COMMISSIONER OF INCOME TAX vs. M/S.TAMILNADU URBAN FINANCE &

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TCA/411/2018HC Madras04 December 2019Bench: Hon`ble Mr Justice N. KIRUBAKARAN6 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the Tribunal was right in allowing the assessee's appeal. The Court found that there was no fresh material brought on record by the Assessing Officer to justify the issuance of the notice for re-opening the assessment under Section 148. The Court reiterated the principle that for re-opening an assessment, especially when the period is beyond four years (in this case, the notice was issued exactly six years after the original assessment), there must be tangible material or evidence indicating escapement of income due to the assessee's failure or negligence. The Tribunal's finding that no such material was produced by the Assessing Officer was upheld. The Court also noted that it had decided similar matters in the same way, citing TCA.No.765 of 2019 dated 22.11.2019. Therefore, the substantial questions of law were answered in favour of the assessee, and the appeal filed by the Revenue was dismissed.

What were the facts?

The Revenue (Commissioner of Income Tax, Corporate Circle – 3, Chennai) has appealed against an order of the Income Tax Appellate Tribunal (ITAT), Chennai 'C' Bench, dated 27.07.2017, which was passed in ITA.No.1315/MDS/2015 for the assessment year 2006-07. The original assessment order under Section 143(3) was passed on 28.11.2008. A notice for re-opening the assessment under Section 148 was issued on 30.03.2013, and a re-assessment order was passed on 17.01.2014. The Assessing Officer determined an eligible allowance of Rs.4,43,21,439/- as against Rs.5,05,10,900/- claimed by the assessee, M/s. Tamil Nadu Urban Finance & Infrastructure Development Corporation Limited. The assessee's appeal before the Commissioner of Income Tax (Appeals) was partly allowed, and the subsequent appeal before the ITAT was allowed, leading to the present appeal by the Revenue.

What were the issues?

1. Whether the Tribunal was right in quashing the re-opening assessment order under Section 147, when the case was re-opened as per Explanation (2)(c)(iv) to Section 147 for excessive allowance computed? (Question of law) 2. Whether the Tribunal was right in holding that the assessment cannot be reopened unless negligence is on the part of the assessee, even though income escaped assessment within the meaning of Explanation (2)(c)(iv) to Section 147? (Question of mixed law and fact) Assessee's Contention (as understood from the judgment): The ITAT allowed the assessee's appeal stating that no material was brought on record by the Assessing Officer. The ITAT held that as per the proviso to Section 147, there should be negligence on the part of the assessee in furnishing material for assessment. The six-year limitation period could only be invoked if there was a failure on the assessee's part. Since no fresh materials were available and there was no negligence by the assessee, the re-opening of assessment was not justified. Revenue's Contention: The Revenue argued that the assessment was re-opened as per Explanation (2)(c)(iv) to Section 147 for excessive allowance computed. The Revenue's counsel attempted to justify the issuance of the notice for re-opening under Section 148 and relied upon Explanation (2)(c)(iv) of Section 147.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 143(3)

AI-generated summary — verify with the full judgment below

T.C.A.No.411 of 2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 04.12.2019 CORAM : THE HONOURABLE MR.JUSTICE N.KIRUBAKARAN and THE HONOURABLE MR.JUSTICE P.VELMURUGAN T.C.A.No.411 of 2018 Commissioner of Income Tax, Corporate Circle – 3 Chennai. ... Appellant Vs M/s.Tamil Nadu Urban Finance & Infrastructure Development Corporation Limited, No.460/1-2, Anna Salai, Nandanam, Chennai 600 035 PAN: AAACT1259R ... Respondent PRAYER : Appeal under Section 260-A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Madras “C” Bench, dated 27.07.2017 passed in ITA.No.1315/MDS/2015. For Appellant :Mr.M.Swaminathan Senior standing counsel For Respondent :Mr.M.P.Senthilkumar 1/6 https://www.mhc.tn.gov.in/judis/ T.C.A.No.411 of 2018 J U D G M E N T (Judgment of the Court was delivered by N.KIRUBAKARAN, J) This Tax Case Appeal has been preferred by the Revenue against the order dated 27.07.2017 passed in ITA.No.1315/MDS/2015 on the file of the Income Tax Appellate Tribunal, Chennai 'C' Bench for the assessment year 2006-07. 2.The appeal was admitted on 29.06.2018 on the following substantial questions of law : “(i)Whether the Tribunal is right in quashing the re- opening assessment order under Section 147 though the case was re-opened as per Explanation (2)(c)(iv) to Section 147 for excessive allowance computed? (ii)Whether the Tribunal was right in holding that the assessment cannot be reopened unless the negligence is on the part of the assessee though the income has escaped from assessment within the meaning under Explanation (2)(c)(iv) to Section 147? " 3.Mr.M.Swaminathan, learned Senior Standing Counsel would submit that the assessment order was passed under Section 143(3) of the Income Tax Act, 1961 on 28.11.2008 and notice for re-opening the 2/6 https://www.mhc.tn.gov.in/judis/ T.C.A.No.411 of 2018 assessment under Section 148 of the Income Tax Act, 1961 was ordered on 30.03.2013 and re-assessment order has been passed on 17.01.2014, by which the Assessment Officer found that the assessee is eligible to allowance only to the tune of Rs.4,43,21,439/- as against the allowance of Rs.5,05,10,900/-. The said assessment order was challenged before the Commissioner of Income Tax (Appeals) by the assessee and the appeal was partly allowed. The said order was challenged before the Appellate Tribunal by the assessee. The assessee's appeal was allowed by the Tribunal stating that no material was brought on record by the Assessment Officer and as per proviso to Section 147 of the Income Tax Act, 1961, there should be negligence on the part of the assessee in furnishing material required for completing the assessment. Only if there is a failure on the part of the assessee, the six years limitation period could be invoked whereas in this case, the original assessment order was passed on 28.11.2008 and notice for re-opening the assessment was issued on 30.03.2013 which is exactly six years. Since there are no fresh materials available and there is no negligence on the part of the assessee, the question of re-opening does not arise. Therefore, the Appellate Tribunal rightly allowed the assessee's Appeal. Accordingly, the 3/6 https://www.mhc.tn.gov.in/judis/ T.C.A.No.411 of 2018 substantial questions of law are answered. 4.Even though Mr.M.Swaminathan, learned senior standing counsel would try to justify the issuance of re-opening notice under Section 148 of the Income Tax Act, 1961 and rely upon Explanation (2) (c) (iv) of Section 147, there is no fresh material brought on record to issue notice for re-opening the assessment. 5.In similar circumstances, this Court has also decided the matter in the same way in TCA.No.765 of 2019 on 22.11.2019. 6.Accordingly, the Appeal fails and the same is dismissed. No costs. (NKKJ) (PVJ) 04.12.2019 sai 4/6 https://www.mhc.tn.gov.in/judis/ T.C.A.No.411 of 2018 To 1.The Commissioner of Income Tax, Corporate Circle – 3 Chennai. 2.Income Tax Appellate Tribunal 'C' Bench, Chennai. 5/6 https://www.mhc.tn.gov.in/judis/ T.C.A.No.411 of 2018 N.KIRUBAKARAN, J. and P.VELMURUGAN

, J.

sai T.C.A.No.411 of 2018 Dated : 04.12.2019 6/6 https://www.mhc.tn.gov.in/judis/

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