Pr. Commissioner Of Income Tax-Central 4 v. M/S. J.m. Financial Institutional Securities Ltd

DDR IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONINCOME TAX APPEAL NO.1361 OF 2017 Pr. Commissioner of Income Tax-Central 4 ..Appellant vs. M/s. J.M. Financial Institutional Securities Ltd. ..Respondent …........ Mr. Suresh Kumar for appellant. Mr. Jehangir Mistri, Senior Counsel a/w. Mr. Atul K. Jasani forrespondent. …........ CORAM : NITIN JAMDAR &M.S.KARNIK, JJ. DATE : 6 JANUARY 2020 P.C.:- Heard learned counsel for the parties. 2.The Appellant has challenged the order dated 11/8/2016passed by the Income Tax Appellate Tribunal (‘the Tribunal’ forshort) in Income Tax Appeal No.179/Mum/2016 (AssessmentYear 2006-07). 3.The present Appeal relates to Assessment Year 2006-07. 4.The Appellant – Revenue has framed following questions assubstantial questions of law :- (A)Whether under the facts and circumstances of thecase, the Hon’ble Income Tax Appellate Tribunal wasjustified in holding the re-assessment proceedings as invalid,without appreciating the fact that the issue was not a subjectmatter of verification in the original assessment proceedingshence re-assessment is not based on “change of opinion”? (B)Whether under the facts and circumstances of thecase, when there is no discussion in the assessment order onthe issue of sundry creditors and when there is no findingpositive or negative in the original assessment order on thisissue, whether Hon’ble Income Tax Appellate Tribunal wasjustified in not appreciating that there is no “change ofopinion” and in denying the applicability of decision in thecase of Ess Ess Kay Engineering Co. P. Ltd. vs. CIT [247ITR 818 (SC) ?” 5.The Appeal arises from the proceeding taken out in respectof the notice for re-assessment issued on 22 March 2013 underSection 148 of the Income Tax Act, 1961. The note was admittedlyissued beyond the period of four years. As per the Section 147,since the note was issued beyond period of four years, theproceedings could have been initiated if there was a failure on thepart of the assessee to disclose fully and truly all material factsnecessary for the assessment. 6.The Tribunal, after considering the material on record andreasons for re-opening the assessment, which are reproduced inimpugned order, observed thus :- “7.The above facts show that the assessee has disclosed allmaterial facts at relevant places during original assessmentproceedings u/s. 143(3) of the Act. The AO himself askedfor specific questions and full details were supplied by theassessee. AO examined these documents and framed theassessment only after proper application of mind. There wasno failure on the part of the assessee to fully and trulydisclose all the material facts. Thus, reassessment is beingsought by the AO on mere change of opinion andapparently on the basis of Audit Memo, which is notpermissible. No new tangible material has come to theknowledge of the AO so as to justify the reopening. Thefollowing observation of the Hon’ble Apex Court in the caseof CIT vs.Kelvinator of India Ltd. 320 ITR 561 would berelevant here :- “Assessing Officer has no power to review ; he has thepower to reassess. But reassessment has to be based onfulfillment of certain preconditions and if the concept of“change of opinion” is removed, as contended on behalf ofthe Department, then, in the garb of reopening theassessment, review would take place. One must treat theconcept of “change of opinion” as an in-built test to checkabuse of power by the Assessing Officer. Hence, after 1[st]April, 1989, the Assessing Officer has power to reopen,provided there is “tangible material” to come to beconclusion that there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief.” “Assessing Officer has no power to review ; he has thepower to reassess. But reassessment has to be based onfulfillment of certain preconditions and if the concept of“change of opinion” is removed, as contended on behalf ofthe Department, then, in the garb of reopening theassessment, review would take place. One must treat theconcept of “change of opinion” as an in-built test to checkabuse of power by the Assessing Officer. Hence, after 1[st]April, 1989, the Assessing Officer has power to reopen,provided there is “tangible material” to come to beconclusion that there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief.” Further, the Hon’ble apex Court in the case of CIT vs.Foramer France (2003) 264 ITR 566(SC) has clearly laiddown the principle that where there is no failure on the partof the assessee to disclose material facts, the reassessmentproceedings after the expiry of four years is not possible inview of the provisions of Sec.147 of the Act. In thecircumstances of the case and after appreciating the statutory provisions and judicial pronouncements, we conclude thatreassessment proceedings are bad in law and the same are setaside. Accordingly, the appeal of the assessee is allowed. ” 7.In view of the clear finding of the Tribunal that there was nofailure on the part of the Respondent – Assessee to disclose fullyand truly all material facts and that nothing contrary isdemonstrated as to why this finding is incorrect, the questions oflaw proposed do not give rise to any substantial question of law.The Appeal is dismissed. (M.S.KARNIK, J.) (NITIN JAMDAR, J.) DikshaRaneDigitally signedby Diksha RaneDate: 2020.02.1116:20:11 +0530