14645/2021 Of M/S Messina Beej Private Limited v. The Principle Chief Commissioner, Income Tax, Central Revenue Building Virchand Patel Path, Patna

IN THE HIGH COURT OF JUDICATURE AT PATNACivil Writ Jurisdiction Case No.14645 of 2021 ====================================================== M/S Messina Beej Private Limited, A company incorporated under IndianCompanies Act, 1956 having Registered office at Tajpur Road, District-Samastipur, Bihar- 848101 through its Managing Director, Anil Kumar MisraGender- Male S/O- Late Data Ram Misra, Tajpur Road, District- Samastipur,Bihar- 848101 ... ... Petitioner/s Versus 1.The Principle Chief Commissioner, Income Tax, Central Revenue BuildingVirchand Patel Path, Patna.Virchand Patel Path, Patna. 2.The Principal Commissioner/Commissioner-2, Income Tax, Central RevenueBuilding, Veerchand Patel Path, Patna.Building, Veerchand Patel Path, Patna. 3.The Joint Commissioner of Income Tax, Range-2, Lok Nayak Bhavan,Dakbanglow, Patna.Dakbanglow, Patna. 4.The Income Tax Officer, Ward 2(1), Patna. ... ... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No. 4093 of 2020 ====================================================== M/s Messina Beej Private Limited, Tajpur Road, Samastipur, Bihar-848101through its director Anil Kumar Mishra, aged about 72 years, Gender-Male,Son of Data Ram Mishra, Resident of E-24, Marg one, P.O.- Greater Kailash-2, Grater-Kailash, P.S.- Neharu Marg, South Delhi, Delhi-110048 ... ... Petitioner/s Versus 1.The Principal Chief Commissioner Income Tax, Central Revenue Building,Virchand Patel Path, PatnaVirchand Patel Path, Patna 2.The Principal Commissioner/Commissioner-2 Income Tax, Central RevenueBuilding, Virchand Patel Path, PatnaBuilding, Virchand Patel Path, Patna 3.The Joint Commissioner of Income Tax, Range-2, Lok Nayak Bhavan,Dakbanglow, PatnaDakbanglow, Patna 4.The Income Tax Officer, Ward 2(1), Patna ... ... Respondent/s ====================================================== Appearance :(In Civil Writ Jurisdiction Case No. 14645 of 2021)For the Petitioner/s: Mr. Krishna Mohan Mishra, AdvocateFor the Respondent/s: Mrs. Archana Sinha, Sr. SC. Income Tax Dett.(In Civil Writ Jurisdiction Case No. 4093 of 2020)For the Petitioner/s: Mr. Krishna Mohan Mishra, AdvocateFor the Respondent/s: Mrs. Archana Sinha, Sr. SC. Income Tax Dett. ====================================================== CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHYORAL JUDGMENT(Per: HONOURABLE THE CHIEF JUSTICE) Date : 01-08-2023 Thewrit petitions are concerned with theassessment years 2012-13 and 2013-14, and they challenge there-assessment proceedings taken under Section 147 and 148 ofthe Income Tax Act-1961 (for brevity the Act). The return ofincome filed for the respective years are produced by theidentical petitioneras Annexure-P/2 in C.W.J.C. No.4093 of2020 and C.W.J.C. No.14645 of 2021, concerned with theassessment years 2012-13 and 2013-14. 2. For the assessment year 2012-13, which is thesubject matter of C.W.J.C. No. 4093 of 2020, a notice wasissued dated 29.03.2019 under Section 148 of the Act. ByAnnexure-P/4, the petitioner sought for the reasons whichprompted the Assessing Officer to issue the notice, relying onthe judgment of the Hon’ble Supreme Court in GKNDriveshafts (India) Ltd. V. I.T.O (2002) 259 ITR 19. ByAnnexure- P/5, the petitioner was informed the reasons toentertain the belief of escaped assessment which also spokeabout the necessary approval having been obtained from thePrincipal Commissioner of Income-Tax-1, Patna. The reasons 2. For the assessment year 2012-13, which is thesubject matter of C.W.J.C. No. 4093 of 2020, a notice wasissued dated 29.03.2019 under Section 148 of the Act. ByAnnexure-P/4, the petitioner sought for the reasons whichprompted the Assessing Officer to issue the notice, relying onthe judgment of the Hon’ble Supreme Court in GKNDriveshafts (India) Ltd. V. I.T.O (2002) 259 ITR 19. ByAnnexure- P/5, the petitioner was informed the reasons toentertain the belief of escaped assessment which also spokeabout the necessary approval having been obtained from thePrincipal Commissioner of Income-Tax-1, Patna. The reasons for the belief entertained by the Assessing Officer were that theinformation available on record shows the assessee companyhaving taken fresh unsecured loan of Rs. 10,82,563/- andreturned an agricultural income of Rs. 18,96,114/-. It is statedthat information was called for under Section 133 (6) of the Actwith prior approval of the Principal CIT. The information calledfor, were the copy of the balance sheet for the assessment year2012-13, the full details of the person/persons from whom theunsecured loan was availed, the relationship with such personsand the details of lands from which agricultural income wasearned. The assessee failed to furnish the requisite informationand hence, the unsecured loan and the agricultural income wereproposed to be treated as having escaped assessment. 3. The assessee filed a petition under Section 144Abefore the Joint Commissioner of Income Tax, by Annexure-P/6, which was partly allowed, but the addition of agriculturalincome, upheld. The Assessing Officer passed an assessmentorder as Annexure-P/1, in accordance with Annexure-P/6; whichis impugned in C.W.J.C. No. 4093/2020. 4. Similarly in C.W.J.C. No. 14645/2021 for theassessment year 2013-14 an identical addition was made ofagricultural income coming to Rs. 5,68,302/-, by assessment order produced along with I.A 1/2022 as Annexure P/1 dated26.03.2022. 5. The learned counsel for the assessee claimed that the assesse had been deriving agricultural income and returningit right from the assessment year 1998-1999 and hence there isno question of any further proof being produced of the landsfrom which such income was earned. 6. The learned counsel also relied on the decisionof the Division Bench of this Court in Ravindra Kumar (HUF)v. CIT; (2019) 419 ITR 0308. It was held, on identicalcircumstances, that re-assessment cannot be made without anytangible material. The mere reason of the default of the assesseeto produce evidence in support of agricultural income returnedand accepted earlier, cannot be the reason for a proceedingunder Sections 147 & 148 of the Act. 7. We do not think that, the mere fact of theagricultural income having been accepted in the earlierassessment years would restrict the Assessing Officer fromcalling for details regarding the agricultural income derived, in asubsequent assessment year; since every assessment year givesrise to a separate cause of action. However, we are definite inour minds that the said enquiry has to be conducted at the initial stage and does not fall for consideration under Section 148,since it would lead to a mere change of opinion. 8. The challenge is confined to the reassessment 7. We do not think that, the mere fact of theagricultural income having been accepted in the earlierassessment years would restrict the Assessing Officer fromcalling for details regarding the agricultural income derived, in asubsequent assessment year; since every assessment year givesrise to a separate cause of action. However, we are definite inour minds that the said enquiry has to be conducted at the initial stage and does not fall for consideration under Section 148,since it would lead to a mere change of opinion. 8. The challenge is confined to the reassessment initiated for the purpose of disallowing the exemption claimedof agricultural income, treating it as escaped income. In thepresent cases, in both the assessment years, the petitioner wascalled upon to provide information about the agricultural landfrom which income was derived under Section 133(6) of theAct, after the assessment was completed on the basis of thereturn filed. The Assessing Officer had at the first instanceaccepted the income returned by the assessee and allowed theexemption with respect to the agricultural income. In the re-assessment proceedings, the Assessing Officer had again calledfor the details regarding the lands from which such agriculturalincome was derived. The absence of any details having beensupplied to the Assessing Officer would not result in a tangiblematerial being available with the Assessing Officer for thepurpose of issuing a notice under Sections 147 & 148 of the Act. 9. CIT v. Kelvinator of India Ltd., reported in(2010) 2 SCC 723 considered the effect of the amendmentbrought about to Section 147 by Amendment Act 1987, and theAmendment Act, 1989. Section 147 as it existed before the amendments enabled the income tax officer to proceed underSection 147, inter-alia, if there is reason to believe that, inconsequence of information in his possession income chargeableto tax has escaped assessment; even if there is no omission orfailure on the part of the assessee to disclose fully and truly allmaterial facts necessary for assessment in a given year. By theDirect Tax Laws (Amendment) Act, 1987, Section 147 stoodamended and the Assessing Officer was enabled to proceed, forreasons to be recorded by him in writing if he is of the opinionthat any income chargeable to tax has escaped assessment forany assessment year, subject to the provisions of Sections 148 to153. 10. Again by the Amending Act of 1989, the wordopinion was omitted and the Assessing Officer was empoweredto proceed under Section 147, only if he had reason to believethat any income chargeable to tax has escaped assessment forany assessment year, subject to the provisions of Section 148 to153. 11. As per the amendment of 1987 and 1989 anyincome chargeable to tax, which the Assessing Officer notices inthe course of the proceedings under Section 147 orre-computation of loss or depreciation allowance or any other allowance, could also be reckoned for such assessment orreassessment, even if that was not a ground on which theAssessing Officer entertained the initial belief of escapement ofincome tax. However, this does not detract from the fact that thereason to believe to be entertained by the Assessing Officershould be of some tangible material in his possession, which hereceives after the initial assessment is completed, for coming toa conclusion that there was an escapement of income chargeableto tax. The income so alleged; to have escaped assessmentshould thus have a live link with the formation of belief by theAssessing Officer. allowance, could also be reckoned for such assessment orreassessment, even if that was not a ground on which theAssessing Officer entertained the initial belief of escapement ofincome tax. However, this does not detract from the fact that thereason to believe to be entertained by the Assessing Officershould be of some tangible material in his possession, which hereceives after the initial assessment is completed, for coming toa conclusion that there was an escapement of income chargeableto tax. The income so alleged; to have escaped assessmentshould thus have a live link with the formation of belief by theAssessing Officer. 12. In the present case as has been found inRavindra Kumar(HUF) (supra), the belief entertained by theAssessing Officer is only on the premise that there was nothingproduced by the assessee in pursuance of a notice under Section133(6); regarding the agricultural income, which was shown asexempted income under the returns and accepted by theAssessing Officer. There was no tangible material on which theAssessing Officer proceeded under Section 147 and in thatcircumstance it is a mere change of opinion which is, as held inKelvinator of India (supra), a review in the garb of reopeningthe assessment. 13. On the above reasoning, it has to be held for thetwo assessment years, that the proceedings were issued withoutjurisdiction, since the reassessment initiated under Section 147was not on any tangible material and there was nothingavailable with the Assessing Officer to entertain a belief that theassessee had wrongly claimed exemption of the agriculturalincome or of the unsecured loans. The agricultural incomeshown as exempted in the return was accepted by the AssessingOfficer initially and so were the unsecured loans. There is noscope for a review of the same and when there was nothingavailable with the Assessing Officer, there could not be areopening of assessment, under Section 147. Both theassessment orders challenged in the writ petitions are set aside. 14. The writ petitions stand allowed. (K. Vinod Chandran, CJ) aditya/- AFR/NAFRCAV DATEUploading Date17.08.2023.Transmission Date ( Partha Sarthy, J)