DELL INTERNATIONAL SERVICES INDIA PVT. LTD vs. THE JOINT COMMISSIONER OF INCOME TAX

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WA/1145/2015HC KarnatakaKAHC01001435201510 June 2024Bench: KRISHNA S DIXIT,RAMACHANDRA D. HUDDAR5 pages
AI SummaryAllowed

What did the High Court hold?

The High Court allowed the appeal and set aside the order of the learned Single Judge. The Full Bench, to which the matter was referred, answered the first question in the negative, holding that the decision in Commissioner of Income Tax vs. Rinku Chakraborthy (2011) 242 ITR 425 does not lay down the correct position of law and is per incuriam. The second question was answered in the affirmative, confirming that the Rinku Chakraborthy judgment was per incuriam. The third question was answered in the negative, holding that the expression ‘reason to believe’ in Section 147 of the Income Tax Act, 1961, is not satisfied by a mere change of opinion by the Assessing Officer. The High Court found that the assessee's arguments were supported by the Full Bench's decision. Consequently, the Joint Commissioner's order dated 24.02.2015 and the notice dated 27.03.2014 for Assessment Year 2009-10 were quashed. The appellant was relieved of the reassessment proceedings.

What were the facts?

The appellant, Dell International Services India Pvt. Ltd., successor in interest to Dell India Pvt Ltd, challenged an order dated 24.02.2015 rejecting its preliminary objection to reassessment proceedings and a notice dated 27.03.2014 issued under Section 148 read with Section 147 of the Income Tax Act, 1961, for Assessment Year 2009-10. These were issued by the Joint Commissioner of Income Tax. The appellant's writ petition challenging these actions was dismissed by a learned Single Judge on 23.03.2015. This intra-court appeal was filed against the Single Judge's order. The appellant argued that a co-ordinate bench had referred three questions to a Full Bench, which had subsequently answered two questions in favour of the assessee, warranting the allowance of this appeal.

What were the issues?

1. Whether the Division Bench judgment in the case of Commissioner of Income Tax Vs Rinku Chakraborthy (2011) 242 ITR 425 lays down good law? (Question of law) 2. Whether the judgment in the Rinku Chakraborthy (supra) is per incuriam in view of the fact that it relies upon the judgment of the Apex Court in the case of Kalyani Mavi & Co. Vs Commissioner of income Tax 1976 CTR 85, which has been specifically overruled by the Apex Court in the case of Indian & Eastern Newspaper Society Vs Commissioner of Income Tax (1979) 110 ITR 996? (Question of law) 3. Whether ‘reason to believe’ in the context of Section 147 of the Income Tax Act can be based on mere ‘change of opinion’ of the Assessing Officer? (Question of law) Assessee's contentions: The appellant argued that a co-ordinate bench had referred these questions to a Full Bench, and the Full Bench's decision answering two of the three questions in favour of the assessee should lead to the allowance of this appeal. Revenue's contentions: The revenue's counsel was not in a position to resist the argument made on behalf of the assessee.

Which sections of the Income-tax Act were involved?

Section 147,Section 148

AI-generated summary — verify with the full judgment below

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NC: 2024:KHC:20031-DB WA No. 1145 of 2015

IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 10TH DAY OF JUNE, 2024 PRESENT THE HON'BLE MR JUSTICE KRISHNA S DIXIT AND THE HON'BLE MR JUSTICE RAMACHANDRA D. HUDDAR WRIT APPEAL NO. 1145 OF 2015 (T-IT) BETWEEN:

DELL INTERNATIONAL SERVICES INDIA PVT. LTD, (SUCCESSOR IN INTEREST) DELL INDIA PVT LTD (NOW DELL INTERNATIONAL SERVICES INDIA P.LTD) DIVYASHREE GREENS, NO.12/1, 12/1A, KORAMANGALA INNER RING ROAD, DOMLUR, BANGALORE 560 071. REPRESENTED HEREIN BY ITS TAX DIRECTOR, MR. AMIT GUPTA …APPELLANT (BY SRI.T SURYA NARAYANA.,ADVOCATE)

AND:

1.

THE JOINT COMMISSIONER OF INCOME TAX LARGE TAX PAYERS UNIT :(LTU) JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI III STAGE, BANGALORE 560 085.

2.

THE COMMISSIONER OF INCOME TAX - II LARGE TAX PAYERS UNIT (LTU) JSS TOWERS, 100 FEET RING ROAD, BANASHANKARI III STAGE, BANGALORE 560 085. …RESPONDENTS (BY SRI.E I SANMATHI.,ADVOCATE)

THIS WRIT APPEAL FILED U/S 4 OF THE KARNATAKA HIGH COURT ACT PRAYING TO SET ASIDE THE ORDER PASSED IN THE WRIT PETITION NO.8901/2015 DATED 23/03/2015.

THIS WRIT APPEAL, COMING ON FOR HEARING, THIS DAY, KRISHNA S DIXIT.J., DELIVERED THE FOLLOWING:

Digitally signed by SHARADA VANI B Location: HIGH COURT OF KARNATAKA

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NC: 2024:KHC:20031-DB WA No. 1145 of 2015

JUDGMENT

This intra court appeal seeks to call in question a learned Single Judge’s order dated 23.03.2015 whereby Appellant-Assessee’s W.P.No.8901/2015 (T-IT) has been negatived. In the said petition, challenge was mounted to the order dated 24.02.2015 at Annexure-P rejecting Assessee’s Preliminary Objection to the intended reassessment and to the notice dated 27.03.2014 at Annexure-K issued u/s.148 r/w Sec.147 of the Income Tax Act, 1961 for the Assessment Year 2009-10. Both they are issued by the Joint Commissioner of Income Tax who happens to be the 1st respondent.

2.

Learned counsel appearing for the Assessee vehemently submits that a Co-ordinate Bench of this court vide order dated 02.09.2015 had referred the matter for consideration by the Full Bench of three questions enlisted therein and that the Full Bench vide judgment dated 27.01.2021 having answered two of the three questions in favour of the Assessee, this appeal needs to be allowed. Learned Panel Counsel appearing for the Revenue despite

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NC: 2024:KHC:20031-DB WA No. 1145 of 2015

submissions is not in a position to resist the argument made on behalf of the Assessee.

3.

Having heard the learned counsel for the parties and having perused the appeal papers, we are inclined to grant indulgence in the matter and reasons for this are far to seek: The Co-ordinate Bench vide order dated 02.09.2015 at paragraph 47 had referred the following three questions for the consideration of Full Bench: “47 In the aforesaid facts, we have no option but to request the Hon’ble Chief Justice to refer this matter for consideration of a larger Bench, on the following questions of law:

1.

Whether the Division Bench judgment in the case of Commissioner of Income Tax Vs Rinku Chakraborthy (2011) 242 ITR 425 lays down good law?

2.

Whether the judgment in the Rinku Chakraborthy (supra) is per incurium in view of the fact that it relies upon the judgment of the Apex Court in the case of Kalyani Mavi & Co. Vs Commissioner of income Tax 1976 CTR 85, which has been specifically overruled by the Apex Court in the case of Indian & Eastern Newspaper Society Vs Commissioner of Income Tax (1979) 110 ITR 996?

3.

Whether ‘reason to believe’ in the context of Section 147 of the Income Tax Act can be

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NC: 2024:KHC:20031-DB WA No. 1145 of 2015

based on mere ‘change of opinion’ of the Assessing Officer?”

4.

The Full Bench at paragraph 19 of its order has observed as under: “Therefore, in the light of law laid down in the case of Indian and Eastern Newspaper Society (supra), the first question will have to be answered in the negative by holding that the decision in the case of Rinku Chakraborthy does not lay down correct position law to the extent to which it follows what is held in clause (2) of paragraph 13 of the decision of the Apex Court in the case of Kalyanji Mavji and Company (supra). The second question will have to be answered in the affirmative. In view of the consistent decisions of the Apex Court holding that “reason to believe” in the context of Section 147 of the Income –tax cannot be based on mere change of opinion of the Assessing Officer, the third question will have to be answered in the negative. In fact, in view of settled law, framing of question No.3 was not warranted at all.”

Thus, it answered the first question as to correctness of Division Bench decision in Commissioner of Income Tax vs. Rinku Chakraborthy (2011) 242 ITR 425 in the negative holding that it does not correctly lay down the law and therefore it is per incuriam. It also held that the expression ‘reason to believe’ employed in Sec.147 of

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NC: 2024:KHC:20031-DB WA No. 1145 of 2015

the 1961 Act is not satisfied when there is a mere change of opinion of the Assessing Officer. Thus the argued case of the Assessee needs to be accepted, nothing contra having been demonstrated by the Revenue. In the above circumstances, this appeal succeeds and the impugned order of the learned Single Judge is set aside. The Assessee’s W.P.No.8901/2015 having been favoured, a Writ of Certiorari issues quashing Joint Commissioner’s order dated 24.02.2015 (Annexure-P) and also notice dated 27.03.2014 issued u/s.148 r/w Sec.147 of the IT Act, 1961 (Annexure-K) for the Assessment Year 2009-10. Appellant is relieved of the subject proceedings. Costs made easy.

Sd/- JUDGE

Sd/- JUDGE Bsv/snb List No.: 1 Sl No.: 28

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