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Income Tax Appellate Tribunal, HYDERABAD BENCH “A”, HYDERABAD
Before: SMT P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN
PER S. RIFAUR RAHMAN, A.M.:
This appeal filed by the revenue is directed against the order dated 14/08/2014 of CIT(A) – V, Hyderabad for AY 2007-08.
Briefly the facts of the case are, assessee company, engaged in the business of printing and publication of news papers and periodicals, filed its return of income for the AY 2007-08 on 29/10/2007 admitting total income at Rs. 174,16,01,840/-. The assessment was completed u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’) on 29/12/2009 determining the income at Rs. 178,20,37,090/-. Later, the case was reopened u/s 147 of the Act and reassessment was completed determining the income at Rs. 194,58,81,644/- by making the following disallowances: i) QIB issue expenses Rs. 1,65,53,975/- ii) Debenture issue expenses Rs. 1,84,69,940/- iii) Debenture issue expenses Rs. 2,07,30,684/- iv) Depreciation claimed on machinery Rs. 6,04,02,542/-
2 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd. v) Depreciation on Aircraft Rs. 7,77,04,217
Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and furnished its submissions as under: “A. The assessing officer is not justified in initiation of re- assessment proceedings on the basis of mere change of opinion and on the facts and in the circumstances of the case and in law such proceedings ought to be declared null and void ab-initio.
it was submitted by the Assessee that all the relevant information was specifically required to be furnished during original assessment proceedings by the then assessing officer and accordingly the original assessment was completed after due examination of such issues. It was explained that the fact, that the above claims were duly examined during the original assessment proceedings, was evident from the questionnaires issued during such proceedings and the original assessment order itself. Thus, the assessee humbly submitted that it was a case, wherein the earlier AO had taken a considered view after specifically examining the relevant details/evidences furnished by the appellant on the issues in question, and as such the reopening proceedings were bad in law. To put it differently, it is contended that the reassessment proceedings were legally unsustainable., in view of the fact there was no failure, whatsoever, on the part of the appellant in furnishing the material particulars during the original assessment proceedings and the impugned reopening was solely based on mere change of opinion.
Following case laws for reopening the assessment which are squarely covered by the facts and circumstances as such the reopening proceedings were bad in law.
A notice issued under s. 148 of the Act should be a reasoned one. In the absence of any new material, the Assessing Officer is not empowered to reopen an assessment irrespective of the fact whether it is made u/s. 143(1) or section 143(3) of the Act. Bapalal & Co. v/s. Jt. CIT - (2007) 2891TR 37 (Mad.)
I) Re-opening of assessment on the same ground in the absence of any tangible material was based on mere change of opinion and therefore is not sustainable. Aventis Pharma Ltd. vs. Astt. CIT (2010) 323 ITR 570 (Born) (5.77), ICICI Prudential Life Insurance Co. Ltd. (2010) 3251TR 471 . (Born)
3 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd. ii) Mere change of opinion of Assessing Officer is not ground for reassessment ICICI Prudential Life Insurance Co. Ltd. (2010) 3251TR 471 (80m)
Issues raised now, the information and all facts were furnished during the assessment proceedings and hence we strongly object to the reopening of the assessment since no fresh facts have come to light and most of these facts were considered either in earlier years assessments or were submitted during the course of assessment proceedings as such the reopening proceedings were bad in law. To put it differently; it is contended that the re-assessment proceedings were legally unsustainable.”
After considering the submissions of the assessee, the CIT(A) observed that the A.O. was not justified in reopening the assessment u/s 147 of the Act for the following reasons: “i) In the original assessment u/s 143(3) dated 29/12/2009, the AO after examining the information/details filed by the assessee, did not make any of the five additions as made by the AO in the reassessment proceedings, as mentioned para 2 of this order.
ii) Subsequently, the proceedings u/s 147 were purely initiated only due to mere change of opinion on the same set of facts, evidences and circumstances of the case already considered by the AO in the original assessment. There were no new facts/fresh material brought on record by the AO subsequent to the original assessment for reason to believe that income chargeable to tax has escaped assessment, other than information submitted by the assessee during the original assessment proceedings.
(iii) As the assessee has disclosed fully and truly all the material facts and evidences necessary for the assessment as required by the A.O, the precondition for invoking the proviso to Section 147 was not satisfied and therefore the AO acted without jurisdiction in issuing a notice u/s 148.
(iv) As per the provisions of Section 147, the A.O. also cannot reopen an assessment, which was completed u/s 143 (3) of the Act, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return u/s 139 or in response to a notice issued under sub-section (1) of Section 142 or Section 148 to disclose fully and truly all material facts necessary for his assessment, for that assessment year.
4 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd.
In this case, there is no failure or omission on the part of the appellant to disclose fully and truly all material facts necessary for the assessment or to make a return as mentioned above.
4.1 Further, the CIT(A) after discussing the issue with various cases, on which reliance placed by the assessee, observed as under:
“But, in the case of the assessee, the original assessment u/s 143 (3) was passed by the AO after examining all the details / information filed by the assessee and the A.O. reopened the assessment u/s 147 on the same set of facts / information available with the AO and not on the basis of any fresh material, which cannot be sustained.
4.10. On the basis of the reasons for reopening the assessment by the AO, and on the submissions made by the appellant, it is apparent that the Revenue could not contend that the reassessment is framed on submission of new material or information. There is no charge that income chargeable to tax has escaped from assessment, by reason of the failure on the part of the assessee to disclose fully and truly material facts necessary for assessment. The AO has not established any new facts during the course of assessment proceeding u/s 147 to substantiate, that the Assessee has not furnished full particulars during the course of the earlier assessment proceeding u/s 143(3), all the material facts were available at the time of making original assessment. Therefore the AO's reasons for reopening of the assessment u/s 147 cannot be accepted.”
4.2 The CIT(A), even, decided the appeal on merits and deleted all the disallowances made by the AO by holding that notwithstanding the cancellation of reassessment proceedings u/s 147 of the Act as not sustainable and the consequent disallowances being treated as infructuous, the disallowances made by the AO are adjudicated on merits.
Aggrieved by the order of CIT(A), the revenue is in appeal before us raising the following grounds of appeal: I. The order of the CIT(A) is erroneous in law and on facts of the case.
5 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd. 2. " On the facts and in the circumstances of the case and in law, the CIT(A) erred in holding that the AO was not justified in reopening the assessment u/s 147". (Additional ground of appeal authorized as per authorization of Pro CIT-4, Hyderabad u/s 253(2) of l.T. Act- dated 4.11.2016.) 3. The C1T(A) erred in allowing expenditure on Disallowance of QIB issue expenses Rs. 1,65,53,975 before verifying the fact the Bangalore edition was not released in A Y 200708.
The CIT(A) erred in allowing the Disallowance of Debenture Issue Expenses, Rs. 1,84,69,940 placing reliance on factually different issue for the A Y 2008-09.
The CIT(A) ought to have appreciated the disallowance of Debenture Issue Expenses Rs. 2,07,30,684/- in view of the deduction u/s. 36(1)(iii) is inapplicable.
The CIT(A) ought to have appreciated the disallowance of depreciation on machinery and aircraft not put in use.
The CIT(A) ought to have afforded opportunity to the Assessing Officer as per the provisions of Section 46 of the IT Act.
The CIT(A) ought to have appreciated the disallowance of addition depreciation as the same can be claimed by the manufacturing oriented business.
Any other ground(s) that may be urged at the time of hearing.”
Considered the rival submissions and perused the material on record. The categorical finding of the CIT(A) is that the original assessment u/s 143 (3) was passed by the AO after examining all the details / information filed by the assessee and the A.O. reopened the assessment u/s 147 on the same set of facts / information available with the AO and not on the basis of any fresh material, which cannot be sustained. He further held that the AO has not established any new facts during the course of assessment proceeding u/s 147 to substantiate, that the Assessee has not furnished full particulars during the course of the earlier assessment proceeding u/s 143(3), all
6 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd. the material facts were available at the time of making original assessment. Therefore the AO's reasons for reopening of the assessment u/s 147 cannot be accepted. Therefore, in our considered view, since the assessee has disclosed fully and truly all the material facts and evidences necessary for the assessment as required by the AO, the precondition for invoking the proviso to section 147 was not satisfied. Further, as submitted by ld. AR, the assessment was reopened after 4 years and the AO has not recorded, in the reasons to reopen the assessment, that there is failure on the part of the assessee to furnish all the information on record. On verification of the satisfaction recorded by AO for reopening the assessment, we observed that there is no such satisfaction recorded by AO, even though, the reopening of assessment was done beyond four years. Therefore, AO has not established that there is a failure on the part of the assessee and reopened the assessment without any cogent material necessary to reopen the assessment. Therefore, we find no infirmity in the order of CIT(A) in cancelling the reassessment made by the AO u/s 147 and, accordingly, upholding the same, we dismiss the grounds raised by the revenue.
6.1 As the reassessment itself is cancelled, the disallowances made in such assessment become infructuous. Therefore, we are not going to decide the same on merits, as the CIT(A) dismissed all the disallowances on merits also, which we uphold.
In the result, appeal of the revenue is dismissed. Pronounced in the open Court on 11th July, 2018.
Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER
Hyderabad, Dated: 11th July, 2018 kv
7 ITA No. 1722/Hyd/14 Deccan Chronicle Holdings Ltd., Hyd. Copy to:-
1) DCIT, Circle – 16(2), 2nd Floor, B Block, IT Towers, AC Guards, Masab Tank, Hyderabad. 2) M/s Deccan Chronicle Holding Ltd., 6-3-898, Raj Bhavan Road, Somajiguda, Hyderabad. 3) CIT(A) – V, Hyderabad. 4) CIT - IV, Hyd. 5) The Departmental Representative, I.T.A.T., Hyderabad. 6) Guard File