M/S Rajasthan State Mines And Minerals Ltd v. The Joint Commisioner Of Income Tax, Circle-6, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 302 / 2017 M/s Rajasthan State Mines and Minerals Ltd. Registered Office ATC 89, 90 Lal Kothi, Janpath, Jaipur Through Rajendra Meena S/oGL Meena, Aged About 36, Presently Posted At 8, West PatelNagar, Ratanada, Jodhpur. ----Appellant Versus The Joint Commisioner of Income Tax, Circle-6, Jaipur. ----RespondentConnected With D.B. Income Tax Appeal No. 303 / 2017 M/s Rajasthan State Mines and Minerals Ltd. Registered Office AT C-89, 90, Lal Kothi, Janpath, Jaipur Through Rajendra Meena S/o GL Meena, Aged About 36, Presently Posted At 8, West Patel Nagar, Ratanada, Jodhpur. ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-6, Jaipur. ----Respondent D.B. Income Tax Appeal No. 304 / 2017 M/s. Rajasthan State Mines and Minerals Ltd. Registered Office At C-89, 90 Lal Kothi, Janpath, Jaipur Through Rajnedra Meena S/o GL Meena, Aged About 36, Presently Posted At 8, West Patel Nagar, Ratanada, Jodhpur. ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-6, Jaipur. ----Respondent D.B. Income Tax Appeal No. 305 / 2017 M/s. Rajasthan State Mines and Minerals Ltd. Registered Office At C-89, 90, Lal Kothi, Janpath, Jaipur Through Rajendra Meena S/o GL Meena, Aged About 36, Presently Posted At 8, West Patel Nagar, Ratanada, Jodhpur. ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-6, Jaipur. ----Respondent D.B. Income Tax Appeal No. 306 / 2017 M/s Rajasthan State Mines and Minerals Registered Office At C-89,90, Lal Kothi Scheme, Jaipur Through Rajendra Meena S/o GL Meena, Aged About 36, Presently Posted At 8, West Patel Nagar, Ratanada, Jodhpur. ----Appellant Versus The Assistant Commissioner of Income Tax, Central Circle-6, Jaipur. ----Respondent D.B. Income Tax Appeal No. 307 / 2017 M/s Rajasthan State Mines and Minerals Ltd. Registered Office At C-89,90, Lal Kothi, Janpath, Jaipur Through Rajendra Meena S/o GL Meena, Aged About 36, Presently Posted At 8 West Patel Nagar, Ratanada, Jodhpur ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-6, Jaipur. ----Respondent D.B. Income Tax Appeal No. 308 / 2017 M/s. Rajasthan State Mines and Minerals Ltd Registered Office AT C-89, 90, Lal Kothi, Janpath, Jaipur Through Rajendra Meena S/o GL Meena, Aged About 36, Presently Posted At 8, West Patel Nagar, Ratanada, Jodhpur. ----Appellant Versus The Assistant Commissioner of Income Tax, Circle-6, Jaipur. ----Respondent _____________________________________________________ For Appellant(s) : Mr. Sanjay Jhanwar with Ms. Archana For Respondent(s) : Mr. Anuroop Singhi with Mr. Aditya Vijay _____________________________________________________ HON'BLE MR. JUSTICE K.S. JHAVERIHON'BLE MR. JUSTICE VIJAY KUMAR VYASOrder 13/12/2017 1.Since all these appeals arise out of same judgment,they are being decided by this common order. 2.By way of these appeals, the appellants havechallenged the judgment and order of the Tribunal whereby theTribunal has rejected the appeal of the assessee. 3.This court while admitting the ITA No.302/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified inholding that amount of Rs.6,61,487/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.14,04,582/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? 3.This court while admitting the ITA No.302/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified inholding that amount of Rs.6,61,487/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.14,04,582/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iv) Whether under the facts and circumstancesof the case and in law the ld. ITAT was justifiedin holding that the claim of Rs.5,49,980/- paidtowards social welfare expenses was notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. 4.This court while admitting the ITA No.303/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified in notholding that reassessments proceedings u/s 147/148 were without jurisdiction. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.1,00,25,871/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iv) Whether under the facts and circumstancesof the case and in law Ld. ITAT was justified inholding that amount of Rs.1,20,47,954/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and disallowed the claim u/s 37 of theAct. 5.This court while admitting the ITA No.304/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified inholding that amount of Rs.1,30,98,423/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. (ii) Whether under the facts and circumstancesof the case and in law the Ld. ITAT has notlegally erred in not allowing the claim of Rs.25,62,746/- on account of amortization of costpaid towards the acquisition of wasting asset i.e.mining land/leasehold land u/s 37 of the Act? (iii) Whether under facts and circumstances ofthe case and in law Ld. ITAT was justified indisallowing the claim of expenditure ofRs.4,20,073/- incurred towards social welfare. (iv) Whether under facts and circumstances ofthe case and in law Ld ITAT was justified indisallowing the expenses of Rs.6,64,150/-incurred towards mine development expenses. 6. This court while admitting the ITA No.305/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law ld. ITAT was justified inholding that amount of Rs.23,95,996/- paid towards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. (ii) Whether under the facts and circumstancesof the case and in law the ld. ITAT has notlegally erred in not allowing the claim ofRs.1,65,35,825/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act. (iii) Whether under the facts and circumstancesof the case and in law ld. ITAT was justified indisallowing the claim of expenditure ofRs.2,77,218/- incurred towards social welfare. (i) Whether under the facts and circumstances ofthe case and in law ld. ITAT was justified inholding that amount of Rs.23,95,996/- paid towards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act. (ii) Whether under the facts and circumstancesof the case and in law the ld. ITAT has notlegally erred in not allowing the claim ofRs.1,65,35,825/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act. (iii) Whether under the facts and circumstancesof the case and in law ld. ITAT was justified indisallowing the claim of expenditure ofRs.2,77,218/- incurred towards social welfare. (iv) Whether under the facts and circumstancesof the case and in law ITAT was justified indisallowing the expenses of Rs.33,41,648/-incurred towards mine development expenses. 7.This court while admitting the ITA No.306/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified in notholding that reassessments proceedings u/s147/148 were without jurisdiction. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.1,00,99,102/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iii) Whether under the facts and circumstancesof the case and in law Ld. ITAT was justified inholding that amount of Rs.17,95,838/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act? (iv) Whether under the facts and circumstancesof the case and law ITAT was justified inconfirming an addition of Rs.35,51,084/- onaccount of unpaid land tax u/s 43B of the Act. 8. This court while admitting the ITA No.307/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified in notholding that reassessments proceedings u/s147/148 were without jurisdiction. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.1,01,02,114/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iii) Whether under the facts and circumstancesof the case and in law Ld. ITAT was justified inholding that amount of Rs.17,56,444/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act? (iv) Whether under the facts and circumstancesof the case and law ITAT was justified inconfirming an addition of Rs.3,15,50,975/- onaccount of unpaid land tax u/s 43B of the Act. 9.This court while admitting the ITA No.308/2017 on 10.11.2017 framed following substantial questions of law:- (i) Whether under the facts and circumstances ofthe case and in law Ld. ITAT was justified in notholding that reassessments proceedings u/s147/148 were without jurisdiction. (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.99,49,723/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iii) Whether under the facts and circumstancesof the case and in law Ld. ITAT was justified inholding that amount of Rs.18,70,932/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act? 10.Now the issue is covered by the decision of this Court in (ii) Whether under the facts and circumstancesof the case and in law the learned ITAT has notlegally erred in not allowing the claim ofRs.99,49,723/- on account of amortization ofcost paid towards the acquisition of wastingasset i.e. mining land/leasehold land u/s 37 ofthe Act? (iii) Whether under the facts and circumstancesof the case and in law Ld. ITAT was justified inholding that amount of Rs.18,70,932/- paidtowards rural development expenses were notincurred wholly of exclusively of the businesspurpose and not allowable u/s 37 of the Act? 10.Now the issue is covered by the decision of this Court in D.B. Income Tax Appeal No.146/2016, where we have decided the issue in favour of assessee in view of decision of Delhi High Court Full Bench in Commissioner of Income Tax-VI vs.Usha International Ltd., [2012] 25 taxmann.com 200 (Delhi) (FB), wherein it has been observed: “13. It is, therefore, clear from the aforesaidposition that: (1) Reassessment proceedings can be validlyinitiated in case return of income is processedunder Section 143(1) and no scrutiny assessmentis undertaken. In such cases there is no change ofopinion; (2) Reassessment proceedings will be invalid incase the assessment order itself records that theissue was raised and is decided in favour of theassessee. Reassessment proceedings in the saidcases will be hit by principle of "change ofopinion". (3) Reassessment proceedings will be invalid incase an issue or query is raised and answered bythe assessee in original assessment proceedingsbut thereafter the Assessing Officer does notmake any addition in the assessment order. Insuch situations it should be accepted that theissue was examined but the Assessing Officer didnot find any ground or reason to make addition orreject the stand of the assessee. He forms anopinion. The reassessment will be invalid becausethe Assessing Officer had formed an opinion in theoriginal assessment, though he had not recordedhisreasons. 14. In the second and third situation, the Revenueis not without remedy. In case the assessmentorder is erroneous and prejudicial to the interestof the Revenue, they are entitled to and caninvoke power under Section 263 of the Act. Thisaspect and position has been highlighted in CITvs. DLF Powers Limited, ITA 973/2011 decided on29th November, 2011 and BLB Limited vs. ACITWrit Petition (Civil) No. 6884/2010 decided on 1stDecember, 2011. In the last decision it has beenobserved: “13. Revenue had the option, but did not takerecourse to Section 263 of the Act, inspite of auditobjection. Supervisory and revisionary power underSection 263 of the Act is available, if an orderpassed by the Assessing Officer is erroneous andprejudicial to the interest of the Revenue. An erroneous order contrary to law that has causedprejudiced can be correct, when jurisdiction underSection 263 is invoked.” 15. Thus where an Assessing Officer incorrectly orerroneously applies law or comes to a wrongconclusion and income chargeable to tax hasescaped assessment, resort to Section 263 of theAct is available and should be resorted to. Butinitiation of reassessment proceedings will beinvalid on the ground of change of opinion.” and judgment of Gujarat High Court in Praful Somabhai Patel (HUF) vs. Income Tax Officer, [2016] 73 taxmann.com 184 (Gujarat), wherein it has been observed as under:- erroneous order contrary to law that has causedprejudiced can be correct, when jurisdiction underSection 263 is invoked.” 15. Thus where an Assessing Officer incorrectly orerroneously applies law or comes to a wrongconclusion and income chargeable to tax hasescaped assessment, resort to Section 263 of theAct is available and should be resorted to. Butinitiation of reassessment proceedings will beinvalid on the ground of change of opinion.” and judgment of Gujarat High Court in Praful Somabhai Patel (HUF) vs. Income Tax Officer, [2016] 73 taxmann.com 184 (Gujarat), wherein it has been observed as under:- 8. In view of various judicial pronouncements, itis clear that Section 147 authorises and permitsthe Assessing Officer to assess or reassessincome chargeable to tax if he has reason tobelieve that income for any assessment year hasescaped assessment. The word "reason" in thephrase "reason to believe" would mean cause orjustification. If the Assessing Officer has cause orjustification to know or suppose that income hadescaped assessment, it can be said to havereason to believe that an income had escapedassessment. The expression cannot be read tomean that the Assessing Officer should havefinally ascertained the fact by legal evidence orconclusion. The function of the Assessing Officeris to administer the statute with solicitude for thepublic exchequer with an inbuilt idea of fairness totaxpayers. As observed by the Supreme Court inCentral Provinces Manganese Ore Co. Ltd. v. ITO[1991] 191 ITR 662, for initiation of action undersection 147(a) (as the provision stood at therelevant time) fulfilment of the two requisiteconditions in that regard is essential. At thatstage, the final outcome of the proceeding is notrelevant. In other words, at the initiation stage,what is required is "reason to believe", but notthe established fact of escapement of income. Atthe stage of issue of notice, the only question iswhether there was relevant material on which areasonable person could have formed a requisitebelief. Whether the materials would conclusivelyprove the escapement is not the concern at thatstage. This is so because the formation of beliefby the Assessing Officer is within the realm of subjective satisfaction. Merely an audit report, inour opinion, would not authorize the AssessingOfficer to reopen the assessment even within theperiod of 4 years from the end of the relevantassessment year, when the said material wasalready before him when the original assessmentwas made. Any such attempt on his part would bebased on mere change of opinion. To reiteratewhen a claim was processed at length and aftercalling for detailed explanation from the assessee,the same was accepted, merely because a certainelement or angle was not in the mind of theAssessing Officer while accepting such a claim,cannot be a ground for issuing notice forreassessment. Therefore, in our view, theAssessing Officer cannot change his opinion,which he has already accepted in his assessmentorder. We are of the opinion that the Tribunal hascommitted an error in reversing the finding of CIT(A). Accordingly, we answer the question posedfor our consideration in favour of the assesseeand against the revenue and the Tribunal hascommitted an error in holding that the reopeningproceedings are valid, legal and within thejurisdiction of the Respondent. Even otherwise,the method of valuation is in order and since thevaluations are made under two different Acts,they cannot be made basis for reopening ofvaluation. Accordingly, all these appeals areallowed. 11.In both the judgments (supra) the issues wereconsidered and this Court remitted back the matter. In view of thematter the order of the Tribunal is quashed and set aside. 11.In both the judgments (supra) the issues wereconsidered and this Court remitted back the matter. In view of thematter the order of the Tribunal is quashed and set aside. 12.It is made clear that we are not expressing any opinionon merits of the case. Tribunal will consider the matter afreshtaking into consideration the judgments delivered by us today in Income Tax Appeal No.146/2016 on questions which are admitted. 13.The appeals stand allowed. (VIJAY KUMAR VYAS), J. (K.S. JHAVERI), J.