEN WENT TO THE EXTENT THAT RE- ASSESSMENT BASED ON NEW VIEWS ON THE SAME FACTS IS NOT PERMISSIBLE AND SIMILARLY THE HONBLE CALCUTTA HIGH COURT IN CENTURY ENKA LTD. VS . ITO (143 ITR 629) CONCLUDED THAT WHERE THE RELEVANT MATERIAL OR FACT S WERE ADMITTEDLY ALREADY AVAILABLE DURING ORIGINAL A SSESSMENT PROCEEDINGS AND THERE WERE NO NEW FACTS OR LEGAL PO SITION WAS NOT KNOWN TO THE AO THOUGH THE RELEVANT MATERIAL FACTS WERE AVAILABLE, IGNORANCE OF LAW WOULD NOT BE A GROUND OR EXCUSE FO R THE ITO CONCERNED TO RE-OPEN THE ASSESSMENT. LIKEWISE THE HONBLE MADHYA PRADESH HIGH COURT IN LOKENDRA SINGH VS. ITO (128 ITR 450) CONCLUDED THAT OMISSION TO NOTICE FACTS BY OVERSIGHT CANNOT BE THE BASIS FO R RE-OPENING. IN THE PRESENT APPEAL UNDISPUTEDLY THE MATERIAL FACTS WERE AVAILABLE BEFORE THE AO DURING ORIGINAL ASSESSMENT PROCEEDINGS ITSELF. T HEREFORE, IN OUR HUMBLE OPINION THE LD. AO WAS UNJUSTIFIED TO RE-OPE N THE ASSESSMENT WHICH WAS FRAMED ON DUE APPLICATION OF MIND AFTER E XAMINING THE FACTS. THE DECISION IN KELVINATOR OF INDIA (256 ITR 1)(FB)(DEL.) WHICH WAS LATER ON AFFIRMED BY THE HON'BLE APEX COURT IN (320 ITR 561) FURTHER SUPPORTS OUR VIEW. ANOTHER DECISION WORTH QUOTING IS FROM HON'BLE JURISDICTIONAL HIGH COURT IN ASTEROIDS TRADING AND INVESTMENT PVT. LTD. VS. DCIT (308 ITR 190)(BOM.) AND ASIAN PAINTS LTD. VS. DCIT (308 ITR 195)(BOM.) I TA NO.7777/MUM/2010 ICICI LTD. 6 HOLDING THAT A DIFFERENT VIEW ON THE SAME FACTS IS MERE CHANGE OF OPINION WHICH DOES NOT PROVIDE JURISDICTION TO INITIATE PRO CEEDINGS U/S. 147/148 OF THE ACT. SO FAR AS RELIANCE BY THE LD. DR IN YUV RAJ VS. UNION OF INDIA AND ORS. (2009)(315 ITR 84)(BOM.), IS CONCERNED, TH ERE IS A FINDING IN THE CASE THAT IT WAS NOT A CASE OF MERE CHANGE OF O PINION, THUS, NO INTERFERENCE WAS WARRANTED BY THE HON'BLE HIGH COUR T, CONSEQUENTLY, MAY NOT HELP THE REVENUE. WHEREAS IN THE PRESENT AP PEAL THE LD. AO FRAMED ORIGINAL ASSESSMENT ON DUE APPRECIATION OF F ACTS AND CONSCIOUS APPLICATION OF MIND. THEREFORE, WE FIND NO INFIRMIT Y IN THE CONCLUSION DRAWN BY THE LD. CIT(A). FINALLY, THE APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT IN THE PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION O F THE HEARING ON 20 TH OCTOBER, 2014 . 0 ) -./ 1 #2 20.10.2014 . ) 8 SD/- SD/- (RAJENDRA) (JOGINDER SINGH) ! ! ! ! / ACCOUNTANT MEMBER ! ! ! ! / JUDICIAL MEMBER MUMBAI; 1 # DATED : 21 ST OCTOBER, 2014. JV. I TA NO.7777/MUM/2010 ICICI LTD. 7 0 ) '+9 :9/+ 0 ) '+9 :9/+ 0 ) '+9 :9/+ 0 ) '+9 :9/+/ COPY OF THE ORDER FORWARDED TO : 1. %& / THE APPELLANT 2. '(%& / THE RESPONDENT. 3. ; ( ) / THE CIT, MUMBAI. 4. ; / CIT(A)-13, MUMBAI 5. 9>8 '+# , , / DR, ITAT, MUMBAI 6. 8? @ / GUARD FILE. 0# 0# 0# 0# / BY ORDER, (9+ '+ //TRUE COPY// A AA A/ // /B B B B (DY./ASSTT. REGISTRAR) , , , , / ITAT, MUMBAI