Itxa/854/2016 Of The Principle Commissioner Of Income Tax-8 v. M/S. Zee Media Corporation Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.854 OF 2016 The Pr. Commissioner of Income Tax-8 .. Appellant v/s. M/s. Zee Media Corporation Ltd. .. Respondent Mr. N.C. Mohanty a/w Ms. Padma Divakar for the appellant Mr. Jay Bhansali for the respondent CORAM : AKIL KURESHI & M.S. SANKLECHA, J.J. P.C. DATED : 11[th] DECEMBER, 2018. 1.The Revenue is in appeal against the judgment of the Income TaxAppellate Tribunal (“the Tribunal” for short) dated 12.08.2015. 2.Several questions have been framed in this appeal. First questionconcerns the correctness of the decision of the Tribunal in holding thatthe proceedings of re-assessment under Section 147 of the Income TaxAct, 1961 (“the Act” for short) were invalid. The remaining questionsraised by the Revenue are on merits because the Tribunal after comingto the conclusion that the re-assessment was invalid, proceeded toexamine the issues on merits and gave its opinion thereon. For the purpose of this tax appeal, we consider only the question of validity ofthe re-assessment proceedings. In this context, the Revenue haspresented following question for our consideration :- “Whether on the facts and circumstances of the case and in law,the Tribunal is justified in holding that the reassessmentproceeding u/s 147 of the Act is unsustainable in law?” 3.This issue pertains to Assessment Year 2008-09. The respondentassessee is a company registered under the Companies Act and isengaged in the business of broadcasting and running of satellitetelevision channel. For the said Assessment Year 2008-09, the assesseehad filed its return of income declaring total income of Rs.65.37 crores(rounded off). This return was subsequently revised by declaring totalincome of Rs.65.75 crores (rounded off). The Assessing Officer undertook scrutiny assessment of this return. He passed order under Section143(3) of the Act on 10.12.2010 determining the assessee's totalincome at Rs.65.88 crores (rounded off). 4.To reopen said assessment, the Assessing Officer issued a noticeunder Section 148 of the Act on 28.02.2013. This notice thus, wasissued within a period of 4 years from the end of relevant assessment year. In order to issue the notice, the Assessing Officer had recordedfollowing reasons:- “The assessee during the year had acquired program / films rightsof Rs.99,05,07,680/-. And the same was debited to P & L Accountunder the head operational expenses. Since, the film rights arean intangible asset, one fourth of the same i.e. Rs.24,76,26,920/-can only be allowed. That has resulted in underassessment ofincome of Rs.74,28,80,760/-.” 5.The assessee contested very notice of reopening inter alia on theground that the Assessing Officer having examined the issue in theoriginal assessment proceedings, the same could not be subject matterof re-assessment. The Assessing Officer rejected the contention andproceeded to pass a fresh order of assessment. CIT(A) also rejected theassessee's contention in this regard, upon which the issue reached theTribunal. Tribunal by the impugned judgment came to the conclusionthat the issue was examined by the Assessing Officer during the originalscrutiny assessment. There was no new material available with theAssessing Officer. Any attempt on his part to reopen the assessmentwould, therefore, be on the basis of change of opinion. In the process,the Tribunal took note of the detailed scrutiny that the Assessing Officerhad carried out during the original assessment. The Tribunal reproduced questions nos. (5) and (11), raised by the Assessing Officerduring the regular assessment. Question no.(5) called upon theassessee to submit a detail note on nature of business carried on by theassessee and modus operandi of the business. Question no.(11) calledupon the assessee to submit details of inventories and basis ofvaluation. The Tribunal was of the opinion that these questions whichpertain to the nature of the assessee's business and asked for theinventory had direct relation to the assessee's valuation i.e. TVprograms and film rights. The Tribunal noted that the relevant detailswere submitted by the assessee under its letter dated 24.11.2010. TheTribunal noted that these questions arose in the context of note no.(7)to the financial statement submitted by the assessee. This note onaccounts was also acknowledged by the Assessing Officer during theregular assessment. This had relation to the consistent method adoptedby the assessee for valuation of its inventories of TV programs and filmrights. The Tribunal, therefore, was of the opinion that the onlyrelevance of the said questions raised by the Assessing Officer duringthe original scrutiny assessment, was in relation of the assessee'svaluation of its film rights. We may note that in the reasons recorded,the Assessing Officer desired to dis-allow 1/4 of the assessee'sexpenditure in acquisition of film rights on the ground that the same were intangible assets. Whatever be the validity of the AssessingOfficer's preposition, it cannot be denied that the entire issue wasexamined by the Assessing Officer during the original scrutinyassessment. The Tribunal correctly noted that the Assessing Officerhad raised relevant queries and elicited response from the assessee.The fact that the Assessing Officer did not make any dis-allowance,would be of importance. In our opinion, the Tribunal correctly came tothe conclusion that in absence of any new tangible material, which wasnot on record during the original assessment proceedings, any attempton the part of the Assessing Officer to reopen the assessment on thisground would be based on a mere change of opinion. 6.The Supreme Court in the case of Commissioner of Income TaxVs. Kelvinator of India Ltd. (2010) 320 ITR 561 has held that evenpost the amendments in Section 147 of the Act w.e.f. 01.04.1989, theconcept of change of opinion continues to apply. Learned Counsel forthe Revenue however, contended that the Assessing Officer had notspecifically raised queries in respect of proposed dis-allowance asrecorded in the reasons. In our opinion, as long as certain claim madeby the assessee was examined by the Assessing Officer, whether theAssessing Officer raised correct queries and came to the correct conclusion or not, in the context of reopening of assessment, would beof no consequence. There is a vital difference between a conclusion ofthe Assessing Officer after scrutiny which may appear to the Revenue tobe erroneous and a situation where the Assessing Officer during thescrutiny assessment does not examine a particular claim of the assesseealtogether. The later will follow within the purview of reopening ofassessment, particularly when the notice is issued within a period of 4years but the formermay not. Since we uphold the Tribunal's decisionon the invalidity of the reopening, the other issues on merits need notbe gone into. No question of law arises. 7.In the result, tax appeal is dismissed. (M.S. SANKLECHA, J.) (AKIL KURESHI, J.)