Commissioner Of Income Tax, Chennai v. M/S.meenakshi Narayanan Investments Pvt. Ltd.,Old

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 14.12.2006 THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MR.JUSTICE P.P.S.JANARTHANA RAJA Commissioner of Income Tax, Chennai...Appellant inboth T.Cs.Vs.M/s.Meenakshi NarayananInvestments Pvt. Ltd.,Old No.71, New No.12,3[rd] Main Road, Kasturba Nagar, Chennai...Respondent inboth T.Cs. Appeals under Section 260A of the Income Tax Act, 1961against the common order of the Income Tax Appellate Tribunal,Madras 'A' Bench dated 28.2.2006 made in ITA No.1507/Mds/2002 andC.O.No.101/Mds/2002 in ITA No.1507/Mds/2002, for the assessmentyear 1997-98. respectively against the order of the commissionerof Income Tax (Appeals)V in ITA 15/2002-03, dated 14.6.2002,against the order of the Asst Commissioner of Income Tax CompanyCircle IV (2) in PAN/GIR No. AAACC 3032B/148-ME dated 28.3.2002respectively. The above tax case appeals are directed against the commonorder of the Income-tax Appellate Tribunal in ITA No.1507/Mds/2002 and C.O.No.101/Mds/2002 in ITA No. 1507/Mds/2002,for the assessment year 1997-98. 2. The Revenue is the appellant. During the relevantassessment year, viz., 1997-98, the assessee filed a returnhttps://hcservices.ecourts.gov.in/hcservices/declaring loss of Rs.9.58 lakhs. But, thereafter, the assesseefiled a revised return declaring a total income of Rs.95.32 lakhs.On completing the assessment, the assessing officer accepted the claim of the assessee for exemption of non-competition fee. But,later, a notice under Section 148 of the Act was issued, as theassessing officer had reason to believe that income chargeable totax had escaped assessment and after taking note of the objectionsof the assessee, the assessing officer passed the order of re-assessment. Aggrieved against the same, the assessee filed appealbefore the Commissioner of Income-tax (Appeals), who, whileholding the issue in favour of the assessee on merits, held re-opening of assessment as valid. Against the said order of theCommissioner, the Revenue as well as the assessee filed appealsbefore the Income-tax Appellate Tribunal and the Tribunal, by itscommon order dated 28.2.2006, without going into the merits of thecase, held that assessement was re-opened on change of opinion andthe re-assessment as void for delayed issuance of notice undersection 143 (2) of the Act after one year. Against the said orderof the Tribunal, the Revenue preferred the above appeals raisingthe following substantial questions of law: "1. Whether on the facts and circumstances of the case,the Tribunal was right in holding that the re-assessmentwas only on account of change of opinion? 2. Whether on the facts and circumstances of the case,and considering the retrospective amendment to sec.148,the re-assessment could be said to be invalid as thenotice u/s 143(2) was not issue within one year ?" 3. Heard both sides. 4. The issue raised in the first question with regard to re-opening the assessment merely on the basis of change of opinion isalready covered against the Revenue by the decision of this Courtin COMMISSIONER OF INCOME-TAX v. ANNAMALAI FINANCE LTD. [(2005)275 I.T.R. 451]., wherein this Court, held as follows:-" .. that Section 147 of the Act does not postulateconferment of power upon the Assessing Officer toinitiate reassessment proceedings upon a mere change ofopinion. The Assessing Officer proposed to reopen theassessment for the year 1994-95 purely based on thechange of opinion, namely, the change in the method ofaccounting of overdue interest on case or actual receiptbasis, when the assessee was following the mercantilesystem of accounting. The reassessment proceedings werenot valid." 4. Admittedly, in the instant case, on completing theoriginal assessment, the assessing officer accepted the exemptionclaimed by the assessee on non competition fee. But, thereafter,the assessing officer reopened the assessment purely based on thechange of opinion that income derived from competition fees, whichare chargeable to tax, had escaped assessment. Therefore,https://hcservices.ecourts.gov.in/hcservices/applying the ratio laid down by the Apex Court in the case ofAnnamalai Finance Ltd., cited supra, we hold that reopening ofassessment merely on the basis of change of opinion is invalid and accordingly, the first question of law is answeredagainst the Revenue. 5. In view of the above conclusion with regard to questionNo.1, we do not think it necessary to answer the second question,as it is consequential in nature. Accordingly, finding no substantial question of law arisesfor consideration, the above Tax Case Appeals stand dismissed. sraSd/Asst.Registrar/true copy/Sub Asst.RegistrarTo1. The Income Tax Appellate TribunalMadras Bench "A" Chennai.2. The Commissioner of Income-Tax (Appeals V), Chennai 34.3. The Assistant Commissioner ofIncome-tax Company, Circle-IV(2),Chennai.34. 4. The Asst Registrar, Income Tax Appellate Tribunal, Besant Nagar, Rajaji Bhavan, Chennai 90. 5. The Commissioner of Income Tax, Chennai.+ 1 cc to M/s. Pushya Sitaraman, Sr SC for IT SR No. 62929TC (A) Nos.2680 and 2681 of 2006 JSK(CO)SR/12.1.2007 https://hcservices.ecourts.gov.in/hcservices/