The Commissioner Of Income Tax – 10, Mumbai v. M/S.orix Auto Business Solutions Limited, Mumbai

IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.6079 OF 2010 The Commissioner of Income Tax – 10, Mumbai..Appellant. Versus M/s.Orix Auto Business Solutions Limited, Mumbai..Respondent. Mr.Suresh Kumar for the appellant.None for the respondent. CORAM : J.P. Devadhar &K.K. Tated, JJ. P.C. : DATE : 19[th] October 2011 1.Although several questions are raised by the Revenue in this appeal, the basic question raised in this appeal is, whether the Income Tax Appellate Tribunal was justified in holding that the reopening of the assessment was bad in law. 2.The assessment year involved herein A.Y. 2001-2002. 3.In the assessment year in question, pursuant to the revised return filed by the assessee, assessment was completed under Section 143(3) of the Income Tax Act, 1961 (‘Act’ for short) on 26[th] March 2004 at a loss of Rs.84,92,828/-. Thereafter, by a notice dated 15[th] March 2007 issued under Section 148 of the Act, the assessment was sought to be re-opened on the following grounds : “It is seen from the profit and loss account that the assessee has shown lease rental of Rs.21,96,73,469/- after reducing lease equalization charges of Rs.9,01,08,283/-. The annual equalization charge claimed by the assessee was disallowed while computing the income under the normal provisions but did not add to the book profit under Section 115JB of the I.T. Act, 1961. It may be pointed out that similar additions were made to the book profit in the earlier assessment years. Therefore, I have reason to believe that the income chargeable to tax has escaped assessment for A.Y. 2001-02 to the extent of Rs.9,01,08,283/- while computing the book profit under Section 115JB read with proviso thereto by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment.” 4.On the basis of the reasons recorded, the assessing officer completed the reassessment proceedings on 26[th] September 2007 under Section 144 read with Section 147 of the Act, computing total income under Section 115JB at Rs.9,44,73,484/-. Challenging the aforesaid order, the assessee filed an appeal before the Commissioner of Income Tax (Appeals), who by his order dated 22[nd] July 2008 held that the re-opening of the assessment was beyond a period of four years from the end of relevant assessment year and in the absence of any failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment, re-assessment was bad in law. Challenging the aforesaid order, the Revenue filed an appeal 3 before the Income Tax Appellate Tribunal (‘Tribunal’ for short). By the impugned order dated 30[th] September 2009 the Tribunal has concurred with the findings recorded by the Commissioner of Income Tax (Appeals) and held that there was no failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of assessment and, therefore, the requirements of the proviso to Section 147 being not complied with, the re-opening of the assessment is bad in law. 6.In our opinion, if on the basis of the material on record, the assessing officer takes a conscious decision and subsequently it is found that the earlier decision was erroneous, then to rectify that error, the assessing officer cannot re-open the assessment beyond four years from the end of the relevant assessment year, if there is no failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. In the present case, there is no material on record to show that the finding of fact recorded by the Tribunal to the effect that there was no failure on the part of the assessee to disclose all material facts, is erroneous. 7.In these circumstances, we see no reason to entertain the present appeal. Accordingly, the appeal is dismissed with no order as to costs. (K.K. Tated, J.)