THE ITO, - 2, ITARSI vs. M/S. MANISH KUMAR RAKESH KUMAR, HOSHAGABAD

PER MADHUMITA ROY, J.M

The instant appeal is directed against the order dated 15.12.2014 passed by the Learned Commissioner of Income Tax (Appeals-1), Bhopal

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

(MP) arising out of the order dated 26.06.2012 under section 147 read

with section 143(3) of the Income Tax Act, 1961(hereinafter referred as

“the Act”) passed by the ITO-2, Itsari for Assessment Year 2005-06.

maintaining mercantile system of accounting derived income from

warehousing filed its return of income on 29.10.2005 declaring income at

NIL, assessment of which was completed under section 143(3) of the Act

on 05.11.2007 on Nil income accepting the claim of 100% deduction

under section 80IB(11A) of the assessee at Rs.6,32,322/-. Later on it was

found by the Learned Assessing Officer that such claim made by the

assessee was incorrectly allowed whereupon after obtaining prior

approval from the CIT, notice under section 148 of the Act dated

08.08.2011was served upon the assessee upon recording of reasons. The

return already filed by the assessee on 29.10.2005 was requested to be

treated as return filed in response of the said notice. Finally the Ld. A.O

issued notices under section 143 (2) and 142(1) of the Act and completed

the reassessment under section 147 upon determining the taxable

income at Rs.6,32,322/- after disallowing the appellant’s claim of

deduction under section 80IB(11A) of the Act which was in turn deleted

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

by the Learned CIT(A). Hence the instant appeal before us. In fact by

and under an order dated 22.09.2015 the appeal preferred by the

revenue against the order dated 15.12.2014 passed by the Learned

CIT(A) got dismissed by the Ld. Tribunal due to low tax effect as covered

by CBDT instruction No. 5/2014 dated 10.07.2014. However, the said

order was recalled on 29.10.2019 upon application made by the revenue

applying the exception clause due to audit objection. Thus, the matter is

heard afresh.

Departmental Representative vehemently opposed the order passed by

the Learned CIT(A) in quashing the order passed by the Learned

Assessing Officer in effect the reassessment order under section 147 of

the Act dated 26.06.2012 for Assessment Year 2005-06. According to

him the explanation rendered by the assessee in support of the claim

does not satisfy the conditions specified in section 80IB(11A) since the

assessee is not engaged in integrated business of handling, storage and

transportation of food grains being the main condition for claiming

deduction under this particular section. He, therefore, relied upon the

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

order passed by the Learned Assessing Officer under section 147 of the

Act.

submitted before us that the initiation of the proceeding under section

147 is bad in law. It was further submitted by him that the notice under

section 148 was issued on 08.08.2011 i.e. after the expiry of 4 years

from the end of relevant Assessment Year. In the absence of any tangible

material, reopening of the assessment completed under section 143(3) of

the Act is nothing but a “change of opinion”. Furthermore the assessee

answered the query made by the Ld. Assessing Officer effectively relating

to the claim under section 80IB(11A) of the Act with corroborating

documents which is evident from the order dated 05.11.2007 passed

under section 143(3) of the Act. It was further contended by the Learned

Counsel appearing for the assessee, that the reasons for issuing of notice

under section 148 on 08.08.2011 with the prior approval dated

04.08.2011 granted by the Learned CIT shows that the approval so

granted by the Learned CIT is a product of non application of mand. Last

but not the least the proceeding initiated under section 147 of the Act

has been challenged by the assessee on the very basic ground of not

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

alleging failure on the part of the appellant truly and fully in disclosing

the material facts at the time of regular assessment in the reason

recorded dated 08.08.2011 by the ITO-2, Itarsi in terms of the relevant

provisions of law.

and we have also perused the relevant materials available on records

including the order passed by the authorities below. It appears from the

order passed by the Learned AO that he was not satisfied with the case

made out by the assessee in handling and transportation activities; the

explanation rendered by the assessee in this regard was not found

suitable and hence not accepted by the Assessing Officer. But it appears

from the records that in regard to the particular claim under section

80IB((11A) of the Act dated 26.09.2007, the assessee furnished all the

details of income from warehousing, the licence for running the same

under the Madya Pradesh Krishi Godam Adhiniyam, 1947, the license

granted by the MP Krishi Upaj Mandi Samiti, Itarsi, the license issued by

MP Warehousing and Logistics Corporation, Bhopal, the body constituted

by MP government. Consideration of those documents is also reflecting in

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

the initial order of assessment under section 143(3) dated 05.11.2007 as

on record before us.

section 148 of the Act only speaks of incorrectly allowing the claim of the

assessee of 100% deduction under section 80 IB(11A) of the Act of

Rs.6,32,322/-. However, the Ld. A.O has not brought any tangible

material so as to draw a conclusion that the assessee has failed to

disclose fully and truly all material facts with regard to such claim of

deduction under section 80IB(11A) of the Act necessary for assessment

proceeding under section 143(3) of the Act which is the essential

ingredient and or condition to be fulfilled as stipulated by the statutory

provision of section 147 of the Act. In this aspect we have considered the

judgment passed by the Hon'ble Delhi High Court in the case of

Balasubramaniam Ramachandran V/s ITO in WP( C) 6159/2013 and CM

13549/2013 while dealing with the issue the Hon'ble Court has been

pleased to observe as follows:-

Xxxxx "In the reasons as furnished by the Assessing Officer, we find that there is neither an}' allegation that the assessee had failed to truly disclose any material facts at the time of assessment, nor can we readily infer the same in view of the fact that a detailed enquiry had been conducted by the 6

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

Assessing Officer with regard to the identity and creditworthiness of the share_applicants and genuineness of the transactions in relation to the share application money received by the assessee. Further the mere statement that the DRl has seized certain goods of the assessee and levied a penalty also cannot be stated to be a reason for reopening of assessment of the assessee as the said statement made is neither followed by the recording of a belief that the income escaped on the count or that the assessee has failed to disclose all relevant material, fully and truly, at the stage of the first assessment. "

invoke the provisions of Section 147 of the Act, after a period of four

years from the end of the relevant assessment year, in addition to the Ld.

A.O having reasons to believe that any income has escaped assessment,

it must also be established that the income has escaped assessment on 7

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

account of the assessee failing to make returns u/s 139 or on account of

failure on the part of the assessee to disclose fully or truly, the necessary

material facts. In this regard the Ld. CIT(A) relied upon the judgment

passed by the Hon'ble Delhi High Court in the matter of CIT V/s Suren

International P. Ltd (2013) 357 ITR 24 (Del) where on the same premise

the Hon'ble Court quashed the proceeding initiated u/s 147 of the Act.

years from the date of completion of the relevant Assessment Year in the

absence of any allegation leveled against the assessee in not disclosing

truly or fully all material facts necessary for the assessment, we find that

the Learned CIT(A) had further relied upon the judgment passed in the

matter of Haryana Acrylic Manufacturing Co V/s CIT reported in (2009)

308 ITR 38(Del) passed by the Hon'ble Delhi High Court. We have

considered that particular judgment. While allowing the petition

preferred by the assessee the Hon'ble Court has been pleased to observe

as follows:

"Held, allowing the petition,

(i) That the reasons recorded did not indicate the failure on the part of the petitioner to disclose fully and truly all material

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

facts necessary for its assessment for the Assessment Year 1998-99. While in the reasons supplied to the petitioner there was no mention of the allegation that there was a failure on the part of the assessee to disclose fully and truly all material facts, in the reasons shown in the said form to the counter affidavit there was a specific allegation that there was a failure on the part of the assessee to disclose fully and truly all material facts relating to accommodation entries raised from one of the companies to the extent of Rs. 5 lakhs. Thus, one of the conditions precedent for removing the bar against taking action after the said four years period remained unfulfilled. Consequently, the notice under section 148 based on the recorded reasons supplied to the petitioners as well as the consequent order were without jurisdiction as no action under section 147 could be taken beyond the four year period. "

Apart from that the judgment passed by the Hon'ble Delhi High

Court in the case of wel Inter-trade Private Ltd and another versus ITO

reported in (2009) 308 ITR 22(Del) was considered by the learned CIT(A)

while quashing the proceeding.

Apex Court In the case of CIT V/s Kelvinator of India Ltd 2010, 187

taxmann 312(SC) where it was held that reopening of an assessment

under section 147 of the Act is not permitted merely on the ground that 9

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

there is change in the view of the Assessing Officer and subsequently he

believes that earlier views was incorrect particularly when the

assessment order itself records that the issue was raised and was

decided in favour of the assessee. In that view of the matter the

reassessment proceeding in such a case will be hit by the principle of

change of opinion and thus liable to be quashed. Since the assessee had

truly disclosed all the relevant material facts necessary for the

assessment, the preconditions for invoking the proviso of Section 147

had not been satisfied. Hence the Ld. A.O had acted wholly without

jurisdiction. Thus considering this particular facts and circumstances of

the case and the judgment relied upon by the assessee and as well as the

Learned CIT(A), we find no justification in interfering with the order

passed by the Learned CIT(A) in holding the decision of reassessment

proceeding under section 147 of the Act for Assessment Year 2005-06 by

issuing notice under section 148 of the Act as bad in law in the absence

of mentioning of any allegation against the assessee in failing to disclose

fully and truly the material facts in the assessment proceeding under

section 143 (3) of the Act. Merely by making a statement in the reasons

recorded that the assessee’s claim of 100% deduction under section

801B(11A) of the Act was incorrectly allowed cannot be said to be

Manish Kumar Rakesh Kumar ITA No.128/Ind/2015

justified in reopening the assessment. Such order, passed by the Learned CIT(A), in our considered view is without any ambiguity so as to warrant interference. Hence the order is passed in the affirmative, i.e. in favour of the assessee and against the revenue. The revenue’s appeal is, therefore, dismissed.

The order pronounced in the open Court on 13.04.2021 Sd/- Sd/-

(MANISH BORAD) (MADHUMITA ROY) ACCOUNTANT MEMBER JUDICIAL MEMBER

�दनांक /Dated : 13 April, 2021 /Dev

Copy to: The Appellant/Respondent/CIT concerned/CIT(A) concerned/ DR, ITAT, Indore/Guard file. By Order, Asstt.Registrar, I.T.A.T., Indore