Reserve Bank Officers Co-Operative Credit Society Ltd.3Rd Floor, Amar Building, Sir P. M. Road,Mumbai-400 001 v. The Income Tax Officer- 17 (3) (1)Room

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3327 OF 2019 Reserve Bank Officers co-operative Credit Society Ltd.3rd floor, Amar Building, Sir P. M. Road,Mumbai-400 001 ...Petitioner Vs. 1. The Income Tax Officer- 17 (3) (1)Room No.125, 1st Floor, Kautilya Bhavan,C-41 to C-43, G Block, Bandra Kurla Complex,Bandra (E), Mumbai- 400 051 2. The Jt. Commissioner of Income Tax-17 (3),Kautilya Bhavan, Bandra Kurla Complex,Bandra (E), Mumbai 400 051. 3. The Pr. Commissioner of Income Tax-17,Aaykar Bhavan, M. K. Road, Mumbai-400 020 4. Union of India, Aaykar Bhavan, Mumbai. ...Respondents ---- Mr. Mandar Vaidya for Petitioner.Mr. P. C. Chhotaray for Respondent. ---- CORAM : K. R. SHRIRAM AND AMIT B. BORKAR, JJ. DATE : 23 November 2021. ORAL JUDGMENT : (Per Amit B. Borkar, J.) Rule. With the consent of both sides, Rule is made returnable forthwith. 2.By notice dated 31/3/2019, the Assessing Officer had soughtto reopen the assessment under Section 147 of the Income Tax Act, 1961(the Act) for Assessment Year 2013-2014. Objections that Petitionersubmitted to reopen the assessment have been rejected by order dated31/10/2019. Both the notice for reopening the assessment and the orderdisposing of the objections of Petitioner has been challenged in this petitionunder Article 226 of the Constitution of India. 3.Petitioner is a Co-operative Credit Society registered under theprovisions of the Multi-State Co-operative Societies Act. Petitioner filed itsreturn of income on 30/7/2013 for Assessment Year 2013-2014, declaringtotal income as 'Nil" after claiming deduction under Section 80P of the Actviz., deduction towards interest income received from co-operative Banks.Petitioner had received a sum of Rs.7,03,48,883/- as interest income fromco-operative Banks in the relevant year. Petitioner in the said return hadclaimed deduction of Rs.3,38,41,724/- by confining the same to the grosstotal income as per Section 80P of the Act. Petitioner had also filed an audit rsk report in Form 3CA as contemplated by Section 44AB of the Act, whichdisclosed the amount of Rs. 3,38,41,724/- being eligible and admissiblefor deduction under Section 80P of the Act. 4.Petitioner's return was picked up for scrutiny by issuing noticedated 3/7/2015 under Section 142 of the Act. Petitioner was called upon toexplain and justify the deductions claimed under Chapter VIA of the Act inwhich Section 80P falls. In response to the said notice, Petitioner filed areply dated 5/8/2015 explaining eligibility for deduction under Section80P of the Act. 5.Petitioner filed further detailed reply dated 8/1/2016explaining the eligibility of Petitioner for deduction under Section 80P ofthe Act. Respondent No.1 on 27/1/2016 passed an assessment order underSection 143(3) of the Act accepting Petitioner's claim for deduction underSection 80P of the Act by not making any additions to the income ofPetitioner. 6.On 31/3/2019, respondent No.1 issued a notice under Section148 of the Act seeking to reopen the assessment of Petitioner forAssessment Year 2013-2014. At the request made by Petitioner, respondentNo.1 supplied reasons for such reopening. Reasons supplied by respondent rsk 5.Petitioner filed further detailed reply dated 8/1/2016explaining the eligibility of Petitioner for deduction under Section 80P ofthe Act. Respondent No.1 on 27/1/2016 passed an assessment order underSection 143(3) of the Act accepting Petitioner's claim for deduction underSection 80P of the Act by not making any additions to the income ofPetitioner. 6.On 31/3/2019, respondent No.1 issued a notice under Section148 of the Act seeking to reopen the assessment of Petitioner forAssessment Year 2013-2014. At the request made by Petitioner, respondentNo.1 supplied reasons for such reopening. Reasons supplied by respondent rsk No.1 disclosed that deduction under Section 80P is available only onincome received from co-operative Society and not from a co-operativebank. Accordingly, respondent No.1 had reason to believe that the incometo the extent of deduction allowed had escaped assessment. Upon receiptof the reasons, Petitioner submitted its objections to reopening ofassessment by letter dated 15/10/2019. Petitioner stated in the objectionsthat in the course of original assessment proceedings, the Assessing Officerhad already examined the issue, which is the issue in reopening. ThereafterAssessing Officer accepted the claim of the Petitioner by not disallowingdeduction towards Section 80P of the Act. Therefore, it was stated that thereopening of the assessment on the said issue amounted to a change ofopinion. It was further stated that reopening of assessment was withoutany new material brought on record. Petitioner also stated, on merits, thatthe issue of deduction under Section 80P of the Act on income receivedfrom co-operative Bank was covered in favour of Petitioner by the decisionsof various High Courts and Income Tax Appellate Tribunal. 7.Respondent No.1 vide order dated 31/10/2019 and servedupon Petitioner on 4/11/2019 dismissed the objections. Therefore, thePetitioner has filed the present petition challenging a notice of reopeningassessment and order of rejection of objections. rsk 8.Mr. Vaidya, learned Advocate for Petitioner, submitted that (i) The reopening of the assessment has taken place beyond aperiod of four years of the end of the relevant assessment year, and hence,the jurisdictional condition is that there must be a failure on the part ofPetitioner to disclose truly and fully all material facts necessary forassessment for that assessment year. (ii) The Assessing Officer had made an enquiry during thecourse of the assessment proceedings for Assessment Year 2013-14 inresponse to which Petitioner had submitted relevant information regardingthe eligibility of Petitioner to claim a deduction under Section 80-P. Hence,the assessment cannot be reopened beyond a period of four years. (iii) The issue of deduction of interest received from co-operativeBanks under Section 80P of the Act was raised by respondent No.1 in thecourse of original assessment proceedings. After he was satisfied, he madeno addition or disallowance in respect of the said issue. (iv)Specific query was raised by respondent No.1 during originalproceedings by issuing notice under section 142 of the Act to show cause asto why such deductions are not to be disallowed, which was replied by Petitioner and the Assessing Officer had not dis-allowed the saiddeductions. (v)If the stand of Revenue is to be accepted, the sanctity attachedto proceedings under Section 143(3) would be done away with. (vi) It is evident from the reasons supplied to Petitioner forreopening the assessment that no new material has been brought onrecord. 9. Mr. Chhotaray appearing on behalf of Revenue, submitted that (i) Section 80P(2)(d) of the Act does not extend the benefit of thededuction for interest received from the investment made with co-operativeBanks as co-operative Banks are not co-operative Society as defined underSection 2(19) of the Co-operative Societies Act. (ii) From the tenor of the original assessment order, it is clear that Petitioner and the Assessing Officer had not dis-allowed the saiddeductions. (v)If the stand of Revenue is to be accepted, the sanctity attachedto proceedings under Section 143(3) would be done away with. (vi) It is evident from the reasons supplied to Petitioner forreopening the assessment that no new material has been brought onrecord. 9. Mr. Chhotaray appearing on behalf of Revenue, submitted that (i) Section 80P(2)(d) of the Act does not extend the benefit of thededuction for interest received from the investment made with co-operativeBanks as co-operative Banks are not co-operative Society as defined underSection 2(19) of the Co-operative Societies Act. (ii) From the tenor of the original assessment order, it is clear that the Assessing Officer had not applied his mind to the issue of eligibility ofPetitioner to the deduction for interest received from the investment madewith co-operative Banks. (iii) The Assessing Officer was within his jurisdiction in reopeningthe assessment under Section 148 of the Act and had correctly rejected theobjections preferred by Petitioner. 10.The rival submission now fall for determination. From thereasons supplied to Petitioner, it appears that assessment for the assessmentyear 2013-2014 is sought to be reopened principally on the ground thatPetitioner claimed deduction under Section 80P (2) of the Act, which isclearly in contravention of the provisions of the Act and the income fromFixed Deposits was required to be shown under the head "income fromother sources". Additionally, as per the provision of the Act, a co-operativeBank is an Urban Commercial Bank and does not fall under the term 'co-operative Society' referred to under Section 80P(2)(d) of the Act. 11.The reopening of the assessment in the present case underSection 148 has taken place beyond a period of four years of the end of therelevant assessment year. The jurisdictional requirement that must befulfilled in such a case is that there must be a failure on the part of theassessee to disclose truly and fully all material facts necessary forassessment for that assessment year. It is also trite law that an assessmentcannot be reopened on the basis of a mere change of opinion, and there rsk must be some tangible material before the Assessing Officer beforeproceeds to reopen an assessment. Beyond the period of four years, it mustalso be demonstrated that there was a failure on the part of the assessee tomake a true and full disclosure of material facts necessary for theassessment. Reading the reasons of the Assessing Officer, it is evident thatthere is absolutely no tangible material based on which he could havereopened assessment for the assessment year 2013-2014. It is not indispute that Petitioner is a Multi-State Co-operative Society registeredunder the Multi-State Co-operative Societies Act. It is also not in disputethat the Assessing Officer raised a specific query during the originalassessment proceedings by issuing notice under Section 142 of the Actcalling upon Petitioner to show cause as to why deduction under Section80P of the Act cannot be disallowed. Undisputedly, Petitioner filed a replyto the said notice, and the original assessment order was passed. It is alsonot in dispute that Petitioner, during the original assessment, had filed anaudit report in Form 3CA as mandated by Section 44AB of the Act statingthe amount of Rs.3,38,41,724/- admissible for deduction under Section80P of the Act. 12.Mr. Chhotaray, learned Counsel appearing for Revenue placedreliance on the proposition of law laid down by the Supreme Court in the 12.Mr. Chhotaray, learned Counsel appearing for Revenue placedreliance on the proposition of law laid down by the Supreme Court in the three judgments viz., Sociedade De Formento Industrial P. Ltd. vs. AssistantCommissioner of Income-Tax and Another1, Raymond Woollen Mills Ltd.vs. Income Tax Officer and Others2, Income Tax Officer, Cuttack and Ors.vs. Biju Patnaik3 and Phool Chand Bajrang Lal and Another vs. Income-TaxOfficer and Another4 and Income Tax Officer vs. Selected Dalurband CoalCommissioner of Income-Tax and Another1, Raymond Woollen Mills Ltd.vs. Income Tax Officer and Others2, Income Tax Officer, Cuttack and Ors.vs. Biju Patnaik3 and Phool Chand Bajrang Lal and Another vs. Income-TaxOfficer and Another4 and Income Tax Officer vs. Selected Dalurband Coal Co. Pvt. Ltd.5 There cannot be a dispute about the proposition of law laiddown in those judgments, but the judgments are distinguishable in thefacts of the present case. Moreover, in the present case, the AssessingOfficer raised a specific query in the original assessment proceedings, towhich Petitioner replied. Therefore it is clear that Assessing Officer in theoriginal assessment proceedings was conscious of the issue involved of theeligibility of Petitioner to claim deduction under Section 80P (2) of the Act. 13.The criteria for reopening assessment after a period of 4 yearsare no longer Res-Integra in view of the judgment of Division Bench of thisCourt in the case of Ananta Landmark (P.) Ltd. vs Deputy Commissioner of Income Tax 1[6], wherein this Court held that where assessment was notsought to be reopened on reasonable belief that income had escaped 1(2011) 339 ITR 595 (Bom) 2(1999) 236 ITR 34 (SC) 3(1991) 188 ITR 247 (SC) 4(1993) 203 ITR 456 (SC) 5(1996) 217 ITR 597 (SC) 6(2021) 131 taxmann.com 52 (Bombay) rsk assessment on account of failure of assessee to disclose truly and fully allmaterial facts that were necessary for computation of income but was acase wherein assessment was sought to be reopened on account of changeof opinion of Assessing Officer about manner of computation of deductionunder Section 57, reopening was not justified. It is also held that when theprimary facts necessary for assessment are fully and truly disclosed, theAssessing Officer is not entitled to a change of opinion for commencingproceedings for reassessment. It is also held that when considering thematerial on record, one view is conclusively taken by the Assessing Officer,it would not be open for the Assessing Officer to reopen the assessmentbased on the very same material and take another view. For the aforesaid reasons, the Assessing Officer has acted inexcess of the restraints on his jurisdiction to reopen an assessment in theexercise of the powers under section 147 read with section 148.Accordingly, Petitioner would be entitled to succeed in these proceedings. 14.We, therefore, pass the following order: ORDER The impugned notice dated 31/3/2019 issued underSection 148 of the Act and order of rejection of Petitioner'sobjections dated 31/10/2019 are quashed and set aside. 15.Rule is made absolute in the above terms. (AMIT B. BORKAR, J) (K. R. SHRIRAM, J.) Digitallysigned byRAJESHWARIRAJESHWARISUBODHSUBODHKARVEKARVEDate:2021.11.2716:24:34+0530