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IN THE HIGH COURT OF DELHI AT NEW DELHI
H ITA Nos.1391/2009, 1362/2009 & 1130/2009
Date of Decision: 09.03.2011
Commissioner of Income Tax
.... APPELLANT
Through: MS.Prem Lata Bansal, Sr. Advocate with Mr.Deepak Anand, Advocates
Versus
The Simbhaoli Sugar Mills Limited
.... RESPONDENT
Through: Mr.Ajay Vohra, Advocate
CORAM:
HON'BLE MR. JUSTICE A.K. SIKRI HON'BLE MR. JUSTICE M.L. MEHTA
- 1. Whether reporters of Local papers be allowed to see the judgment? - 2. To be referred to the reporter or not? - 3. Whether the judgment should be reported in the Digest?
M.L. MEHTA, J. (ORAL)
The aforesaid three appeals are being disposed of by this common order as these relate to same assessee, for the same assessment year and have common questions of law.
capital expenditure and not revenue expenditure this was also added to the income of the assess filed appeal against this order before the Income of the Income of the assess filed appeal against this order before the Income of the assess filed appeal against this order before the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of the Income of Income of the Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of Income of
- "4. We have carefully considered the riv gone through the records. In our vie for re-assessment u/s 148 cannot be than one reason. First of all, the or were completed u/s 143(3) of the Act return filed and the re-assessment initiated beyond the expiry of 4 years AY in question. In respect of each of t subject matter of re-assessment assessee has made full and complete AO framed opinion of those issues. E objection, there appears to be no mate issuarice of the notice u/s 147 of the circumstances, we accept the content that re-assessment proceedings are change of opinion and not on any vali now sell settled that an opinion of an of the I.T. Deptt. on a point of law can an information within the meaning u Having regard to these discussions, assessment proceedings framed u/s 14 have cancelled the reassessment jurisdiction, we do not find it necess merits of the case. Accordingly, appea - 3. Against this order, the Revenue has come No.1391/2009. - In the appellate penalty proceedings, CIT(A) visits. 15.12.2006 following the order of quantities.
cancelled the penalty with reference to the first Rs.3,89,33,833/- in respect of excise duty but spenalty with reference to the second addit Rs.1,99,96,463/- in respect of interest on capital acquiring assets for business purpose. The disposing of the two appeals, recorded as under:
"..... After considering all the facts and cirthe case, as discussed above, in this callelement of mensrea pertaining to either of furnishing of inaccurate. It is only the continuous the Department pertaining to treatment payable, it has been looked at different assessment order. As such, penalty levied made of Rs.3,89,33,833/- on account of excise duty payable is cancelled."
"..... The facts on record establish that the furnished in accurate particulars to Rs.1,99,96,463/- by claiming the same expenditure. As such it is held that the fin levying penalty u/s 271(1)(c) on the Rs.1,99,96,463/- by holding that the furnished in accurate particulars thereof levied u/s 271(1)(c) on this account is confi
Both Revenue and the assessee filed cross-appearance.
Tribunal against the aforesaid order dated 15.1
CIT(A). Both the cross-appeals were disposed or impugned order also dated 07.11.2008 by the Tribunal against the appeal of the assessee.
2011:DHC:11462-DB
i.e., the penalty in relation to cancelled. The appeal of the Reven relating to cancellation of penalty v. Rs. 3,89,33,833/- in respect of exci
- "3. The issue with regard to t borrowed for acquiring purposes, although, the C respect of the addition, contest before the ITAT. T the copy of the order of the allowability of the interes the AY 2001-02 has be assessee. This clearly sho respect of which a pena 271(1)(c) of the Act, or Therefore, in our conside levied even in respect 271(1)(c). We, therefore, the CIT(A)." - 6. From the above chronological narral recorded by the authorities below, issue of notice under Section 14 assessment year under consider internal audit report. In the Reason the AO, he had mentioned about the audit report. Based on this audit report be made by the AO under the nare escape of income in the assessment.
to be held that an order that has been passed purportedly without application of mind, would itself confer jurisdiction upon the AO to re-open the proceedings without anything further, the same would amount to giving premium to an authority exercising a quasi-judicial function to take benefit of its own wrong. The Full Bench decision also makes it clear that Section 147 of the Act does not postulate conferment of power upon the AO to initiate reassessment proceedings upon a mere change of opinion. It is obvious that the Full Bench Decision holds the field.
It may also be noted that appeal arising out of the aforesaid Full Bench decision of this Court has also been dismissed by the Supreme Court in the case of Commissioner of Income Tax V. Kelvinator of India Ltd., (2010) 228 CTR (SC) 488. The Supreme Court, after observing the changes and amendments brought about in Section 147, from time to time, held as under:
"However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the AO to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to re-assess. The AO has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre-condition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the
concept of "change of opinion" as an abuse of power by the AO.
- In another case of our High Court entitled
Income Tax v. Eicher Ltd., (2007) 294 ITE
making reference to different judgments of v. \nit was observed that if the entire material h
the assessee before the Assessing Officer at
original assessment was made and the Assess
his mind to that material and accepted the
the assessee, then merely because he did not
assessment order, that by itself would not give
conclude that income has escaped assessment
the assessment needed to be reopened. On the
Assessing Officer did not apply his mind and
there is no reason why the assessee should
the consequences of that lapse. - 10. In the case of Commissioner of Income Batra Bhatta Company, (2008) 174 Tax another Division Bench of our High Court held - "7. We feel that the observations of the saforesaid decision clearly apply to Merely because the Assessing Office required 'much deeper scrutiny, is no invoking Section 147. It is not belief
2011:DHC:11462-DB
condition for invoking Section 147 of the said belief founded on reasons. The expression used 147 is – "If the Assessing Officer has reason and not – "If the Assessing Officer believes". be some basis upon which the belief can be broad matter whether the belief is ultimately provided by the some material upon a belief can be founded. In the present Commissioner Income-tax (Appeals) as we tribunal have found as a fact that there was upon which the Assessing Officer could have belief that income had escaped assessment."
- 11. There is also catena of judgments to the effect that in reassessment proceedings on the basis of audit report is bad in law. A reference in this regard can be judgment of our High Court titled Transworld Intelling. v. Joint Commissioner of Income Tax, (2005) 242 and also judgments of Supreme Court in Intelligence Eastern Newspaper Society v. Commissioner of Tax, New Delhi, (1979) 119 ITR 996 and Commissioner Tax v. Lucas T.V.S. Ltd., (2001) 249 ITR 306 - 12. The sum and substance of discussion is that real proceedings under Section 147 read with 148 of the be initiated merely based on the audit report. A principally intended for the purpose of satisfying the aregard to sufficiency of rules and procedures prescrib purpose of securing an effective check on the area.
collection and proper allocation of revenue. As per para (3) of the circular issued by the Board on July 28, 1960, also an audit department should not in any way substitute itself for the revenue authorities in the performance of their statutory duties.
- 13. In view of our foregoing discussion, we are in complete agreement with the conclusion arrived at by the Tribunal in the impugned orders. - 14. As we do not find any infirmity in the aforesaid impugned orders, no substantial question of law arises. Consequently, all the appeals are dismissed.
M.L.MEHTA (JUDGE)
Á.K. SIKRI (JUDGE)
MARCH 09, 2011 'Dev'