Loading judgment…
Facts
The Revenue appealed the CIT(A)'s order deleting an addition of Rs. 4,69,85,106/- made under Section 69A. The assessee cross-objected, challenging the validity of the reassessment proceedings initiated for AY 2013-14.
Held
The Tribunal held that the reassessment proceedings initiated by the Assessing Officer were bad in law as they were based on a change of opinion without any new material. The Tribunal relied on the Supreme Court's decision in Kelvinator of India Ltd.
Key Issues
Whether the reassessment proceedings were validly initiated and whether the addition made under Section 69A was justified.
Sections Cited
69A, 148, 148A, 149, 144B, 151A, 143(3), 147, 271(1)(c)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “F” MUMBAI
Before: SHRI OM PRAKASH KANT & SHRI SUNIL KUMAR SINGH
The captioned appeal by the Revenue appeal by the Revenue and cross cross-objection by the assessee are directed against order dated 23.02.2024 passed by the assessee are directed against order dated 23.02.2024 passed by the assessee are directed against order dated 23.02.2024 passed by the Ld. Commissioner of Income the Ld. Commissioner of Income-tax (Appeals) – National Faceless National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year Appeal Centre, Delhi [in short ‘the Ld. CIT(A)’] for assessment year 2013-14.
The grounds raised by The grounds raised by the Revenue are reproduced as under: the Revenue are reproduced as under:
a) On the facts and circumstances of the case and in law, Ld. CIT(A) a) On the facts and circumstances of the case and in law, Ld. CIT(A) a) On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs.4,69,85,106/ has erred in deleting the addition of Rs.4,69,85,106/-u/s. 69A of the u/s. 69A of the Act without appreciating the fact the Remittance receipts submitted by Act without appreciating the fact the Remittance receipts submitted by Act without appreciating the fact the Remittance receipts submitted by the assessee before the Ld. CIT(A) are without digital footprints and see before the Ld. CIT(A) are without digital footprints and see before the Ld. CIT(A) are without digital footprints and signature and hence the authenticity of the said receipts needs signature and hence the authenticity of the said receipts needs signature and hence the authenticity of the said receipts needs verification from the bank. verification from the bank. (b) On the facts and circumstances of the case and in law, Ld. CIT(A) (b) On the facts and circumstances of the case and in law, Ld. CIT(A) (b) On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the additio has erred in deleting the addition of Rs. 4,69,85,106/- u/s. 69A of the u/s. 69A of the Act without verification of remittance receipts from the banks and Act without verification of remittance receipts from the banks and Act without verification of remittance receipts from the banks and granting proper opportunity to the AO for verification of the additional granting proper opportunity to the AO for verification of the additional granting proper opportunity to the AO for verification of the additional evidences submitted by the assessee before the Ld. CIT(A). evidences submitted by the assessee before the Ld. CIT(A). (c) On the facts a (c) On the facts and circumstances of the case and in law, Ld. CII(A) nd circumstances of the case and in law, Ld. CII(A) has erred in deleting the addition of Rs. 4,69,85,106/ has erred in deleting the addition of Rs. 4,69,85,106/- u/s. 69A of the u/s. 69A of the Act without appreciating the fact that the assessee has not submitted Act without appreciating the fact that the assessee has not submitted Act without appreciating the fact that the assessee has not submitted the confirmation from the third party i.e. M/s. Manjhi Ltd nei the confirmation from the third party i.e. M/s. Manjhi Ltd nei the confirmation from the third party i.e. M/s. Manjhi Ltd neither during the assessment proceedings nor before the Ld. CIT(A). during the assessment proceedings nor before the Ld. CIT(A). during the assessment proceedings nor before the Ld. CIT(A). (d) On the facts and circumstances of the case and in law, Ld. CIT(A) (d) On the facts and circumstances of the case and in law, Ld. CIT(A) (d) On the facts and circumstances of the case and in law, Ld. CIT(A) has erred in deleting the addition of Rs.4,69,85,106/ has erred in deleting the addition of Rs.4,69,85,106/- u/s. 69A of the u/s. 69A of the Act without appreciating the fact that the MoU su Act without appreciating the fact that the MoU submitted by the bmitted by the assessee is silent about the amount of Rs.4,69,85,106/ assessee is silent about the amount of Rs.4,69,85,106/- given to the given to the assessee for production of the film 'Love Legend' rather the MOU assessee for production of the film 'Love Legend' rather the MOU assessee for production of the film 'Love Legend' rather the MOU mentions production of a film by name Irani Production No. 1 and only mentions production of a film by name Irani Production No. 1 and only mentions production of a film by name Irani Production No. 1 and only speaks of Rs. 15,00,000/- as per clause 7 being given on lump se 7 being given on lump sum compensation for services rendered for the project. compensation for services rendered for the project.
2.1 The grounds raised by the assessee in cross The grounds raised by the assessee in cross The grounds raised by the assessee in cross-objection are reproduced as under: reproduced as under:
Reopening is bad in law: Reopening is bad in law:
1.
The Ld. Assessing Officer erred in reopening the assessment for 1. The Ld. Assessing Officer erred in reopening the assessment for 1. The Ld. Assessing Officer erred in reopening the assessment for A.Y. 2013-2014 vide notice u/s 148 dated 25/07/2022 without 2014 vide notice u/s 148 dated 25/07/2022 without 2014 vide notice u/s 148 dated 25/07/2022 without appreciating that reopening was time barred as the last day for appreciating that reopening was time barred as the last day for appreciating that reopening was time barred as the last day for issuance of Notice u/s 148 was issuance of Notice u/s 148 was 31.03.2020 for AY 2013- -14 and by virtue of first proviso to Section 149 of UP the Act, the reopening virtue of first proviso to Section 149 of UP the Act, the reopening virtue of first proviso to Section 149 of UP the Act, the reopening is time barred.
2. The Id JAO had no jurisdiction to issue show cause notice u/s 2. The Id JAO had no jurisdiction to issue show cause notice u/s 2. The Id JAO had no jurisdiction to issue show cause notice u/s 148A(b) 148A(b) dated dated 30/05/2022, 30/05/2022, pass pass order order u/s u/s 148A(d) 148A(d) dated dated 20/07/2022 and issue notice u/s 148 20/07/2022 and issue notice u/s 148 dated 25/07/2022 as after dated 25/07/2022 as after 29/03/2022 same can be done in a faceless manner 29/03/2022 same can be done in a faceless manner as provid as provided u/s 144B i.e. by Faceless Assessing Officer in view of 144B i.e. by Faceless Assessing Officer in view of NOTIFICATION S.O. NOTIFICATION S.O. 1466(E) [NO. 18/2022/F. NO. 370142/16/2022 1466(E) [NO. 18/2022/F. NO. 370142/16/2022-TPL(PARTI], DATED TPL(PARTI], DATED 29-03-2022 2022 titled titled "E-ASSESSMENT "E ASSESSMENT OF OF INCOME INCOME ESCAPING ESCAPING ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act. ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act. ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act. Thus, Notice u/s 148 dated 25/07/2022 is bad in law. s 148 dated 25/07/2022 is bad in law.
3. The Ld Assessing Officer erred in reopening of Assessment due to 3. The Ld Assessing Officer erred in reopening of Assessment due to 3. The Ld Assessing Officer erred in reopening of Assessment due to change of opinion without appreciating that original assessment u/s change of opinion without appreciating that original assessment u/s change of opinion without appreciating that original assessment u/s 143(3) of the Act for A. Y. 2013 143(3) of the Act for A. Y. 2013 - 14 was already passed on 14 was already passed on 29.03.2016. Further du 29.03.2016. Further during the assessment proceeding complete the assessment proceeding complete scrutiny of all points raised were well explained and including the scrutiny of all points raised were well explained and including the scrutiny of all points raised were well explained and including the ones raised in reopening. ones raised in reopening.
4. The reopening is bad in law as it is based on audit objection of 4. The reopening is bad in law as it is based on audit objection of 4. The reopening is bad in law as it is based on audit objection of internal auditor . auditor .
5. Without prejudice section 69A of 5. Without prejudice section 69A of the Act is not applicable to facts of the Act is not applicable to facts of present case.
3. Briefly stated facts of the case are that Briefly stated facts of the case are that during relevant during relevant year, the assessee was in the profession of the assessee was in the profession of ‘lending on hire camera for lending on hire camera for film production and works and works’ on a contract basis. The assessee filed he assessee filed return of income for the year under consideration for the year under consideration for the year under consideration on 19.09.2013 declaring total income at Rs.13,75,510/ declaring total income at Rs.13,75,510/-. The scrutiny scrutiny assessment of return filed was completed on 29.03.2016 of return filed was completed on 29.03.2016 u/s 143(3) of the u/s 143(3) of the Income-tax Act, 1961 (in short ‘the Act’). Subsequently, the tax Act, 1961 (in short ‘the Act’). Subsequently, the tax Act, 1961 (in short ‘the Act’). Subsequently, the Assessing Officer reopened the assessment by way of issue of notice ing Officer reopened the assessment by way of issue of notice ing Officer reopened the assessment by way of issue of notice u/s 148 of the Act on 25.07.2022. During re-assessment u/s 148 of the Act on 25.07.2022. During u/s 148 of the Act on 25.07.2022. During proceedings, the Assessing Officer proceedings, the Assessing Officer observed that assessee received that assessee received an advance of Rs.4,69,85,106/ an advance of Rs.4,69,85,106/- from ‘M/s Manjhi Ltd. Manjhi Ltd. Mauritius’ and Rs.7,00,000/- from others. The Assessing Officer noted that from others. The Assessing Officer noted that from others. The Assessing Officer noted that only part of compliance was mad only part of compliance was made of the notices issued by him and e of the notices issued by him and failed to explain source of the advance along with supporting failed to explain source of the advance along with supporting failed to explain source of the advance along with supporting documentary evidence documentary evidences. The Assessing Officer noted that assesse . The Assessing Officer noted that assessee had not furnished any confirmation from M/s Manjhi Ltd., had not furnished any confirmation from M/s Manjhi Ltd., had not furnished any confirmation from M/s Manjhi Ltd., Mauritius for advance advance of Rs.4,69,85,106/-and accordingly , made and accordingly , made addition to the income addition to the income of the assessee. The relevant show cause The relevant show cause issued during assessment proceedings during assessment proceedings by the Assessing Officer is by the Assessing Officer is reproduced as under: roduced as under:
“4.2.2 Summary of information/evidence collected which “4.2.2 Summary of information/evidence collected which “4.2.2 Summary of information/evidence collected which proposed to be used against it ( attach documents if proposed to be used against it ( attach documents if proposed to be used against it ( attach documents if required) In the instant case, the assessee has not furnished any In the instant case, the assessee has not furnished any In the instant case, the assessee has not furnished any confirmation from M/s. Manjhi Ltd, Maritius for payment of Rs. confirmation from M/s. Manjhi Ltd, Maritius for payment of Rs. confirmation from M/s. Manjhi Ltd, Maritius for payment of Rs. 4,69,85,106/- to him for completion of the film " Love Legend". The to him for completion of the film " Love Legend". The to him for completion of the film " Love Legend". The MOU filed is completely silent about the amount given to you for MOU filed is completely silent about the amount given to you for MOU filed is completely silent about the amount given to you for production of the film 'Love Legend. The MOU mentions production production of the film 'Love Legend. The MOU mentions production production of the film 'Love Legend. The MOU mentions production of a film by name Irani Production No. 1 and only speaks of of a film by name Irani Production No. 1 and only speaks of of a film by name Irani Production No. 1 and only speaks of Rs. 15,00,000/- as per clause 7 being given on lump sum as per clause 7 being given on lump sum as per clause 7 being given on lump sum compensation for services rendered for the project. Further there compensation for services rendered for the project. Further there compensation for services rendered for the project. Further there is no mention of the amount given to him for production of the said is no mention of the amount given to him for production of the said is no mention of the amount given to him for production of the said movie. Whereas the assessee has shown an amount of Rs. movie. Whereas the assessee has shown an amount of Rs. movie. Whereas the assessee has shown an amount of Rs. 4,69,85,106/- as advance received, for which the assessee has as advance received, for which the assessee has not furnished any documentary evidences and confirmation from not furnished any documentary evidences and confirmation from not furnished any documentary evidences and confirmation from M/s. Manjhi Ltd, Maritius. In addition to this, it is also noticed M/s. Manjhi Ltd, Maritius. In addition to this, it is also noticed M/s. Manjhi Ltd, Maritius. In addition to this, it is also noticed that an amount of Rs. 7,00,000/ that an amount of Rs. 7,00,000/- has been shown as advances has been shown as advances which is not ex which is not explained by the assessee 4.2.3 Variation proposed on the basis of inference drawn : 4.2.3 Variation proposed on the basis of inference drawn : 4.2.3 Variation proposed on the basis of inference drawn :
Under these circumstances, Under these circumstances, the assessee was show caused vide show caused vide show cause notice dated show cause notice dated 25/04/2023 as to why the amount of 25/04/2023 as to why the amount of Rs. 4,76,85,106/ Rs. 4,76,85,106/- ( Rs. 4,69,85,106/- plus Rs. 7,00,000/- -) shall not be treated as unexplained money u/s 69A of the I.T. Act, not be treated as unexplained money u/s 69A of the I.T. Act, not be treated as unexplained money u/s 69A of the I.T. Act, 1961 and added to total income for the A.Y. 2013 1961 and added to total income for the A.Y. 2013-14. Assessee 14. Assessee was also show caused as to why the penalty proceedings u/s was also show caused as to why the penalty proceedings u/s was also show caused as to why the penalty proceedings u/s 271(1)(c) of the Act shall not be initiated for the same. 271(1)(c) of the Act shall not be initiated for the same.”
On further appeal, the assessee challenged validity of the On further appeal, the assessee challenged validity of the On further appeal, the assessee challenged validity of the reassessment proceedings as well as addition on merit. The Ld. reassessment proceedings as well as addition on merit. The Ld. reassessment proceedings as well as addition on merit. The Ld. CIT(A) called for a remand report remand report from the Assessing Officer for the Assessing Officer for confirming the claim of assessee claim of assessee that advance from M/s Manjhi Ltd. that advance from M/s Manjhi Ltd. Mauritius was received by the assessee in earlier years. But no was received by the assessee in earlier years. But no was received by the assessee in earlier years. But no such remand report was submitted by the Assessing Officer despite such remand report was submitted by the Assessing Officer such remand report was submitted by the Assessing Officer several reminders , therefore, the Ld. CIT(A) after verifying therefore, the Ld. CIT(A) after verifying therefore, the Ld. CIT(A) after verifying from the records available before him available before him, held that advance of Rs.4,69,85,106 of Rs.4,69,85,106 from ‘Manjhi Lltd’, was was received by the assessee in earlier years in earlier years and hence not taxable in year under consideration, hence not taxable in year under consideration, thus, thus, deleted the addition addition of of Rs.4,69,85,106/ Rs.4,69,85,106/-, but sustained sustained addition addition of of Rs.7,00,000/- in relation to other parties in relation to other parties. The relevant finding of relevant finding of the Ld. CIT(A) is reproduced as under: the Ld. CIT(A) is reproduced as under:
5.4 The above submissions have been considered. Following facts have 5.4 The above submissions have been considered. Following facts have 5.4 The above submissions have been considered. Following facts have been observed: been observed:- i Original assessment order was completed u/s 143(3) of the IT Act at the i Original assessment order was completed u/s 143(3) of the IT Act at the i Original assessment order was completed u/s 143(3) of the IT Act at the returned income of Rs. 13,75,510/ returned income of Rs. 13,75,510/- in which all issues were considered n which all issues were considered by the AO. ii) Addition of Rs.4,76,85, 106/ ii) Addition of Rs.4,76,85, 106/- u/s 69A has been made by the AO in the u/s 69A has been made by the AO in the reassessment order u/s 147/144 which was the advance of Rs. reassessment order u/s 147/144 which was the advance of Rs. reassessment order u/s 147/144 which was the advance of Rs. 4,69,85,106/- from Manjhi Ltd. and Rs. 7,00,000/ from Manjhi Ltd. and Rs. 7,00,000/- from others disclosed from others disclosed in the Balance Sheet (as admitted by the AO in the assessment order). the Balance Sheet (as admitted by the AO in the assessment order). the Balance Sheet (as admitted by the AO in the assessment order). iii) It is evident that the AO initiated reassessment proceeding on the iii) It is evident that the AO initiated reassessment proceeding on the iii) It is evident that the AO initiated reassessment proceeding on the facts available on record and considered by the AO during the original facts available on record and considered by the AO during the original facts available on record and considered by the AO during the original assessment proceeding. assessment proceeding. iv) The Appellant has s iv) The Appellant has submitted in his above submissions that advance of ubmitted in his above submissions that advance of Rs.4,69,85, 106/ Rs.4,69,85, 106/- from M/s Manjhi Ltd, Mauritius were received during from M/s Manjhi Ltd, Mauritius were received during the the financial financial years years 2009-10 2009 (Rs.2,54,62,753/-) ) and and 2010-11 2010 (Rs.2,15,22,353/ (Rs.2,15,22,353/-) and it does not pertain to the AY 2013 ) and it does not pertain to the AY 2013-14. The Appellant had enclosed Remittance advices from his bank confirming the ad enclosed Remittance advices from his bank confirming the ad enclosed Remittance advices from his bank confirming the remittances received along with party name and source country. The remittances received along with party name and source country. The remittances received along with party name and source country. The Appellant has further submitted that this fact was submitted during the Appellant has further submitted that this fact was submitted during the Appellant has further submitted that this fact was submitted during the original appellant assessment proceeding. original appellant assessment proceeding. v) As mentioned v) As mentioned above, the AO was given an opportunity to rebut the above, the AO was given an opportunity to rebut the above submission and a Remand Report was sought on 15/12/2023 above submission and a Remand Report was sought on 15/12/2023 above submission and a Remand Report was sought on 15/12/2023 and subsequently a reminder was issued on 18/01/2024. However, the and subsequently a reminder was issued on 18/01/2024. However, the and subsequently a reminder was issued on 18/01/2024. However, the AO failed to submit the Remand Report till the date of filing of this orde AO failed to submit the Remand Report till the date of filing of this orde AO failed to submit the Remand Report till the date of filing of this order. vi) It is evident from the above facts that the advance of Rs.4,69,85, vi) It is evident from the above facts that the advance of Rs.4,69,85, vi) It is evident from the above facts that the advance of Rs.4,69,85, 106/- from Manjhi Ltd. was not' received in the AY 2013 from Manjhi Ltd. was not' received in the AY 2013-14. 14. vii) The above advance was disclosed in the Balance Sheet as mentioned vii) The above advance was disclosed in the Balance Sheet as mentioned vii) The above advance was disclosed in the Balance Sheet as mentioned by the AO himself in the assessment order hence it by the AO himself in the assessment order hence it is not a case of any is not a case of any investment/advance not being recorded in the books of account which is investment/advance not being recorded in the books of account which is investment/advance not being recorded in the books of account which is a prerequisite for making addition u/s 69A. a prerequisite for making addition u/s 69A. viii) The Appellant has failed to submit any cogent explanation in respect viii) The Appellant has failed to submit any cogent explanation in respect viii) The Appellant has failed to submit any cogent explanation in respect of addition of Rs.7,00,000/ of addition of Rs.7,00,000/- made u/s 69A. 5.5 In view of the above discussion, the addition of Rs. 4,69,85,106/ 5 In view of the above discussion, the addition of Rs. 4,69,85,106/- 5 In view of the above discussion, the addition of Rs. 4,69,85,106/ made u/s 69A on account of advances received from Manjhi Ltd. is made u/s 69A on account of advances received from Manjhi Ltd. is made u/s 69A on account of advances received from Manjhi Ltd. is deleted. However, the addition made u/s 69A on account of deleted. However, the addition made u/s 69A on account of deleted. However, the addition made u/s 69A on account of Miscellaneous advances of Rs.7,00,000/ Miscellaneous advances of Rs.7,00,000/- received during the AY 2 received during the AY 2013- 14 is confirmed. 14 is confirmed.
Before us, while addressing the cross Before us, while addressing the cross-objections, objections, the Ld. Counsel for the assessee challenged for the assessee challenged validity of validity of reopening the on three grounds, firstly, that assessment year under assessment, on three assessment year under consideration is 2013 consideration is 2013-14 and notice u/s 148 of the Act has been 14 and notice u/s 148 of the Act has been issued on 25.07.2022 following the procedure provided u/s 148A of issued on 25.07.2022 following the procedure provided u/s 148A of issued on 25.07.2022 following the procedure provided u/s 148A of the Act. Under the provisions of section 148A of the Act, notice u/s the Act. Under the provisions of section 148A of the Act, notice u/s the Act. Under the provisions of section 148A of the Act, notice u/s 148A(b) of the Act was issued on 30 148A(b) of the Act was issued on 30.05.2022 and than than an order u/s 148A(d) of the Act was 148A(d) of the Act was passed on 28.07.2022 and thereafter on 28.07.2022 and thereafter the AO has issued the notice u/s 148 of the Act on 25.07.2022. The Ld. has issued the notice u/s 148 of the Act on 25.07.2022. The Ld. has issued the notice u/s 148 of the Act on 25.07.2022. The Ld. counsel for the assessee has challenged that notice u/s 148 of the counsel for the assessee has challenged that notice u/s 148 of the counsel for the assessee has challenged that notice u/s 148 of the Act for assessment year 2013 Act for assessment year 2013-14 could have been issued up to have been issued up to 31.03.2020 i.e. up to the period of 6 years and therefore, notice 31.03.2020 i.e. up to the period of 6 years and therefore, notice 31.03.2020 i.e. up to the period of 6 years and therefore, notice issued beyond that date is time barred by virtue of proviso to issued beyond that date is time barred by virtue of proviso to issued beyond that date is time barred by virtue of proviso to section 149 of the Act. Secondly, submitted that the jurisdiction section 149 of the Act. that the jurisdiction Assessing Office (JAO) (JAO) was not authorised to issue notice u/s 148 ot authorised to issue notice u/s 148 of the Act in view of of the Act in view of judgment dated 03/05/2024 03/05/2024 of Hon’ble Bombay High Court in the case of Hexaware T Court in the case of Hexaware Technologies ltd echnologies ltd Vs ACIT in Writ Petition No.1778 of 2023 Writ Petition No.1778 of 2023. He submitted that after He submitted that after 29.03.2022 any notice u/s 148 of 29.03.2022 any notice u/s 148 of the Act could have been issued the Act could have been issued only in the faceless manner as provided u/s 144B i.e. by Faceless only in the faceless manner as provided u/s 144B i.e. only in the faceless manner as provided u/s 144B i.e. Assessing Officer, in view of the Notification n view of the Notification S.O. 1466(E) [NO. S.O. 1466(E) [NO. 18/2022/F. NO. 370142/16/2022 /F. NO. 370142/16/2022-TPL(PART1], DATED 29 ], DATED 29-03- 2022 titled "E-ASSESSMENT ASSESSMENT ASSESSMENT OF OF OF INCOME INCOME INCOME ESCA ESCAPING ESCA ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act. ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act ASSESSMENT SCHEME, 2022" passed u/s 151A of the Act Thirdly, the Ld. counsel submitted that in regular assessment , the Ld. counsel submitted that in regular assessment , the Ld. counsel submitted that in regular assessment proceedings completed on 29.03.2016 proceedings completed on 29.03.2016, all the issues in respect to all the issues in respect to the advance received were duly explained and therefore, reopening the advance received were duly explained and therefore, reopening the advance received were duly explained and therefore, reopening of the assessment on the same material, without there being any he assessment on the same material, without there being any he assessment on the same material, without there being any external or internal information for reopening, it was merely on the external or internal information for reopening, it was merely on the external or internal information for reopening, it was merely on the basis of ‘change of the opinion ‘change of the opinion,’ which is not permitted in law ’ which is not permitted in law therefore, the reassessment proceedings are invalid. therefore, the reassessment proceedings are invalid. therefore, the reassessment proceedings are invalid.
5.1 The Ld. Departmental Representative on the other hand, Ld. Departmental Representative on the other hand, Ld. Departmental Representative on the other hand, supported the action of the lower authorities and submitted that supported the action of the lower authorities and submitted that supported the action of the lower authorities and submitted that reassessment has been validly completed by the Assessing Officer. reassessment has been validly completed by the Assessing Officer. reassessment has been validly completed by the Assessing Officer.
We have heard rival submission of the parties and perused the 6. We have heard rival submission of the parties and perused the We have heard rival submission of the parties and perused the relevant material on record. The Ld. Assessing Officer has referred t material on record. The Ld. Assessing Officer has referred t material on record. The Ld. Assessing Officer has referred to the basis of reasons recorded in first para of his order, which is to the basis of reasons recorded in first para of his order to the basis of reasons recorded in first para of his order reproduced as under: reproduced as under:
1. Fact of the case in brief: “1. Fact of the case in brief: In the instant case, the assessee has filed his return of income on In the instant case, the assessee has filed his return of income on In the instant case, the assessee has filed his return of income on 19/09/2013 declaring total income of Rs. 13,75,510/ 19/09/2013 declaring total income of Rs. 13,75,510/- for the A.Y. 2013 for the A.Y. 2013- 14. Thereafter, scrutiny assessment u/s. 143(3) was completed on 14. Thereafter, scrutiny assessment u/s. 143(3) was completed on 14. Thereafter, scrutiny assessment u/s. 143(3) was completed on 29.03.2016 determining total income at Rs. 14,44,920/ 29.03.2016 determining total income at Rs. 14,44,920/-. On perusal of . On perusal of information available with the office it is observ information available with the office it is observed that the assessee was ed that the assessee was in the profession of lending on hire camera for Film production and works in the profession of lending on hire camera for Film production and works in the profession of lending on hire camera for Film production and works on a contract basis as per the Audit report filed u/s. CD. The 26AS shows on a contract basis as per the Audit report filed u/s. CD. The 26AS shows on a contract basis as per the Audit report filed u/s. CD. The 26AS shows receipts on rental basis received by him whereby TDS is deducted u/s. receipts on rental basis received by him whereby TDS is deducted u/s. receipts on rental basis received by him whereby TDS is deducted u/s. 1941. During the year, the assessee has received Rs. 41,29,709/ the year, the assessee has received Rs. 41,29,709/ the year, the assessee has received Rs. 41,29,709/- by way of contract from various parfies. Further, on going through the Balance of contract from various parfies. Further, on going through the Balance of contract from various parfies. Further, on going through the Balance Sheet of you for the year ending 31.03.2013, it is observed that the Sheet of you for the year ending 31.03.2013, it is observed that the Sheet of you for the year ending 31.03.2013, it is observed that the assessee has received an advance of Rs. 4,69,85,106/ assessee has received an advance of Rs. 4,69,85,106/- fr from Manjhi Ltd. and Rs. 7,00,000/ and Rs. 7,00,000/- from others. The case has been selected for scrutiny from others. The case has been selected for scrutiny proceeding. Accordingly, notice u/s 148 of the I,T.act, 1961 was issued on proceeding. Accordingly, notice u/s 148 of the I,T.act, 1961 was issued on proceeding. Accordingly, notice u/s 148 of the I,T.act, 1961 was issued on 25/07/2022 and served upon the assessee through electronic mode. 25/07/2022 and served upon the assessee through electronic mode. 25/07/2022 and served upon the assessee through electronic mode.
6.1 On perusal of the above, On perusal of the above, it is evident that the Assessing Officer it is evident that the Assessing Officer has revisited the audit reports u/s 3CD and Form No. 26AS filed, has revisited the audit reports u/s 3CD and Form No. 26AS has revisited the audit reports u/s 3CD and Form No. 26AS which were already available with which were already available with him as part of assessment assessment record. There is no reference or any information received either from the There is no reference or any information received either from the There is no reference or any information received either from the external sources or from the internal sources s or from the internal sources, which could be basis which could be basis for reasons to believe that income escaped assessment. In absence for reasons to believe that income escaped assessment. In absence for reasons to believe that income escaped assessment. In absence of any such information of any such information, reopening is a kind of review reopening is a kind of review by the Assessing Officer of the assessment already done by of the assessment already done by of the assessment already done by his predecessor, based on the change of the opinion by the Assessing on the change of the opinion by the Assessing on the change of the opinion by the Assessing Officer, which is not permitted in law. The Hon’ble Supreme Court which is not permitted in law. The Hon’ble Supreme Court which is not permitted in law. The Hon’ble Supreme Court in the case of Kelvinator in the case of Kelvinator of India ltd in CIVIL APPEAL NOS.2009 CIVIL APPEAL NOS.2009- 2011 OF 2003 reported in 2011 OF 2003 reported in 2010 (2) SCC 723 held that the Assessing Officer cannot reopen the assessment from the same set Assessing Officer cannot reopen the assessment from the same set Assessing Officer cannot reopen the assessment from the same set of the material which are available before him during the original of the material which are available before him during the original of the material which are available before him during the original assessment proceedings and reopening amounts to change of the assessment proceedings and reopening amounts to change of the assessment proceedings and reopening amounts to change of the opinion. The relevant finding of Hon’ble Supreme The relevant finding of Hon’ble Supreme The relevant finding of Hon’ble Supreme Court is reproduced as under: reproduced as under:
“On going through the changes, quoted above, made to On going through the changes, quoted above, made to On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re- the Act, we find that, prior to Direct Tax Laws (Amendment) Act, 1987, re opening could be done under above two conditions and fulfillment of the opening could be done under above two conditions and fulfillment of the said conditions alone conferred jurisdiction on the Assessing Officer to said conditions alone conferred jurisdiction on the Assessing Officer to said conditions alone conferred jurisdiction on the Assessing Officer to make a back assessment, but in section 147 of the Act [with effect from make a back assessment, but in of the Act [with effect from 1st April, 1989], they are given a go ], they are given a go-by and only one condition has by and only one condition has remained, viz., that where the Assessing Officer has reason to believe remained, viz., that where the Assessing Officer has reason to believe remained, viz., that where the Assessing Officer has reason to believe that income has escaped assessment, confers jurisdiction to re that income has escaped assessment, confers jurisdiction to re- open the that income has escaped assessment, confers jurisdiction to re assessment. Therefore, post-1st April, 1989, power to re assessment. Therefore, post 1st April, 1989, power to re-open is much wider. However, one needs to give a schematic interpretation to the wider. However, one needs to give a schematic interpretation to the wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, words "reason to believe" failing which, we are afraid, Section words "reason to believe" failing which, we are afraid, 147 would give arbitrary powers to the Assessing Officer to r would give arbitrary powers to the Assessing Officer to r would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of "mere change of opinion", which cannot be assessments on the basis of "mere change of opinion", which cannot be 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 per se reason to re open. We must also keep in mind the conceptual difference between power to review and power to re difference between power to review and power to re-assess. The difference between power to review and power to re Assessing Officer has no power to review; he has the power to re Assessing Officer has no power to review; he has the power to re-assess. But re-assessment has to be based on fulfillment of certain pre assessment has to be based on fulfillment of certain pre-condition assessment has to be based on fulfillment of certain pre and if the concept of "change of opinion" is removed, as contended on and if the concept of "change of opinion" is removed, as contended on 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, 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 ake place. One must treat the concept of "change of ake place. One must treat the concept of "change of opinion" as an in-built test to check abuse of power by the Assessing built test to check abuse of power by the Assessing built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re Officer. Hence, after 1st April, 1989, Assessing Officer has power to re- Officer. Hence, after 1st April, 1989, Assessing Officer has power to re open, provided there is "tangible material" to come to the co open, provided there is "tangible material" to come to the conclusion that open, provided there is "tangible material" to come to the co there is escapement of income from assessment. Reasons must have a there is escapement of income from assessment. Reasons must have a there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the live link with the formation of the belief. Our view gets support from the live link with the formation of the belief. Our view gets support from the changes made to Section 147 Section 147 of the Act, as quoted hereinabove. Under d hereinabove. Under the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the Direct Tax Laws (Amendment) Act, 1987, Parliament not only deleted the words "reason to believe" but also inserted the word "opinion" the words "reason to believe" but also inserted the word "opinion" the words "reason to believe" but also inserted the word "opinion" in Section 147 of the Act. However, on receip of the Act. However, on receipt of representations from t of representations from the Companies against omission of the words "reason to believe", the Companies against omission of the words "reason to believe", the Companies against omission of the words "reason to believe", Parliament re-introduced the said expression and deleted the word introduced the said expression and deleted the word introduced the said expression and deleted the word "opinion" on the ground that it would vest arbitrary powers in the "opinion" on the ground that it would vest arbitrary powers in the "opinion" on the ground that it would vest arbitrary powers in the Assessing Officer. We quote hereinbelow the relevant portion of Circular Assessing Officer. We quote here inbelow the relevant portion of Circular No.549 dated 31st October, 1989, which reads as follows: No.549 dated 31st October, 1989, which reads as follows: No.549 dated 31st October, 1989, which reads as follows:
"7.2 Amendment made by the Amending Act, 1989, to reintroduce the "7.2 Amendment made by the Amending Act, 1989, to reintroduce the 7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression expression `reason `reason to to believe' believe' in Section in Section 147.--A 147 number of representations were received against the omission of the words representations were received against the omission of the words representations were received against the omission of the words `reason to believe' from `reason to believe' from Section 147 and their substitution by the and their substitution by the `opinion' of the Assessing Officer. It was poin `opinion' of the Assessing Officer. It was pointed out that the meaning ted out that the meaning of the expression, `reason to believe' had been explained in a number of the expression, `reason to believe' had been explained in a number of the expression, `reason to believe' had been explained in a number of court rulings in the past and was well settled and its omission of court rulings in the past and was well settled and its omission of court rulings in the past and was well settled and its omission from section 147 section 147 would give arbitrary powers to the Assessing Officer rs to the Assessing Officer to reopen past assessments on mere change of opinion. To allay these to reopen past assessments on mere change of opinion. To allay these to reopen past assessments on mere change of opinion. To allay these fears, the Amending Act, 1989, has again amended section 147 to fears, the Amending Act, 1989, has again amended fears, the Amending Act, 1989, has again amended reintroduce the expression `has reason to b reintroduce the expression `has reason to believe' in place of the words elieve' in place of the words `for reasons to be recorded by him in writing, is of the opinion'. Other `for reasons to be recorded by him in writing, is of the opinion'. Other `for reasons to be recorded by him in writing, is of the opinion'. Other provisions of the new provisions of the new section 147, however, remain the same.
, however, remain the same." For the afore-stated reasons, we see no stated reasons, we see no merit in these civil appeals filed by merit in these civil appeals filed by the Department, hence, dismissed with no order as to costs. the Department, hence, dismissed with no order as to costs.” the Department, hence, dismissed with no order as to costs.
6.2 In view of the above, In view of the above, following the Hon’ble Supreme Court following the Hon’ble Supreme Court (supra), the re-assessment proceedings in the case of the assessee assessment proceedings in the case of the assessee assessment proceedings in the case of the assessee cannot be sustained. Accord cannot be sustained. Accordingly, we allow the ground No. 3 of the ingly, we allow the ground No. 3 of the appeal of the assessee and reassessment proceedings are quashed. appeal of the assessee and reassessment proceedings are quashed. appeal of the assessee and reassessment proceedings are quashed. Since, we have already quashed the reassessment proceedings, the Since, we have already quashed the reassessment proceedings, the Since, we have already quashed the reassessment proceedings, the additional ground No additional ground Nos. 1 and 2 of the appeal raised by the assessee . 1 and 2 of the appeal raised by the assessee are not required to be adjudicated and same are left upon. o be adjudicated and same are left upon. o be adjudicated and same are left upon.
6.3 As far as grounds raised by the Revenue As far as grounds raised by the Revenue on merit are As far as grounds raised by the Revenue we have already quashed the reassessment concerned, since we have already quashed the reassessment we have already quashed the reassessment proceedings, same are merely rendered academic and therefore, we same are merely rendered academic and therefore, we same are merely rendered academic and therefore, we are not adjudicating upon. are not adjudicating upon.
In the result, the cross the result, the cross-objections of the assessee are allowed of the assessee are allowed whereas appeal of the Revenue is dismissed. whereas appeal of the Revenue is dismissed.