DCIT, CIR-5(1), KOLKATA, KOLKATA vs. M/S COAL INDIA LTD., KOLKATA

First we take up the appeal of the Revenue for A.Y. 2006-07 being ITA No. 1346/KOL/2015, wherein the following grounds are raised by the Revenue:-

The assessee in the present case is a Public Sector Enterprises, which is engaged in the activities of mining and extraction of coal as also in managing the coal mining industry in the nationalized sector. The return of income for the year under consideration was filed by it on 14.11.2006 declaring total income of Rs.244,19,98,000/-. In the assessment originally completed under section 143(3) vide an order dated 11.12.2008, the total income of the assessee was determined by the Assessing Officer at Rs.605,55,75,000/- after making certain additions/disallowances. Thereafter the Assessing Officer found on further verification of records that there was escapement of income of the assessee from the assessment for the year under consideration. He accordingly reopened the assessment after recording the reasons and issued a notice under section 148 to the assessee on 05.08.2011. Meanwhile the appeal filed by the assessee against the order originally passed by the Assessing Officer under section 143(3) came to be disposed of by the ld. CIT(Appeals) vide his order dated 21.10.2009 and effect to the said order was given by the Assessing Officer vide order dated 30.04.2009. Thereafter the reassessment was completed by the Assessing Officer under section 147/143(3) vide an order dated 25.03.2013, wherein an addition of Rs.200,30,56,000/- was made by the Assessing Officer to the total income of the assessee by treating the interest income received on deposits with scheduled banks as “income from other sources” instead of business income thereby disallowing the claim of the

Against the order passed by the Assessing Officer under section 147/143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the addition of Rs.200,30,56,000/- made by the Assessing Officer therein and after considering the submission made by the assessee as well as the material available on record, the ld. CIT(Appeals) found merit in the contention raised on behalf of the assessee that the re- opening of assessment originally completed under section 143(3) beyond a period of four years without there being any failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment was bad-in-law by virtue of the 1st proviso to section 147. He further held that initiation of re-assessment proceedings under section 147/148 was also bad-in-law as the prior sanction of the concerned authority as required under the proviso to sub-section (1) of section 151 was not obtained. He accordingly annulled the assessment made by the Assessing Officer under section 147/143(3) vide his appellate order dated 15.09.2015. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

The ld. D.R. relied on the reasons recorded by the Assessing Officer in support of the revenue’s case that the re-opening of assessment was in accordance with law and the ld. CIT(Appeals) was not justified in annulling the same. The ld. Counsel for the assessee, on the other hand, contended that the assessment originally completed by the Assessing Officer under section 143(3) was reopened by the Assessing Officer after the expiry of four years from the end of the relevant assessment year without pointing out that the income of the assessee had escaped assessment as a result of the failure of the asessee to furnish fully and truly all material facts necessary for his assessment. He contended that

We have considered the rival submissions and also perused the relevant material available on reocrd. It is observed that the assessment originally completed under section 143(3) for A.Y. 2006-07 was re- opened by the Assessing Officer on 05.08.2011 after recording the following reasons:- “On further verification or records, it is revealed that business income of the assessee included interest of Rs.20,030.56 lakhs. As per income tax, interest on fixed deposit accounts with schedule Bank was on income under the head “income from other sources” with which B/F business loss was not allowable to be set off u/s 72(1). This mistake in computation of income led to a under assessment of income”.

As per the proviso to section 147, where an assessment has been made for the relevant assessment year under section 143(3), no action shall be taken by the AO under section 147 after expiry of four years from the end of the relevant assessment year unless any income chargeable to tax has escaped assessment for such assessment year inter alia by reason of the failure on the part of the assessee to disclose fully and truly all the material facts necessary for his assessment for that assessment year. In the present case, the assessment originally completed under section 143(3) for AY. 2007-08 was reopened by the AO on 05.08.2011 i.e. after expiry of four years from the end of the assessment year under consideration and it was therefore incumbent upon the AO as per the first proviso to section 147 to point out that any income chargeable to tax had escaped assessment by reason of the failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. A

Now we shall take up the appeal of the Revenue for A.Y. 2007-08 being ITA No. 1347/KOL/2015, wherein the following grounds are raised:- (1) That the ld. CIT(A) has erred in annulling the order u/s 147 by treating the same being ‘mere change of opinion’ ignoring the decision of the Full Bench of Delhi High Court in the case of CIT –vs.- Usha International Limited.

In the assessment originally completed under section 143(3) vide an order dated 14.12.2009, the total income of the assessee was determined by the Assessing Officer at Rs.553,79,34,548/- as against the total income of Rs.205,15,88,000/- declared by the assessee in its return of income. The assessee preferred an appeal against the order of the Assessing Officer passed under section 143(3) before the ld. CIT(Appeals) and vide his appellate order dated 06.06.2010, the ld. CIT(Appeals) disposed of the same. The appeal effect to the said order was given to the assessee on 02.08.2010 determining the total income of the assessee at

Against the order passed by the Assessing Officer under section 147/143(3), an appeal was preferred by the assessee before the ld. CIT(Appeals) challenging the validity of the said assessment as well as disputing the addition made by the Assessing Officer therein and after considering the submissions made by the assessee as well as the material available on record, the ld. CIT(Appeals) found merit in the contention raised on behalf of the assessee that the re-opening of assessment made by the Assessing Officer on the basis of same material, which was already available on record was bad-in-law as the same was based merely on a change of opinion. He accordingly annulled the assessment made by the Assessing Officer under section 147/143(3) of the Act vide his appellate order dated 15.09.2015. Aggrieved by the order of the ld. CIT(Appeals), the Revenue has preferred this appeal before the Tribunal.

We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the assessment originally completed under section 143(3) was reopened by the Assessing Officer after recording the following reasons:- 6

A perusal of the reasons recorded by the Assessing Officer also makes it abundantly clear that the assessment originally completed by him under section 143(3) was reopened by the Assessing Officer on the basis of the same material as was available before him while completing the original assessment under section 143(3) and there was no new tangible material that had come to his possession on the basis of which the assessment was reopened by him. In the case of CIT vs Kelvinator of India Ltd. 320 ITR 561, Hon'ble Supreme Court has held that after the amendment made with effect from 1st April, 1989 in the relevant provisions, the Assessing Officer has to have reason to believe that income has escaped assessment, but this does not imply that the Assessing Officer can reopen an assessment on the mere change of opinion. Explaining further, Hon'ble Apex Court has observed the concept of 'change of opinion' must be treated as in-built test to check the abuse of power and hence the Assessing Officer, even after the amendment made in the relevant provisions from April 1, 1989, has the power to reopen an assessment provided that there is tangible material to come to the conclusion that there was escapement of income from assessment.

In the result, both the appeals of the Revenue are dismissed. Order pronounced in the open Court on December 07, 2018. Sd/- Sd/- (A.T. Varkey) (P.M. Jagtap) Judicial Member Vice-President (KZ) Kolkata, the 7th day of December, 2018 Copies to : (1) Deputy Commissioner of Income Tax, Circle-5(1), Kolkata, Aayakar Bhawan, P-7, Chowringhee Square, 3 rd Floor Kolkata-700 069 (2) M/s. Coal India Limited, Premises No. 04, MAR, Plot No. AF-III, Action Area-1A, Kolkata-700 156 (3) Commissioner of Income Tax (Appeals)-8, Kolkata, (4) Commissioner of Income Tax- , (5) The Departmental Representative (6) Guard File By order