ITO 12 (2)(2), MUMBAI vs. M/S E WASTE RECYCLING PVT LTD., MUMBAI

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ITA 7017/MUM/2019Status: DisposedITAT Mumbai09 July 2021AY 2013-143 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that reopening the assessment under Section 147 based on a mere change of opinion on the head of income, when the original assessment under Section 143(3) had accepted the assessee's claim, is not valid. The CIT(A)'s decision to annul the assessment was upheld.

What were the facts?

The assessee company, engaged in plastic waste recycling, declared interest income under 'income from business and profession'. The Assessing Officer (AO) reopened the assessment to assess this interest under 'income from other sources' based on a change of opinion.

What were the issues?

Whether reopening of assessment under Section 147 is permissible on a mere change of opinion by the Assessing Officer regarding the head of income, when the original assessment was completed under Section 143(3) accepting the assessee's classification.

Which sections of the Income-tax Act were involved?

Section 147,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES “SMC”, MUMBAI

Before: SHRI SAKTIJIT DEY (JM)

For Respondent: Shri Saurabh Kumar Rai (DR)
Hearing: 27/05/2021Pronounced: 09/07/2021

This is an appeal by the revenue against order dated 23.08.2019 of learned Commissioner of Income Tax (Appeals)-20, Mumbai for the assessment year 2013-14. 2. When the appeal was called for hearing no one appeared on behalf of the assessee to represent the case. However, considering the nature of dispute, I proceed to dispose of the appeal after hearing the learned Departmental Representative and with the assistance of materials on record.

3.

Briefly the facts are, the assessee is a resident company stated to be engaged in recycling of plastic waste. For the assessment year under dispute, assessee filed its return of income on 19.03.2013 declaring total income of Rs. 27,09,340/-. Assessment in case of the assessee was originally completed under section 143(3) of the Income Tax Act, 1961 vide order dated 02.03.2016 accepting the income returned. Subsequently, being of the view that interest Assessment Year: 2013-14 income Rs. 42,33,817/- shown by the assessee under the had income from business and profession has to be assesses under the head income from other sources, the Assessing Officer (AO) reopened the assessment under section 147 of the Act. While participating in the assessment proceedings, though, the assessee made detailed submissions justifying its claim that interest income has to be assessed under the head income from business and profession, however, the AO did not found merit in such submissions. Thus, ultimately he completed the assessment under section 143(3) r.w.s. 147 of the Act assessin the interest income under the head from other sources. Against the assessment order so passed, assessee preferred appeal before learned Commissioner (Appeals), inter alia, challenging the validity of reopening of the assessment under section 147 of the Act. Learned Commissioner (Appeals) having found merit in the submissions of the assessee that the reopening of assessment was on a mere change of opinion, held the reopening of assessment under section 147 of the Act as bad in law and accordingly, annulled the assessment order passed.

4.

The learned Departmental Representative submitted, the AO has given clear-cut finding that no business activity was carried on by the assessee. Therefore, in absence of business activity and there being no nexus between the interest income and business of the assessee, the interest income was rightly assessed under the head income from other sources. He submitted, in the original assessment proceedings the AO had not examined this aspect. Therefore, there is no change of opinion.

5.

I have considered the submissions of learned Departmental Representative and perused the material on record. Undisputedly, the return of income filed by the assessee was subjected to scrutiny and the AO originally completed the assessment under section 143(3) of the Act. In the return of income the assessee had shown the interest income under the head income from business and profession. It is further observed, to justify its claim the assessee, in course of re-assessment proceedings, had furnished detailed submissions stating that as per the memorandum and article of association, Assessment Year: 2013-14 the assessee can also undertake the business of lending/advancing money or giving credit to businesses, companies, corporations etc. to earn interest. Thus, when in the original assessment, the AO after verifying the return of income filed by the assessee has accepted assessee’s claim of interest income shown under the head income from business and profession, the AO cannot reopen the assessment under section 147 of the Act, merely for changing the head of income from business and profession to other sources. This, in my view, does not come in the realm of “income escaping assessment”. Moreover, such reopening amounts to review of the earlier order passed by the AO on a mere change of opinion. Therefore, I do not find any infirmity in the decision of learned Commissioner (Appeals). Accordingly, grounds are dismissed.

6.

In the result, appeal is dismissed. Order pronounced in the open court on 9th July, 2021. (SAKTIJIT DEY) JUDICIAL MEMBER म ुंबई Mumbai; दिन ुंक Dated: 09/07/2021 Alindra, PS आदेश प्रतितिति अग्रेतिि/Copy of the Order forwarded to : 1. अपील र्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आय क्त(अपील) / The CIT(A)- आयकर आय क्त / CIT 4. 5. दिभ गीय प्रदिदनदि, आयकर अपीलीय अदिकरण, म ुंबई / DR, ITAT, Mumbai 6. ग र्ड फ ईल / Guard file.

आदेशानुसार/ BY ORDER, सत्य दपि प्रदि //// उि/सहायक िंजीकार (Dy./Asstt.

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