COMMISSIONER OF INCOME TAX, KOTTAYAM vs. SHRI. P.M.PAUL, GLEN TEA FACTORY, GLEN

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ITA/775/2009HC KeralaKLHC01025536200910 February 2010Bench: HONOURABLE MR.JUSTICE. P.S.GOPINATHAN,HONOURABLE MR.JUSTICE C.N.RAMACHANDRAN NAIR3 pages
AI SummaryRemanded

What did the High Court hold?

The High Court allowed the appeals, setting aside the orders of the Tribunal. The matter was remanded to the Tribunal for reconsideration. The High Court noted that the Supreme Court decision in ACIT vs. Rajesh Javeri Stock Brokers P. Ltd. was reported after the ITAT's order and that this court had also considered the authority of the AO to reopen assessment under Section 147 after issuing an intimation under Section 143(1)(a) without making a regular or scrutiny assessment. The High Court felt the matter should be reconsidered by the Tribunal in light of these subsequent decisions and the arguments made by the assessee regarding the availability of facts in the return and the tenability of assessments beyond four years, which were not raised before the Tribunal. The Tribunal was directed to give an opportunity of hearing to both sides and also consider the maintainability of the appeal under the relevant Circular.

What were the facts?

The Commissioner of Income Tax, Kottayam (Revenue) is the appellant, and Shri. P.M. Paul, Glen Tea Factory, Idukki District (Assessee) is the respondent. The appeals concern assessment years not explicitly stated in the provided text. The challenge is to the order of the Income Tax Appellate Tribunal (ITAT), Cochin Bench, which cancelled income escaping assessment initiated under Section 147 of the Income Tax Act, 1961, by revising an intimation issued under Section 143(1)(a). The ITAT had held that the Assessing Officer (AO) was barred from initiating Section 147 proceedings because they could have made a regular assessment by issuing a notice under Section 143(2). The High Court notes that the Supreme Court decision in ACIT vs. Rajesh Javeri Stock Brokers P. Ltd. was reported after the ITAT's order and that this court has also considered similar issues. The High Court also notes that the assessee argued that all material facts were available in the return, making some assessments beyond four years not tenable, an issue not raised before the ITAT.

What were the issues?

1. Whether the Tribunal was justified in cancelling income escaping assessment completed under Section 147 of the Act by revising an intimation issued under Section 143(1)(a) of the Act, when the AO could have made a regular assessment by issuing a notice under Section 143(2)? (Question of law/mixed law and fact, concerning Section 147 and Section 143(1)(a) and 143(2) of the Income Tax Act, 1961). Assessee's contentions: All material facts required for assessment were available in the return itself, rendering some assessments completed beyond four years not tenable. Revenue's contentions: Relied on the Supreme Court decision in ACIT vs. Rajesh Javeri Stock Brokers P. Ltd. (2007) 291 ITR 500, which held that an AO cannot be said to have formed an opinion while issuing an intimation under Section 143(1)(a), thus a subsequent notice under Section 147 is not on account of a change of opinion. The Revenue also pointed to subsequent judgments of the High Court.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(1)(a),Section 143(2)

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT : THE HONOURABLE MR. JUSTICE C.N.RAMACHANDRAN NAIR & THE HONOURABLE MR. JUSTICE P.S.GOPINATHAN WEDNESDAY, THE 10TH FEBRUARY 2010 / 21ST MAGHA 1931 ITA.No. 775 of 2009() --------------------- ITA.1035/COCH/2005 of I.T.A.TRIBUNAL,COCHIN BENCH .................... APPELLANT/RESPONDENT: ------------------------------ COMMISSIONER OF INCOME TAX, KOTTAYAM. BY ADV. SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT(S): --------------- SHRI.P.M.PAUL, GLEN TEA FACTORY, GLEN MARY P.O., PEERMADE, IDUKKI DISTRICT. ADV. SRI.P.BALAKRISHNAN (E) THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 10/02/2010, ALONG WITH ITA NO. 1234,1247& 1328 OF 2009, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

C.N.RAMACHANDRAN NAIR & P.S.GOPINATHAN, JJ. .................................................................... I.T. Appeal Nos.775,1234,1247 & 1328 of 2009 .................................................................... Dated this the 10th day of February, 2010. JUDGMENT Ramachandran Nair, J. The question raised is whether the Tribunal was justified in cancelling income escaping assessment completed under Section 147 of the Act by revising intimation issued under Section 143(1)(a) of the Act. The Tribunal found that the Assessing Officer could have made the assessment by issuing notice under Section 143(2) and having failed to proceed to make regular assessment, he is barred from initiating proceedings under Section 147. However, Senior Standing Counsel has relied on decision of the Supreme Court in ASST. COMMISSIONER OF INCOME-TAX VS. RAJESH JAVERI STOCK BROKERS P. LTD. reported in (2007) 291 ITR 500 wherein the Supreme Court has held that while issuing an intimation under Section 143(1)(a), the Assessing Officer cannot be said to have formed an opinion and, therefore, the subsequent notice issued under Section 147 cannot be said to be on account of change of opinion. We notice that the judgment of the Supreme Court abovereferred has been reported

2 after the orders of the Tribunal. This court also had occasion to consider the authority of the Assessing Officer to reopen assessment under Section 147 after issuing intimation under Section 143(1)(a) without making regular or scrutiny assessment. During hearing counsel appearing for the assessee pointed out that all material facts required for assessment are available in the return itself and so much so, some assessments completed beyond four years are not tenable. Since this issue is not seen raised before the Tribunal and in view of the subsequent decision of the Supreme Court abovereferred and judgments of this court, we feel the matter should be reconsidered by the Tribunal. We, therefore, allow the appeals by setting aside the orders of the Tribunal and remand the matter to the Tribunal for reconsideration by it after giving opportunity of hearing to both sides. The maintainability of the appeal under the Circular also should be considered by the Tribunal while deciding the matter afresh. C.N.RAMACHANDRAN NAIR Judge P.S.GOPINATHAN Judge pms

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