The Commissioner Of Income Taxchennai v. M/S.indian Cement Ltd.,Dhun Building, 827, Anna Salai,Chennai - 600 009

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 04.03.2020 CORAMTHE HON'BLE Dr. JUSTICE VINEET KOTHARIANDTHE HON'BLE Mr. JUSTICE R.SURESH KUMARTax Case Appeal No.452 of 2009 The Commissioner of Income TaxChennai....Appellant/Appellant Vs. M/s.Indian Cement Ltd.,Dhun Building, 827, Anna Salai,Chennai - 600 009.PAN: ...Respondent/Respondent Tax Case Appeal filed under Section 260A of the Income TaxAct, 1961 against the order of the Income Tax Appellate TribunalMadras 'C' Bench, dated 29.08.2008 in ITA No.547/Mds/2006 forAssessment Year 1997-98 against the order passed by theCommissioner of Income Tax(Appeals) III, chennai order dated18.11.2005 made in ITA.No.308/2005-06/A-III against the orderpassed by the Assistant Commissioner of Income Tax, CompanyCircle II(3), Chennai-34 made in G.I.No./P.A.No./000-1/AAACT172BP, dated 31.03.2005.For Appellant : Mr.Karthik Renganathan Senior Standing Counsel For Respondent : Mr.R.Vijayaraghavan Both the learned counsels submit that the controversy inthe present case is covered by the decision of the CoordinateBench rendered on 05.08.2019 in T.C.A.No.117 of 2009[Commissioner of Income Tax Vs. M/s.India Cements Ltd., Chennai- 9] for Assessment Year 1996-97. https://hcservices.ecourts.gov.in/hcservices/ 2.The assessment year in the present appeal before us isAssessment Year 1997-98. The Coordinate Bench of this Court heldas under: "30. Having held so, we need to consider as to whetherthe reassessment was validly done. The Tribunal held infavour of the assessee stating that the reassessmentwas bad in law. To decide this issue, we maystraightaway refer to the decision in the case ofKelvinator of India Ltd., wherein the Hon'ble SupremeCourt pointed out that post 01.04.1999, the power toreopen was much wider and that however, one needs togive a schematic interpretation to the words ?"reasonto believe"?, failing which, Section 147 of the Actwould give arbitrary powers to the Assessing Officer toreopen the assessment on the basis of ?"mere change ofopinion"?, which cannot be, per se, reason to reopen.It was pointed out that there is a conceptualdifference between the power to review and power toreassess, that the Assessing Officer has no power toreview, that he has the power to reassess and thatreassessment has to be based on fulfillment of certainpre-conditions and if the concept ?"change of opinion"?is removed, then in the garb of reopening theassessment, review would take place. It was held thatthe concept of "?change of opinion"? should be treatedas in-built test to check the abuse of power by theAssessing Officer. Thus, it was held that after01.04.1999, the Assessing Officer has power to reopenprovided there is ?"tangible material"? to come to theconclusion that there is an escapement of income fromassessment and reasons must have a live link with theformation of the belief. 31. Bearing the aforementioned legal principlesin mind, if we examine the facts of the present case,as rightly pointed out by the Tribunal, all particularsrelating to dividends and short term capital gains andother particulars were available with the AssessingOfficer during the assessment proceedings, which wasconcluded on 15.02.1999 under Section 143(3) of theAct. Furthermore, the Tribunal, on facts, recorded thatthe Department did not bring any material fact beforeit, which was not disclosed in the original return ofincome. 32. Even in this appeal, no such fact has beenbrought to our notice nor pleaded in the memorandum ofgrounds of appeal and presumably that is the reason whythe Revenue had raised the substantial questionsinvolving the interpretation of Rule 27 of the Rules 31. Bearing the aforementioned legal principlesin mind, if we examine the facts of the present case,as rightly pointed out by the Tribunal, all particularsrelating to dividends and short term capital gains andother particulars were available with the AssessingOfficer during the assessment proceedings, which wasconcluded on 15.02.1999 under Section 143(3) of theAct. Furthermore, the Tribunal, on facts, recorded thatthe Department did not bring any material fact beforeit, which was not disclosed in the original return ofincome. 32. Even in this appeal, no such fact has beenbrought to our notice nor pleaded in the memorandum ofgrounds of appeal and presumably that is the reason whythe Revenue had raised the substantial questionsinvolving the interpretation of Rule 27 of the Rules and conveniently was not focusing on the issue as towhether the reopening of assessment was on account ofchange of opinion. A reading of the reassessment orderdated 31.03.2004 will clearly reveal that all facts andfigures were gathered by the Assessing Officer onlyfrom the original return of income filed by theassessee. There was no fresh or tangible materialavailable with the Assessing Officer to reopen theproceedings. Therefore, we have no hesitation toconclude that the reopening of the assessment beyondfour years was clearly a case of change of opinion. Forall the above reasons, substantial questions of lawNo.1 to 3 are liable to be answered against the Revenueand consequently, it is held that the reopening of thereassessment is bad in law and is liable to be setaside. 33. Accordingly, the appeal filed by the Revenueis dismissed. The re-assessment order dated 31.3.2004is set aside. Substantial questions of law No.1 to 3are answered against the Revenue. As we have answeredsubstantial questions of law Nos.1 to 3 against therevenue, there would be no necessity for us to answerthe substantial question of law No.4 and the saidquestion is left open. No costs." 3.In terms of the aforesaid agreed submission made at theBar by the learned counsels, we dispose of the present Appeal insame terms. There shall be no order as to costs. -s/d- Assistant Registrar True Copy Sub-Assistant Registrar SglTo 1.The RegistrarIncome Tax Appellate Tribunal'C' Bench, Madras. 2.The CommissionerIncome TAx(Appeals) IIIChennai 3.The Assistant Commissioner of Income TaxCompany Circle II(CS)Chennai-34 +1 cc to Karthik Ranganathan Advocate sr19100 +1 cc to M/s.Subbaraya Aiyar Padmanabhan Advocate sr19615 T.C.A No.452 of 2009 aa05/06/2020