SIKSHA "O"ANUSANDHAN V. COMMNR.OF INCOME TA

WP(C)/6519/2012

AI Insights

The case involves two writ petitions filed by Siksha \'O\' Anusandhan challenging the reopening of income tax assessments for the Assessment Years 2005-06 and 2006-07 by the Income Tax Department. The department had issued notices under Section 147 of the Income Tax Act, citing reasons such as unexplained cash payments, investments in immovable property, and payments to a vice-president without service justification. The court examined whether the reopening was justified and found that the issues had been previously addressed in the original assessments, and no new material had been presented to warrant reopening. The court referenced the Supreme Court's decision in Commissioner of Income Tax v. Kelvinator of India Ltd., which emphasized that reopening based on mere change of opinion is not permissible.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 735658 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 05-01-2023
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC), Anil Raj Tuli v. Income Tax Officer, National Faceless Assessment Centre, Delhi
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R S CHIMANKA; ABINASH KEDIA
• Assessee Lawyers: SIDHARTHA RAY
• Keywords: Bogus creditors; Change of opinion; Income Tax; Reopening of assessment; Unexplained investment; Honorarium without service
• Section: 147; 148; 132; 153A; 153C

Judgement Text

" W.P.(C) Nos. 6519 of 2012 and 156 of 2013 Page 1 of 5 IN THE HIGH COURT OF ORISSA AT CUTTACK W.P.(C) No. 6519 of 2012 AND W.P.(C) No. 156 of 2013 W.P.(C) No.6519 of 2012 Siksha ‘O’ Anusandhan, Bhubaneswar … . Petitioner -versus- Commissioner of Income Tax, Odisha and Another … Opposite Parties AND W.P.(C) No.156 of 2013 Siksha ‘O’ Anusandhan, Bhubaneswar …. Petitioner -versus- Commissioner of Income Tax, Bhubaneswar and Another … Opposite Parties Advocates, appeared in these cases: For Petitioner(s) : Mr. Sidhartha Ray, Senior Advocate For Opposite Parties : Mr. R.S. Chimanka Senior Standing Counsel Mr. Abinash Kedia, Junior Standing Counsel CORAM: THE CHIEF JUSTICE JUSTICE M.S. RAMAN Order No. ORDER 05.01.2023 Dr. S. Muralidhar, CJ. 13. 1. These are two writ petitions by Siksha ‘O’ Anusandhan (hereafter the ‘Assessee’) questioning the reopening of assessments by the Income Tax Department (Department) for the Assessment Years W.P.(C) Nos. 6519 of 2012 and 156 of 2013 Page 2 of 5 (AYs) 2005-06 [W.P.(C) No. 6519 of 2012] and 2006-07 [W.P.(C) No.156 of 2013]. 2. The notice under Section 147 of the Income Tax Act, 1961 (IT Act) in respect of AY 2005-06 was issued on 21st March, 2012 and the corresponding notice for AY 2006-07 was issued on 18th October, 2012. The reasons for reopening of the assessment as furnished to the Assessee by the Department for both the AYs were as under: (i) For AY 2005-06, it appeared that cash payments were in excess of cash receipts to the tune of Rs.7,85,76,440/- and, therefore, there was escapement of income which had not been disclosed by the Assessee in the original returns. For AY 2006-07 the excess amount was stated to be Rs.2,08,84,520/-. (ii) There was unexplained investment in immovable property. (iii) There were bogus sundry creditors on account of an unsecured loan. (iv) Honorarium was paid to Smt. Saswati Das, Vice-President of Society for both the AYs without any justification and without her rendering any service. 3. For both the AYs the returns originally filed were picked up for scrutiny and the assessment orders framed dealing with each of the issues mentioned in the reasons for reopening of the assessment. W.P.(C) Nos. 6519 of 2012 and 156 of 2013 Page 3 of 5 Those assessment orders were taken up an appeal before the Commissioner of Income Tax (Appeals) i.e. CIT(A). 4. As regards AY 2005-06 the Assessee filed further appeal before the ITAT and then before this Court. The validity of the search conducted under Section 132 of the IT Act and the consequential assessment under Section 153A of the IT Act were assailed in those proceedings. This Court held that in the absence of a valid search warrant, the entire assessment proceedings were invalid. The matters were remitted to the ITAT, and the appeals of the Assessee came to be allowed. It is after the aforementioned decision of the ITAT that the assessment for AY 2005-06 was reopened. 5. As regards AY 2006-07, in similar fashion the ITAT allowed the Assessee’s appeal holding that no proceeding under Section 153A could have been initiated against the Assessee; if at all it could have been initiated only under Section 153C of the IT Act. It is after that above order of the ITAT that the impugned notice for reopening of the assessment were issued for AY 2006-07. 6. The Court finds on examining the reply filed in each of the petitions that each of the reasons for reopening the assessment were already dealt with in the original assessment orders for the two AYs. In other words, there were no tangible new materials on the basis of which reopening could be justified. 7. The issue is no longer res integra. The Supreme Court has in Commissioner of Income Tax v. Kelvinator of India Ltd. (2010) 320 ITR 561 (SC) held that reopening of assessment under Section W.P.(C) Nos. 6519 of 2012 and 156 of 2013 Page 4 of 5 147 of the Act cannot be based merely on a change of opinion. The relevant observations read as under: “.....post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words “reason to believe” failing which, we are afraid, section 147 would give arbitrary powers to the Assessing Officer to reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfillment of certain preconditions and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the grab of reopening the assessment, review would take place. One must treat the concept of “change of opinion” as an inbuilt test to check abuse of power by the Assessing Officer.” 8. The above decision has been followed and the principle reiterated by this Court in its recent decision dated 3rd November, 2022 in W.P.(C) No.7052 of 2022 (Anil Raj Tuli v. Income Tax Officer, National Faceless Assessment Centre, Delhi). 9. In the present case, the Court is satisfied that reopening of the assessment for both the AYs 2005-06 and 2006-07 was based on a mere change of opinion and not on any new tangible material. Consequently, the impugned notices under Section 147 read with Section 148 of the IT Act seeking to reopen the assessments for the aforementioned AYs 2005-06 and 2006-07 respectively and all proceedings consequent thereto are hereby quashed. W.P.(C) Nos. 6519 of 2012 and 156 of 2013 Page 5 of 5 10. The writ petitions are allowed. No order as to costs. (Dr. S. Muralidhar) Chief Justice (M.S. Raman) Judge S.K. Jena/Secy. "