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Income Tax Appellate Tribunal, PUNE “A” BENCH : PUNE
Before: SHRI SATBEER SINGH GODARA & DR. DIPAK P. RIPOTE
Date of Hearing : 14.09.2023 Date of Pronouncement : 23.10.2023 ORDER PER SATBEER SINGH GODARA, J.M. :
These assessee’s three appeals for assessment years 2011-2012 to 2013-2014, arise against the National Faceless Appeal Centre [in short “NFAC”] Delhi’s as many Dins and Orders No.ITBA/NFAC/S/250/2023-24/1053863081(1); 1053864908(1) and 1053867367(1); all dated 22.06.2023, involving proceedings u/s. 143(3) r.w.s. 147 of the Income Tax Act, 1961 (in short “the Act”); respectively.
Heard both the parties at length. Case files perused.
Learned counsel representing assessee submits at the outset that his only challenge is to the validity of the impugned reopening(s) in all three assessment years involving sec.148 notice(s) dated 21.03.2018 and 30.03,.2019 i.e., beyond a period of expiry of four years from the end of the relevant assessment years [in A.Ys 2011-2012 and 2012-2013] and dated 14.03.2017 i.e., within a period of four years from the end of the relevant assessment year 2013-2014. Learned counsel accordingly submits that the former twin reopenings suffer from the Assessing Officer’s action having not 3 I.T..A.Nos.923, 924 & 925/PUN./2023 pinpointed the assessee’s failure in disclosing all the relevant particulars “fully” and “truly” in his reasons recorded and the last assessment year 2013-2014 is clear-cut instance of “change of opinion” which is not sustainable in law.
The Revenue has chosen to place strong reliance on the Assessing Officer’s corresponding reopening reasons recorded in all these assessment years forming part of the case records at pages 90 to 92; 54 to 56 and 58 to 59; respectively. Mr. Murkunde first of all took us to the Assessing Officer’s identical reopening reasons in the former twin assessment years specifically alleging the assessee’s failure in not disclosing the relevant particulars “fully” and “truly” as under:
4 I.T..A.Nos.923, 924 & 925/PUN./2023 3.1. Mr. Murkunde next took us to the Assessing Officer’s reopening reasons in assessment year 2013-2014 setting into motion sec.148/147 mechanism alleging escapement of the assessee’s income from being assessed as under :
5 I.T..A.Nos.923, 924 & 925/PUN./2023 3.2. Mr. Murkunde vehemently argued in terms of the foregoing reopening reasons that the Assessing Officer had not only complied with the relevant rigor of law in sec.147, 1st proviso, but also he proceeded on the basis of the relevant tangible material pinpointing escapement of assessee’s income from being taxed.
We have given our thoughtful consideration to the foregoing vehement rival stands and find no substance in Revenue’s foregoing stand. This is for the precise reason that although the former twin assessment years 2011-2012 and 2012-2013 before us contain the Assessing Officer’s reopening reasons alleging that the assessee had not disclosed “fully” and “truly” all the relevant particulars in sec.143(3) assessments; the same however fails to satisfy the test of validity thereof as there is no afresh tangible material which could rebut the correctness thereof. We wish to clarify here that all these three assessment years involve the Assessing Officer’s first round regular assessments framed u/sec.143(3) of the Act dated 27.03.2014, 27.03.2015 and 31.03.2016; respectively. We further note from a perusal of all the corresponding paper books that the Assessing Officer had duly issued his sec.142(1) r.w.s.143(2) notices; as the case may be, to the assessee raising specific query’s regarding the impugned interest income. The said notice(s) form part of record at pages 24 to 26 followed by the assessee’s clarifications regarding the 6 I.T..A.Nos.923, 924 & 925/PUN./2023 impugned interest income in assessment year 2011-2012 on test check basis. This is indeed coupled with the fact that the assessee had duly placed on record it’s balance-sheets, tax audit reports and audited annual accounts, throwing sufficient light on the details of interest income followed by it’s response to sec.142(1) notice(s) issued during the course of former round of scrutiny assessment. Factual position is hardly any different in latter twin assessment years as well wherein similar response followed in furtherance to the Assessing Officer’s show cause notice(s).
Faced with the situation, we find that these former twin assessment years 2011-2012 and 2012-2013’s reopening do not satisfy the test of the Assessing Officer’s having recorded any specific satisfaction; based on fresh tangible material; that the assessee had not disclosed “fully” and “truly” all the relevant particulars in the course of regular assessments. Hon’ble jurisdictional high court’s recent decision in [2023] 148 taxmann.com 225 (Bom.) Framji Dinshaw Petit Parsee Sanatorium vs. ITO (Exemption) holds that such a reopening beyond four years from the end of relevant assessment year is not sustainable in law as under :
“Conclusion:
We heard both the learned Counsel at length. We find merit in the Petition.
7 I.T..A.Nos.923, 924 & 925/PUN./2023 9. It would be appropriate to mention about the case of Institute of Banking Personnel Selection {IBPS) {supra) which held that income derived from the trust property has also got to be computed on commercial principles and if the commercial principles are applied then the adjustment of expenses incurred by the Trust for charitable and religious purposes in the earlier years against income earned by the Trust in the subsequent year will have to be regarded as application of income of the Trust for charitable and religious purposes in the subsequent year in which adjustment has been made having regard to the benevolent provisions contained in section 11 of the Act and that such adjustment will have to be excluded from the income of the Trust under section 11(1)(a) of the Act.
It is further well settled in the case of DIT (Exem) v. MIDE [IT Appeal No. 2652 of 2011, dated 20-3-2013], where this Court had allowed the assessee's claim to carry forward the deficit relying on the decision of this Court in the matter of Institute of Banking Personnel Selection (IBPS) (supra). The above proposition of law is now well settled by the Supreme Court in the case of DIT v. Society for Applied Microwave Electronic Engineering & Research [20191 106 taxmann.com 204/264 Taxman 81 upholding the decision of the Bombay High Court which held that the Tribunal was justified in upholding the decision of the 8 I.T..A.Nos.923, 924 & 925/PUN./2023 CIT(A) to allow carry forward of deficit on account of excessive expenditure and directing the A.O. to carry forward deficit on account of excess expenditure without appreciating the fact that this would have the effect of granting double benefit to the assessee, first as "accumulation" of income under section 11(1)(a) or as corpus donation under section 11(1)(a) in the earlier years/current year and then as 'application' of income under section 11(1)(a) in the subsequent years.
In the present case, the AO had recorded in the assessment order u/s 143 (3) of the Act dated 28th December 2010 for AY 2008-09 that the petitioner was registered with the Director of Income-Tax exemption - Mumbai, under section 12A of the Act and that during the year the Petitioner had claimed exemption u/s 11 of the Act. The reasons recorded in the letter dated 30th April 2015 evince that the AO has come to the conclusion that income has escaped assessment 'on the perusal of the records'. Consequently, there is no question of any failure to disclose any material fact necessary for assessment as held in the case of ITO v. Lakhmani Mewal Das 119761 103 ITR 437 (SC). The impugned notice by the respondent no. 1 is clearly a case of change of opinion as held by this Court in the case of Aroni Commercials Ltd. v. DCIT [20141 44 taxmann.com 304/224 Taxman 13 (Mag.)/362 ITR
9 I.T..A.Nos.923, 924 & 925/PUN./2023 403. Furthermore, AO's the reason to believe must be based on some new tangible material which was not available at the time of passing the original Assessment Order as held in the case of Lalitha Chem Industries {P.) Ltd. v. Dy. CIT [2014] 45 taxmann.com 451/225 Taxman 225 (Mag.)/364 ITR 213 (Bom.).”
5.1. Their lordships’ recent decisions in Rajshree Realtors Pvt. Ltd., vs. Union of India and Others [2023] 457 ITR 354 (Bom.) and in Jetair (P.) Ltd. vs. DCIT [2023] 148 taxmann.com 185 (Bom.) also reiterate the very legal preposition.
The outcome would be hardly any different in the last assessment year 2013-2014’s appeal ITA.No.925/PUN./ 2023 as well wherein the undisputed factual position remains the same that although the Assessing Officer had initiated sec.148/147 proceedings within four years from the end of the relevant assessment year, there was again no fresh tangible material in light of the fact that he had duly examined the issue during the course of scrutiny assessment framed herein. [2021] 131 taxmann.com 346 (Mad.) Cognizant Technology Solutions India (P.) Ltd., vs. ACIT as upheld in [2023] 146 taxmann.com 197 (SC) holds that such a reopening is not sustainable in law once the Assessing Officer had examined
10 I.T..A.Nos.923, 924 & 925/PUN./2023 the corresponding issue in the former round of assessment as under :
11 I.T..A.Nos.923, 924 & 925/PUN./2023 8. We hold in light of the foregoing clinching ratio decidendi that the impugned last reopening in assessment year 2013-2014 ITA.No.925/PUN./2023 is also not sustainable in law. The assessee succeeds in its’ instant sole legal ground in all these three assessment years therefore.
All other pleadings on merits stand rendered academic.
These three assessee’s appeals are allowed in above terms. A copy of this common order be placed in the respective case files.
Order pronounced in the open Court on 23.10.2023.