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Income Tax Appellate Tribunal, KOLKATA ‘B’ BENCH, KOLKATA
Before: SRI MANISH BORAD & SRI SONJOY SARMA
order
: June 22nd, 2022 ORDER
Per Manish Borad, Accountant Member:
This appeal filed by the assessee pertaining to the Assessment Year (in short “AY”) 2009-10 is directed against the order passed u/s 250 of the Income Tax Act, 1961 (in short the “Act”) by ld. Commissioner of Income-tax (Appeals)-3, Kolkata [in short ld. “CIT(A)”] dated 26.03.2019 arising out of the assessment order framed u/s 143(3)/147 of the Act dated 29.06.2016.
The assessee is in appeal before the Tribunal raising the following grounds:
I.T.A. No.: 1193/Kol/2019 Assessment Year: 2009-10 M/s. Germinda Pvt. Ltd. “1. That in the facts and circumstances of the case the ld. C.I.T.(A) erred in confirming the action of Ld. Assessing Officer in issuing notice u/s 148 of the I.T.Act, 1961.
2. That in the facts and circumstances of the case, the Id. C.I.T.(A) erred in confirming the jurisdiction of the Ld. Assessing Officer in re- opening the proceedings u/s 147 of the I.T.Act, 1961.
3. That in the facts and circumstances of the case, the Id. C.I.T.(A) erred in in confirming the addition made by the Ld. I.T.O for cessation of liability to the extent of Rs.50,46,367/-.
4. That in the facts and circumstances of the case, the Ld. C.I.T.(A) erred in given finding about interest paid.
5. That in the facts and circumstances of the case, the appellant craves leave to add, alter, modify and/or submit further or more ground(s) of appeal either before or at any time during the hearing of the appeal.”
Through this appeal, the assessee has challenged the legality of the re-assessment proceedings u/s 147 of the Act and on merit has challenged the addition for cessation of liability at Rs. 50,46,367/-. Ld. Counsel for the assessee vehemently argued referring to the paper book filed dated 18.04.2022 containing 33 pages and ld. D/R argued supporting the orders of both the lower authorities.
We have heard rival contentions and perused the records placed before us.
We will first take up the legal issue challenging the re- assessment proceedings raised by the assessee in ground nos. 1 & 2. We observe that the assessee is a private limited company and filed its return of income for AY 2009-10 on 30.09.2009. After around six years a notice u/s 148 of the Act was issued on 28.03.2016. The reasons were not provided to the assessee. The I.T.A. No.: 1193/Kol/2019 Assessment Year: 2009-10 M/s. Germinda Pvt. Ltd. assessee gave reply on 19.04.2016 stating that the original return filed should be treated as a return filed u/s 148 of the Act. The reasons recorded were said to be given to the assessee during the course of assessment proceedings. The only reason as appearing from the assessment record is that the assessee deducted Rs. 50,46,367/- in Schedule BP of the ITR under head “income/receipt credited to profit & loss account considered under other heads of income”. But under “any other heads of income” this was not offered to tax. Thus, Rs. 50,46,367/- escaped assessment. The above piece of information has been taken out by the ld. Assessing Officer (in short ld. “AO”) from the income tax return filed by the assessee. There is no new material with the ld. AO to show that the assessee had not disclosed fully and truly material facts necessary for the assessment. It is not in dispute that the re- opening has been done after expiry of four years. Amendment u/s 154 of the Act could be made only withing a period of four years from the end of the financial year in which the order sought to be amended was passed. In the assessee’s case the return was processed u/s 143(1)a of the Act. The Revenue authorities had a period of four years i.e. up to 31.03.2014 to re-open the proceedings so as to examine the issue of alleged amount not offered to tax but it was not done.
In the course of re-assessment proceedings also it was submitted by the assessee that due to clerical mistake the said amount was entered in wrong column of Schedule BP of the ITR and the said amount is write off of capital liability which is not chargeable to tax.
I.T.A. No.: 1193/Kol/2019 Assessment Year: 2009-10 M/s. Germinda Pvt. Ltd.
All these facts remain unrebutted and we, therefore, find that the re-opening of the assessee’s case beyond four year from the end of the AY 2009-10 is not in accordance with law as there is no new material with the Revenue authorities which the assessee has not disclosed and the alleged re-opening is merely based on the information contained in the income tax return itself.
Hon’ble Gujarat High Court in the case of Ami Ashis Shah vs. ITO reported in [2021] 440 ITR 417 (Guj.) observed that the re- opening of assessment u/s 147 of the Act is held to be unsustainable since the original ITR was processed u/s 143(1)a of the Act and no new tangible material was found and notice was given on the ground that the assessee did not offer to tax certain income.
The Hon’ble Supreme Court in the case of Commissioner of Income Tax v. Kelvinator India Limited reported in 320 ITR 561 SC. wherein, it has been held that, one needs to give a schematic interpretation to the words “reason to believe”, failing which, Section 147 of the Act would give arbitrary powers to the Assessing Officer to reopen the assessment on the basis of mere “change of opinion", which cannot be per se reason to reopen. CIT v. Kelvinator of India (2010) 320 ITR 561 (SC) is one of the crucial judgement as regards to the Change of opinion wherein it is held that: Reappraisal of same facts/documents/information means change of opinion. AO has no power to review his order. Order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to Page 4 of 6 I.T.A. No.: 1193/Kol/2019 Assessment Year: 2009-10 M/s. Germinda Pvt. Ltd. giving premium to an authority exercising quasi-judicial function to take benefit of its own wrong.
We, therefore, under these given facts and circumstances and respectfully following the judicial pronouncements referred above, are of the considered view that the alleged re-assessment proceedings are bad in law and liable to be quashed. We accordingly hold so and allow the legal grounds raised
in ground nos. 1 & 2 of the assessee’s appeal.
11. As far as the ground nos. 3 & 4 are concerned, the same are on merit and since we have quashed the re-assessment proceedings, dealing with the merits of the case, will be merely academic in nature. Therefore, we dismiss these grounds as infructuous.
12. Ground no. 5 is general in nature which needs no adjudication.
13. In the result, the appeal filed by the assessee is allowed. Kolkata, the 22nd June, 2022. Sd/- Sd/- [Sonjoy Sarma] [Manish Borad] Judicial Member Accountant Member Dated: 22.06.2022 Bidhan (P.S.)
I.T.A. No.: 1193/Kol/2019 Assessment Year: 2009-10 M/s. Germinda Pvt. Ltd. Copy of the order forwarded to:
1. 1. M/s. Germinda Pvt. Ltd., 37, Shakespeare Sarani, Kolkata- 700 157. 2. ITO, Ward-7(1), Kolkata. 3. CIT(A)-3, Kolkata. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata.