PR. COMMISSIONER OF INCOME TAX-1, CHANDIGARH vs. M/S GOYAL BUILDERS

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ITA/438/2018HC Punjab & HaryanaPHHC01119307201828 January 2020Author: MR. JUSTICE AJAY TEWARI,MR. JUSTICE AVNEESH JHINGAN2 pages
AI SummaryDismissed

What did the High Court hold?

The High Court dismissed the appeal filed by the Revenue. The Court held that the argument that if there is no opinion, there can be no change of opinion, is specious and does not apply. It was not disputed that the issue of cash payments and the evidence thereof were before the original Assessing Officer. The AO had ignored this issue. The Court reasoned that once an issue and its evidence are clearly before an authority and the authority ignores it, the authority cannot later decide to re-open the assessment on that ground. The remedy for the Revenue was to challenge the original order, which they failed to do. Therefore, the invocation of Section 148 was not justified on the ground of change of opinion, as the original AO had the opportunity to consider the issue and failed to do so.

What were the facts?

The Revenue (Pr. Commissioner of Income Tax-1, Chandigarh) filed an appeal against orders of the Commissioner of Income Tax (Appeal)-3, Gurgaon and the Income Tax Appellate Tribunal (ITAT) which had set aside a notice issued under Section 148 of the Income Tax Act, 1961. A search under Section 132(1) led to an assessment order under Section 143(3) on 29.12.2010. Approximately 2.5 years later, a successor officer issued a Section 148 notice, alleging that the assessee (M/s Goyal Builders) had made cash payments of approximately `48,00,000/- contrary to Section 40A(3) read with Rule 6DD. The Commissioner and ITAT held that the issue of cash payments was already before the original Assessing Officer (AO) and had been furnished by the assessee, thus, the re-assessment was hit by the doctrine of change of opinion.

What were the issues?

1. Whether the re-assessment proceedings initiated under Section 148 of the Income Tax Act, 1961, were validly initiated, considering the doctrine of change of opinion, when the issue of cash payments was allegedly before the original Assessing Officer. The Revenue's contention was that in the original assessment order, no opinion was formed at all, and therefore, it was erroneous for the Commissioner and the Tribunal to hold that the re-assessment was a case of change of opinion. The Revenue argued that if there is no opinion, there can be no change of opinion. The Assessee's contention, as accepted by the lower authorities and implicitly supported by the High Court's reasoning, was that the issue of cash payments and the evidence thereof were clearly before the original AO. The AO had ignored this issue, and the remedy for the Revenue was to challenge that order, not to re-open the assessment on the same ground through Section 148.

Which sections of the Income-tax Act were involved?

Section 148,Section 132(1),Section 143(3),Section 40A(3)

AI-generated summary — verify with the full judgment below

101 IN THE HIGH COURT OF PUNJAB & HARYANA AT CHANDIGARH **** DECIDED ON: JANUARY 28, 2020 PR. COMMISSIONER OF INCOME TAX-1, CHANDIGARH APPELLANT VERSUS M/S GOYAL BUILDERS RESPONDENT CORAM: HON'BLE MR. JUSTICE AJAY TEWARI HON'BLE MR. JUSTICE AVNEESH JHINGAN Present: Mr. Yogesh Putney, Senior Standing Counsel for the appellant. **** AJAY TEWARI, J (Oral): This appeal has been filed by the revenue against the orders of the Commissioner of Income Tax (Appeal)-3, Gurgaon and the Income Tax Appellate Tribunal Division Bench 'A', Chandigarh whereby, the stand of the assessee was accepted and notice under Section 148 of the Income Tax Act 1961 (for short 'the Act') was set aside.

2.

The brief facts are that a search was conducted on the premises under Section 132(1) of the Act. Thereafter proceedings were initiated and ultimately an order under Section 143 (3) of the Act was passed on 29.12.2010. After a period of about 2 ½ years a successor officer probably realised that there were glaring omissions in the original order under Section 143 (3) of the Act and issued a notice under Section 148(1) of the Act stating that payments of `48,00,000/- odd had been made by the assessee in cash contrary to Section 40A(3) read with Rule 6DD of the Income Tax Rules 1962 (for short 'the Rules') and framed re-assessment. In subsequent proceedings the Commissioner and Tribunal held that a specific query had SHAM SUNDER 2020.01.31 09:05 I attest to the authenticity and integrity of this document HIGH COURT CHANDIGARH -2- been put by the original AO to the assessee regarding sales and purchases and in response thereto, all details had been furnished by the assessee and therefore the issue of cash payments in contravention of Section 40A(3) read with Rule 6DD of the Rules was before the Assessing Officer and therefore invocation of Section 148(1) of the Act was hit by the doctrine of change of opinion.

3.

The only contention raised before us is that in the original assessment order no opinion at all was formed and therefore, it was erroneous for the Commissioner and the Tribunal to held to be a case of change of opinion. This argument is to be rejected. It is not in dispute that the issue of cash payments and evidence thereof, was before the Assessing Officer and wrongly he ignored it. The remedy before the revenue was to have challenge that order but the revenue did not do so and proceeded in the manner aforementioned. Once an issue and evidence there of, is clearly before an authority and the authority ignores it, it cannot later on decide to re-open on that ground and the specious argument that if there is no opinion there can be no change of opinion, would not apply.

4.

Dismissed. [AJAY TEWARI] JUDGE [AVNEESH JHINGAN] JUDGE JANUARY 28, 2020

sham

1.

Whether speaking/ reasoned : Yes / No 2. Whether reportable : Yes / No SHAM SUNDER 2020.01.31 09:05 I attest to the authenticity and integrity of this document HIGH COURT CHANDIGARH

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