Income Tax Appellate Tribunal - Raipur
Hemant Parwani, Raipur, Raipur vs Deputy Commissioner Of Income Tax, ... on 31 May, 2024
आयकर अपील य अ धकरण यायपीठ "एक-सद य" मामला रायपुर म
IN THE INCOME TAX APPELLATE TRIBUNAL
RAIPUR BENCH "SMC", RAIPUR
ी रवीश सूद, या यक सद य के सम
BEFORE SHRI RAVISH SOOD, JUDICIAL MEMBER
आयकर अपील सं. / ITA No.139/RPR/2024
नधारण वष / Assessment Year : 2013-14
Hemant Parwani
H. No.15/482, Near Raj Bhawan,
Civil Lines, Raipur (C.G.)
PAN: AEQPP5836D
.......अपीलाथ / Appellant
बनाम / V/s.
The Deputy Commissioner of Income Tax,
Circle-1(1), Raipur (C.G.)
...... यथ / Respondent
Assessee by : Shri Rajesh Kumar Chawda, CA
Revenue by : Shri Satya Prakash Sharma, Sr. DR
सुनवाई क तार ख / Date of Hearing : 28.05.2024
घोषणा क तार ख / Date of Pronouncement : 31.05.2024
2
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur
ITA No. 139/RPR/2024
आदे श / ORDER
PER RAVISH SOOD, JM:
The present appeal filed by the assessee is directed against the order passed by the Commissioner of Income-Tax (Appeals), National Faceless Appeal Center (NFAC), Delhi, dated 21.03.2024, which in turn arises from the order passed by the A.O under Sec. 147 r.w.s.144B of the Income-tax Act, 1961 (in short 'the Act') dated 30.03.2022 for the assessment year 2013-14. The assessee has assailed the impugned order on the following grounds of appeal:
"1. That the Ld. lower authorities sought to reopen assessment in case of assessee beyond period of four years on ground that income chargeable to tax had escaped assessment, however, there was no failure on part of assessee to disclose fully and truly all material facts as all relevant facts had not only been disclosed, but had also been considered by Assessing Officer while considering claim of deduction under section 57 of the IT Act, 1961 in order of assessment issued by the Ld. AO u/s.143(3) of the Act, dated 05.03.2016, and therefore reopening of assessment being a mere change of opinion was not justified.
2. The Ld. lower authorities erred in law and in fact by not disposing the objection raised by appellant regarding non availability of any tangible material with the Ld. AO to reopen the case which was already verified by Ld. AO in its original assessment proceedings concluded u/s 143(3) of the IT Act, 1961 and accordingly the same was merely change of opinion which is not permissible under the act. The assessment order may kindly to be set aside.
3. That the Ld. Lower authorities erred in law and in fact by making the disallowance of deduction claimed u/s. 57 of the Income Tax Act, 1961 of Rs.15,42,243/- on the grounds of paying higher rate of interest by ignoring the relevancy of claimed deduction with earning income from investing in Business /Profession/ investment which were truly and correctly disclosed. The addition may kindly be deleted.
4. That the assessee craves leave to add, alter or amend the ground before or at the time of hearing."3
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024
2. The A.O. had vide his order passed u/s. 143(3) of the Act, dated 05.03.2016 framed the original assessment in the case of the assessee wherein his returned income was accepted as such. Thereafter, the A.O. reopened the case of the assessee u/s. 147 of the Act. Notice u/s. 148 of the Act, dated 28.03.2021 was issued by the A.O. In response, the assessee filed his return of income on 05.03.2022, declaring an income of Rs.4,92,500/-.
3. The A.O. vide his order passed u/s. 147 r.w.s. 144B of the Act dated 30.03.2022 reassessed the income of the assessee at Rs.20,34,743/- after making the following additions/disallowances:
4. Aggrieved the assessee carried the matter in appeal before the CIT(Appeals) but without success. For the sake of clarity, the observations of the CIT(Appeals) are culled out as under:
"7.2.1 At the outset it needs to be mention that in the written submission furnished, reproduced above, the appellant has not provided any explanation/ submission in support of this ground of appeal raised or on the merit of addition made by the A.O. in the assessment order. However, as per the original return of income filed, it is an admitted fact that the appellant has shown interest income of Rs.18,03,207/- and claimed deduction u/s 57 of the I.T Act on account of interest expense of 4 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 Rs.48,66,709/-. It is also a fact on record that the appellant has taken unsecured loans of Rs.1,37,97,733/- and secured loan of Rs.2,45,52,127/- from ICICI and HDFC Bank. Out of these loans taken the appellant has transferred an amount of Rs. 1,34,14,070/- to M/s. GK & Sons Automobile Pvt. Ltd. However, subsequently in the return of income filed u/s 148 of the I.T Act the appellant claimed deduction of Rs.28,65,290/- under the head 'income from other sources' and amount of Rs.20,01,419/- is claimed u/s 28 of the I.T Act which is in respect of loan utilized by the partnership firm GK Sales Corporation from which the appellant has earned interest on capital of Rs.15,21,259/-.
7.2.2 At this stage it needs to be mentioned that any interest received by the appellant on capital with the partnership firm is by virtue of the partnership deed which is separate and distinguished from any loan advance by the partner to the partnership firm. Therefore, the appellant's contention that since he has received interest on capital from the partnership firm, it is not required to be seen whether interest bearing borrowed funds have been advanced by the partner without interest or interest at the lesser rate than at which funds are borrowed. Even otherwise the appellant has claimed interest of Rs.20,01,419/- as business expenditure against business income in the nature of interest on capital of Rs.15,21,259/- which again gave loss of Rs. 4,80,160/- to the appellant without any valid reason.
7.2.3 Without prejudice to the above, it needs to be mentioned that the appellant has failed to justify the loss of Rs.30,63,502/- on account of lesser interest income than the interest expenditure incurred whether it is the expenditure u/s. 57 or u/s. 28 of the I.T Act. It was required on the part of the appellant to clearly bring on record necessary authentic documentary evidences to show the nexus of interest bearing borrowed funds and details of interest paid with such borrowed funds utilized with details of interest earned along with reasons for lesser interest charged/ received. The submission made by the appellant before the A.O. is vague and arbitrary and hence not acceptable. Considering these facts of the case and in law I am of the considered view that the addition of Rs.15,42,243/- made by the A.O. in the impugned assessment order is justified. The same is therefore upheld. This ground of appeal raised by the appellant is dismissed.
8.1 The third ground of appeal raised by the appellant read as under:
"The assessing officer erred in disallowing the total interest expenditure of Rs.15,54,583/- and making addition on the ground which was already discussed and accepted in the Original assessment U/s 143(3) of the Income Act, 1961 which is unjustified, prejudicial to the assesses, illegal and bad in law."
8.2 Decision 5 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 8.2.1 In view of the detailed discussion held in the earlier grounds of appeal, this ground of appeal, need no further adjudication. 9.1 The fourth ground of appeal raised by the appellant read as under:
"The AO erred in completing the assessment proceedings without giving any importance to the submission made by the assessee in reply and through video conferencing. The assessment order passed is bad in law, illegal and void ab initio.".
9.2 Decision 9.2.1 The appellant has brought nothing on record to show what was the submission made through video conferencing. In the absence of any such details this ground of appeal raised by the appellant cannot be adjudicated.
10.1 The fifth ground of appeal raised by the appellant read as under
10.2 The appellant reserve the right to add, amends, or modify any of the grounds of appeal."
Decision 10.2.1 During the course of appellate proceedings, the appellant has neither added nor amended or modified any of the ground of appeal hence this ground of appeal need no adjudication.
11. In the result, the appeal filed by the appellant is dismissed."
5. The assessee being aggrieved with the order of the CIT(Appeals) has carried the matter in appeal.
6. I have heard the Ld. Authorized Representatives of both the parties, perused the orders of the lower authorities and material available on record, as well as considered the judicial pronouncements that have been pressed into service by the Ld. AR to drive home his contentions.
7. Shri Rajesh Kumar Chawda, the Ld. Authorized Representative (for short 'AR') for the assessee at the threshold submitted that the A.O. had grossly erred in 6 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 law and facts of the case in assuming jurisdiction for reopening the concluded assessment of the assessee u/s. 147 of the Act. Elaborating on his contention, the Ld. AR had assailed the reopening of the concluded assessment of the assessee based on his two-fold contentions, viz. (i) that the reopening of the concluded assessment of the assessee was based on a mere "change of opinion" on an issue that had been looked into and deliberated upon at length by the A.O in the course of the original assessment proceedings; and (ii) that the reopening of the assessee's case beyond the period of four years from the end of the relevant assessment year was not as per the "1st proviso" to Section 147 of the Act. Carrying his contention further, the Ld. AR submitted that the issue based on which, the concluded assessment of the assessee had been reopened, i.e. declining of his claim for deduction of interest expenditure, had been looked into by his predecessor while framing the original assessment vide order u/s. 143(3) of the Act, dated 05.03.2016. The Ld. AR had taken me through the notice u/s. 142(1) of the Act, dated 07.12.2015 that was issued to the assessee by the ITO, Ward-3(4), Raipur in the course of the original assessment proceedings, wherein a specific query as regards the assessee's claim for deduction of interest expenditure of Rs. 48.66,709/- u/s. 57 of the Act was raised. The Ld. AR had further drawn my attention to the reply that was filed by the assessee vide his letter dated 01.02.2016, Sr. No.7. The Ld. AR submitted that as the concluded assessment of the assessee was reopened based on a mere "change of opinion", the same, thus, could not be sustained and was liable to be struck down on the said count itself. The Ld. AR in support of his aforesaid 7 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 contention had relied on the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Kelvinator of India Ltd., 256 ITR 1 (Del) [which thereafter had been approved by the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Pvt. Ltd. (2010) 320 ITR 561 (SC)].
8. Alternatively, the Ld. AR for the assessee submitted that as the concluded assessment of the assessee that was originally framed by the A.O vide his order passed u/s. 143(3) of the Act, dated 05.03.2016 was reopened beyond a period of four years from the end of the relevant assessment year i.e A.Y 2013-14, in the absence of any failure on his part to disclose fully and truly all material facts necessary for his assessment, therefore, the same being in violation of the "1st proviso" to Sec. 147 of the Act was also liable to be struck down for invalid assumption of jurisdiction by the A.O. It was, thus, averred by the Ld. AR that the notice u/s.148 dated 28.03.2021 issued by the A.O. was liable to be quashed for the aforesaid reason.
9. Per contra, the Ld. Departmental Representative (for short 'DR') relied on the orders of the lower authorities. The Ld. DR had placed on record a report, fated 20.05.2024 that was obtained from the A.O, which reads as under: 8
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 9 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 10 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024
10. Admittedly, it is a matter of fact borne from the record that the original assessment in the case of the assessee was framed by the A.O u/s. 143(3) of the Act, dated 05.03.2016. Before proceeding any further, I deem it fit to cull out the "reasons to believe", dated 11.03.2022 based on which, the concluded assessment of the assessee had been reopened by the A.O u/s. 147 of the Act, which reads as under:
"Subject: Furnishing of Reasons Recorded for Reopening the case - reg.
As requested by your kind self-vide letter dated 05.03.2022, the reasons recorded for reopening the case are reproduced as under:
1. Brief details of the Assessee:
The Assessee is an Individual. As per information available with this office, the assessee filed the return of income on 30.03.2014 for the relevant 11 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 assessment year declaring total income of Rs. 3,66,440/- only. This case was earlier assessed for F.Y. 2011-12 relevant to A.Y. 2012-13 and the reason of selection of the case was that the assessee took unsecured loan of Rs.1,37,97,733/- or more.
2. Brief details of information available:
In this case there is an Internal Audit Objection which comes under CBDT's instruction dated 04/03/2021 of Sr.No.-1(i).
It is observed that the assessee had shown income from interest to the tune of Rs.18,03,207/- and claimed deduction of interest expenses of Rs.48,66,709/- including Bank charges of Rs. 1184/- and Professional fee of Rs.10,470/- against this income resulting in loss of Rs.30,63,502/-. Further, on perusal of Personal Balance Sheet for period ended on 31.03.2013, it is revealed that the assessee had taken unsecured loans to the tune of Rs.1,37,97,733/- and Secured loan of Rs.2,45,52,127/- from 10101 & HDFC Bank. The assessee had extended loans and Advances of Rs.1,34,14,070/- out of the above amount to the family business concern named M/s G. K. & Sons Automobiles Pvt. Ltd. Out of this unsecured loan given to M/s G. K. automobiles Pvt. Ltd., a sum of Rs.17,95,725/- has been earned as interest on unsecured loan. He also earned interest on capital to the tune of Rs.15,21,259/- from G. K. Sales Corporation (partnership Firm) which is taxable under head income from Business and Profession u/s. 28 of Income Tax Act, 1961. Thus, the assessee claimed deduction u/s. 57 of the I. Tax Act to the tune Rs. 48,66,709/- against the income from other sources u/s 56 i.e. interest income of Rs.18.03,207/-
3. Analysis of information:
On further perusal of the Personal Balance Sheet as on 31.03.2013 the discrepancy as noted above press that the assessee has taken unsecured loan of Rs. 1,37,97,733/- from various family members and utilized this loan amount for extending unsecured loan to family concern M/s G.K. Sons Automobiles Pvt. Ltd. In submission dated 01.02.2016, the assessee has stated that out of the above funds, a sum of Rs. 145.52 Lac is given to M/s G. K. & Sons Automobiles Pvt. Ltd. As loan and interest earned on this loan amount is Rs. 17.96 Lac. However, it has been observed that interest paid to the lenders is ranging from 12% to 18% per annum, whereas interest earned on loan given to M/s G. K. & Sons Automobiles Pvt. Ltd. is 12 % per annum. Further, deduction u/s 57 of the I.T. act is also claimed against interest paid on unsecured loan of Rs.10,470/- , bank charges of Rs. 618/-, and Professional fee of Rs. 1184/- . Herein it is pertinent to mention that to claim deduction u/s 57 of the IT Act, it is important to satisfy the following conditions:-
(i) the expenditure must have been laid out or expended wholly and exclusively for the purpose of making or earning "income from other sources ";12
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024
(ii) the purpose of making or earning such income must be the sole purpose for which the expenditure must have been incurred, that is to say the expenditure should not have been incurred for such purpose as , also for another purpose, or for a mixed purpose ;
(iii) the distinction between purpose and motive must always be borne in mind in this connection, for, what is relevant is the manifest and immediate purpose and not the motive or personal considerations weighing in the mind of the assessee in incurring the expenditure .
Considering the above facts, it is ample clear that the assessee has wrongly claimed deduction u/s 57 of the I.T. Act to the tune of Rs. 15,16,365/- which cannot be said to be borne exclusively for earning interest Income u/s 56 of the IT Act. Hence, the same is required to be disallowed and added to the total income of the assessee.
4. Enquiries made as sequel to information:-
The Capital account and personal balance sheet of the assessee for period ending on 31.03.2013 along with the computation of income for the relevant period are examined.
5. Findings:
The Assessee filed its return of income for the year under consideration with his incorrect income and this fact was not examined at the time of re- assessment for F.Y. 2012-13 relevant to A.Y. 2013-14, therefore, in view of Para (c) of explanation of section 147 of the Income Tax Act, 1961, income chargeable to tax amounting to Rs.15,16,365/- has escaped assessment.
6. Basis of forming reason to believe and details of escapement of income In view of above, I have reasons to believe that income chargeable to tax amounting to Rs. 15,16,365/- has escaped assessment for A.Y. 2013-14 within the meaning of section 147 of the Income Tax Act, 1961. Therefore, kind approval may be granted for issuance of notice u/s 148 of the I.T. Act for A.Y. 2013-14.
7. Applicability of the provisions of section 147/151 to the facts of the case The Assessee filed his return of income for the A.Y. 2013-14 with his incorrect income. This case is within six years from the end of the assessment year under consideration. Accordingly, the proposal to issue notice under section 148 for the A.Y. 2013-14 is being submitted in the case of the assessee for kind perusal and necessary approval as per the provisions of section 151 of the Income tax Act, 1961." 13
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024
11. On a careful perusal of the "reasons to believe" in the backdrop of the original assessment framed u/s 143(3) of the Act, dated 05.03.2016, and the assessment record, I find substance in the claim of the Ld. AR that the concluded assessment of the assessee was reopened based on a mere "change of opinion". I concur with the Ld. A.R. that the concluded assessment of the assessee could not have been reopened to relook and reappreciate his claim for deduction of interest expenditure of Rs.15,16,365/-. I find that the A.O in the "reasons to believe" had admitted that as the aforesaid incorrect claim of the assessee was not examined by him at the time of reassessment (sic) for the year under consideration, therefore, the case was being reopened in view of Para (c) of "Explanation 2" to Section 147 of the Act. I am afraid that the reopening of a concluded assessment is not permissible based on a mere "change of opinion". My aforesaid view is fortified by the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Kelvinator of India Ltd. (2002) 256 ITR 1 (Del) [which had been approved by the Hon'ble Apex Court in the case of CIT Vs. Kelvinator of India Pvt. Ltd. (2010) 320 ITR 561 (SC)]. The Hon'ble High Court had observed that the department cannot take recourse to the provisions of Sec. 147 of the Act for the failure of the A.O. to apply his mind in the original assessment proceedings to the material which according to him, is relevant and was available on record. The Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (2008) 308 ITR 195 (Bom) had, by drawing support from the judgment of the Hon'ble High Court of Delhi in the case of CIT Vs. Kelvinator of India Ltd. (supra), had observed that where according to the A.O he had failed to apply his 14 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 mind to the relevant material in making the assessment order, he cannot take advantage of his wrong and reopen the assessment by taking recourse to the provisions of Sec. 147. The Hon'ble High Court had further observed that fresh application of mind by the A.O to the same set of facts for the reason that some material that was available on record while framing the original assessment was inadvertently excluded from consideration would not justify reopening of the assessment u/s 147 of the Act. For the sake of clarity, the observations of the Hon'ble High Court of Delhi in the case of CIT Vs. Kelvinator of India (2002) 256 ITR 1 (Del), which thereafter had been approved by the Hon'ble Apex Court in (2010) 320 ITR 561, are culled out as under (relevant extract):
"10. It is further to be seen that the legislature has not conferred power on the AO to review its own order. Therefore, the power under s. 147 cannot be used to review the order. In the present case, though the AO has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the AO, nothing new has happened, therefore, no new material has come on record, no new information has been received; it is merely a fresh application of mind by the same AO to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator (supra) referred to above, has taken a clear view that reopening of assessment under s. 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under s. 148".
12. Also, the observation of the Hon'ble High Court of Bombay in the case of Asian Paints Ltd. Vs. DCIT (2008) 308 ITR 195 (Bom), wherein as observed by us hereinabove a similar view had been taken, is culled out as under: 15
Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 "7. We have heard the learned counsel appearing for both sides. We have also gone through the judgments on which reliance was placed by the learned counsel appearing for both sides.
8. In the order rejecting the objection filed by the petitioner to the notice under section 148, respondent No. 1 has observed "verification of assessment record reveals that the said details were called for but inadvertently the same were not taken into account while framing the assessment and, therefore, it cannot be said that there is a change of opinion." According to respondent No. 1, thus, the relevant material was available on record, but he failed to apply his mind to that material in making the assessment order. The question is, can respondent No. 1 take recourse to the provision of section 147 for his own failure to apply his mind to the material which, according to him, is relevant and which was available on record. We find that this situation has been considered by the Full Bench of the Delhi High Court in its judgment in the case of CIT v. Kelvinator of India Ltd. [2002] 256 ITR 1 and the Full Bench has observed thus (page 19) :
"The said submission is fallacious. An order of assessment can be passed either in terms of sub-section (1) of section 143 or sub-section (3) of section 143. When a regular order of assessment is passed in terms of the said sub-section (3) of section 143 a presumption can be raised that such an order has been passed on application of mind. It is well known that a presumption can also be raised to the effect that in terms of clause (e) of section 114 of the Indian Evidence Act judicial and official acts have been regularly performed. If it be held that an order which has been passed purportedly without application of mind would itself confer jurisdiction upon the Assessing Officer to reopen the proceeding without anything further, the same would amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong."
9. It is clear from the observations made above that the Full Bench of the Delhi High Court has taken a view that in a situation where according to the Assessing Officer he failed to apply his mind to the relevant material in making the assessment order, he cannot take advantage of his own wrong and reopen the assessment by taking recourse to the provisions of section 147. We find, ourself, in respectful agreement with the view taken by the Full Bench of the Delhi High Court.
10. It is further to be seen that the Legislature has not conferred power on the Assessing Officer to review its own order. Therefore, the power under section 147 cannot be used to review the order. In the present 16 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 case, though the Assessing Officer has used the phrase "reason to believe", admittedly between the date of the order of assessment sought to be reopened and the date of formation of opinion by the Assessing Officer, nothing new has happened, therefore, no new material has come on record, no new information has been received, it is merely a fresh application of mind by the same Assessing Officer to the same set of facts and the reason that has been given is that the some material which was available on record while assessment order was made was inadvertently excluded from consideration. This will, in our opinion, amount to opening of the assessment merely because there is change of opinion. The Full Bench of the Delhi High Court in its judgment in the case of Kelvinator [2002] 256 ITR1 referred to above, has taken a clear view that reopening of assessment under section 147 merely because there is a change of opinion cannot be allowed. In our opinion, therefore, in the present case also, it was not permissible for respondent No. 1 to issue notice under section 148.
11. In the result, therefore, petition succeeds and is allowed. Rule is made absolute in terms of prayer clause (a) with no order as to costs."
(emphasis supplied by me)
13. Accordingly, I am of the view that as the case of the assessee had been reopened merely based on a "change of opinion", therefore, I am unable to persuade myself to subscribe to the view taken by the CIT(Appeals) who had upheld the validity of the reassessment proceedings.
14. Apropos the contention of the Ld. AR that the A.O. had grossly erred in assuming jurisdiction in violation of the "1st proviso" to Section 147 of the Act, I find substance in the same. Admittedly, it is a matter of fact borne from the record that the concluded assessment of the assessee had been reopened beyond the period of four years from the end of the relevant assessment period year, i.e. A.Y.2013-14 vide notice issued u/s.148 of the Act, dated 28.03.2021. As the concluded 17 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 assessment of the assessee was reopened beyond a period of four years from the end of the relevant assessment year to relook and reappreciate the material available on record, and not for any failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, therefore, the same violates the "1st proviso" to Sec. 147 of the Act. My aforesaid view is fortified by the judgment of the Hon'ble Supreme Court in the case of New Delhi Television Ltd. vs. Deputy Commissioner of Income Tax (2020) 116 Taxmann.com 151 (SC), wherein, the Hon'ble Apex Court had, inter alia, held that though the assessee is obligated to disclose the "primary facts" but it is neither required to disclose the "secondary facts" nor required to give any assistance to the A.O by disclosure of the other facts, and it is for the A.O to decide what inferences are to be drawn from the facts before him. It was observed by the Hon'ble Apex Court that the extended period of limitation for initiating proceedings under the "1st proviso" of Section 147 of the Act would only get triggered where the assessee had failed to disclose fully and truly all material facts necessary for its assessment. Now, in the case before us, we are unable to comprehend what facts the assessee had failed to disclose that would have otherwise justified bringing its case within the realm of the extended period contemplated in the "1st proviso" of section 147 of the Act. As the assessee had disclosed fully and truly all the material facts as regards the aforesaid issue, therefore, it could by no means be held to be in default to bring it within the sweep of "1st proviso" of Section 147 of the Act.
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15. Analyzing the scope of the "1st proviso" to Sec. 147 of the Act, which contemplates that where assessment in the assessee's case had been framed u/s 143(3) of the Act, then no action under Sec. 147 shall be taken in its case after the expiry of four years from the end of the relevant assessment year unless any income chargeable to tax had escaped assessment for such assessment year for failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, the Hon'ble Supreme Court had dismissed the Special Leave Petition (SLP) filed by the revenue in ACIT Vs. Marico Limited, 117 taxmann.com 244 (SC) and, thus, had impliedly approved the decision of the Hon'ble High Court of Bombay in the case of Marico Limited Vs. ACIT, WP NO.1917 of 2019 dated 21.08.2009. The Hon'ble High Court of Bombay in Marico Limited Vs. CIT (supra) [as approved by the Hon'ble Apex Court] had observed as follows:
"5. Upon hearing learned counsel for the parties and upon perusal of the documents and record, what we gather is that the notice of reopening of assessment has been issued beyond the period of four years from the assessment year. The reasons recorded by the Assessing Officer are elaborate and refer to various issues on which he wishes to carry out the reassessment. However, the central theme which passes though all these issues is that the Assessing Officer had gathered the information and material from the record of the assessment. For example in Paragraph No. 3 of the reasons which contains several sub-paragraphs which are different elements of the grounds for reassessment begins with the expression "On perusal of the record for the assessment year 2011-12, the following issues were found". Thus, with reference to various issues arise on the basis of the perusal of the record of the assessment year in question. Clearly, therefore, there is no material alien to the record which the Assessing Officer has referred to for issuing the impugned notice. Further, almost for every ground which is part of various sub-paragraphs of Paragraph No. 3, he has referred to either scrutiny or verification of the case 19 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 records. In clear terms, therefore, the Assessing Officer was acting on the information available from the record of the assessment.
6. As is well known, in an instance where the Assessing Officer exercises power of reassessment beyond the period of four years from the end of relevant assessment year, an essential requirement is that the escapement of income chargeable to tax is due to the failure on the part of the assessee to disclose truly and fully all material facts. This is part of section 147 of the Act itself and is on number of occasions by various judgments of High Court and Supreme Court held to be mandatory pre-requirement. In view of such settled law, it is not necessary to refer to any judgment. Revenue is unable to bring to our notice any aspect or element which did not form part of the record and on the basis of which from the reasons recorded, it can be culled out that the Assessing Officer had formed a belief that income chargeable to tax had escaped assessment. In clear terms therefore, there was no failure on the part of the assessee to disclose truly and fully all material facts.
7. Counsel for the revenue however submitted that one of the issues raised by the Assessing Officer is that the activity carried on by the assessee does not amount to manufacturing activity. In the present petition, it is not necessary for us to comment on this aspect of the matter. What is important however is such belief also the Assessing Officer has formed on the basis of material already on record. Looked from any angle, the Assessing Officer cannot justify issuing the notice of reopening of assessment beyond the period of four years from the end of relevant assessment year.
8. Under the circumstances, impugned notice is quashed. Petition allowed and disposed of accordingly."
I am of the considered view that as in the case before the Hon'ble Apex Court in Marico Limited (supra), the concluded assessment in the case of the present assessee before us for the year under consideration, i.e., A.Y 2013-14, had been reopened vide notice u/s 148 of the Act, dated 28.03.2021, i.e., beyond four years from the end of the relevant assessment year, without there being any failure on the part of the assessee to fully and truly disclose all material facts necessary for his 20 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 assessment, therefore, I am unable to persuade myself to subscribe to the view taken by the CIT(Appeals) who had held otherwise.
16. I am, thus, of the view that as the A.O. had grossly erred in law and facts of the case in assuming jurisdiction for reopening the concluded assessment of the assessee on the two counts, viz. (i) that the reassessment proceedings u/s. 147 of the Act had wrongly been initiated based on a mere "change of opinion"; and (ii) that reopening of the concluded assessment beyond the period of four years from the end of the relevant assessment year, i.e. A.Y 2013-14 violates the "1st proviso" to Section 147 of the Act; therefore, the consequential reassessment so framed by him vide his order passed u/s.147 r.w.s. 144B of the Act, dated 30.03.2022 is quashed for want of valid assumption of jurisdiction.
17. As I have quashed the reassessment framed u/s.147 r.w.s. 144B of the Act, dated 30.03.2022 for want of valid assumption of jurisdiction by the A.O., therefore, I refrain from adverting to the other contentions based on which the impugned order has been assailed before me, which, thus, t are left open.
18. In the result, the appeal of the assessee is allowed in terms of the aforesaid observations.
Order pronounced in open court on 31st day of May, 2024.
Sd/-
(रवीश सूद /RAVISH SOOD) या यक सद य/JUDICIAL MEMBER रायपुर/ RAIPUR ; दनांक / Dated : 31st May, 2024 21 Hemant Parwani Vs. DCIT, Circle-1(1), Raipur ITA No. 139/RPR/2024 ***SB आदे श क त ल प अ े षत / Copy of the Order forwarded to :
1. अपीलाथ / The Appellant.
2. यथ / The Respondent.
3. The CIT(Appeals)-1, Raipur (C.G)
4. The Pr. CIT-1, Raipur (C.G)
5. वभागीय त न ध, आयकर अपील य अ धकरण,रायपुर बच, रायपुर / DR, ITAT, Raipur Bench, Raipur.
6. गाड फ़ाइल / Guard File.
आदे शानस ु ार / BY ORDER, // True Copy // Senior Private Secretary आयकर अपील य अ धकरण, रायपरु / ITAT, Raipur.