SAHARA HOUSINGFINE CORPORATION LTD. ,KOLKATA vs. DCIT,CIR-7(1), KOL. , KOLKATA

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.

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. 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. 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.

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.

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 Page 4 of 9 I.T.A. No.: 504/KOL/2023 Assessment Year: 2010-11 M/s. Sahara Housingfina Corporation Limited. 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:

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.

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.

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. 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).