Calcutta High Court
Selvel Transit Advertising Pvt. Ltd vs Commissioner Of Income Tax-Iv on 4 December, 2019
Author: Arindam Sinha
Bench: Arindam Sinha
Judgment
IN THE HIGH COURT AT CALCUTTA
Constitutional Writ Jurisdiction
ORIGINAL SIDE
WP no.1054 of 2011
SELVEL TRANSIT ADVERTISING PVT. LTD.
Versus
COMMISSIONER OF INCOME TAX-IV,KOLKATA & ORS.
BEFORE:
The Hon'ble JUSTICE ARINDAM SINHA
For petitioner : Mr. Somak Basu, Adv.
For respondents : Mr. Dhiraj Kr. Trivedi, Adv.
Mr. Debanshu Ghorai, Adv.
Heard on : 6th March, 2019, 17th April, 2019 and 4th December, 2019.
Judgment on : 4th December, 2019.
The Court :- Challenge in this writ petition is against notice dated 24th March, 2011 issued under section 148, Income Tax Act, 1961, for reopening to assess/re-assess the income for assessment year 2006-07.
Mr. Basu, learned advocate appears on behalf of petitioner and draws attention to what has been said to be reasons, for belief of the Assessing Officer to reopen and reassess. Following from the reasons for belief, stated by communication dated 4th March, 2011, are reproduced below:- 2
"In the instant case, in course of completion of I.T. assessment for A.Y. 2008-09 it was observed that almost the entire income has been claimed by assessee as exempted u/s 80IA of the I.T. 1961. As per Form 10CCB the initial assessment year of such claim is 2001-02. Vide letter dated 25.10.10 it was submitted by the assessee that it is engaged in the business of outdoor advertising and to develop, operate and maintain Infrastructural Facility (Bridge). In support the assessee furnished the copy of agreement with Executive Engineer, P.W. (Roads) Department.
According to the said agreement the assessee was required to build and maintain two over Bridge on Nazrul Islam Avenue. Both the Bridges will remain the property of the assessee for twenty years. But the Balance Sheet of the assessee does not disclose any such assets. During assessment proceedings it was submitted by the assessee that it had treated such expenditure as Deferred Revenue expenditure.
In spite of repeatedly asking for copies of Bills & Vouchers towards construction of the Bridges, the assessee never produced any evidences. Thus the construction of Bridges by the assessee remains unverified with documentary evidences. Apart from that during assessment proceedings no confirmatory certificates were received from the Executive Engineer, P.W.D. (Roads) Division, in response to notice u/s. 133(6) dated 27.10.10.3
It may be mentioned that a reply from Executive Engineer, P.W.D.(Roads) Department was received in this office on 14.01.11, which is much after completion of time-barring assessment. Such reply also arises some questions. Firstly, the letter was received in this office 2 months after date of Issue. Secondly, the name of the Executive Engineer and his official seal do not appear in the letter. Thirdly, the letter is completely silent about the over bridge at Kaikhali crossing. Thus the genuinity of the letter is to be verified."
Mr. Basu submits, his client is engaged, inter alia, in infrastructure projects and entitled to avail exemption under section 80-IA. Such exemptions were allowed in previous assessment years but re-assessment proceeding initiated in subsequent assessment for assessment year 2008-09. He draws attention to averments, inter alia, in paragraph 26 in the petition, which are reproduced below :
"26. Your petitioner states that for the first time for the assessment year 2008-09 the Assessing Officer did not allow the deduction under Section 80-IA of the Act on the ground that from the Balance Sheet it shows that no fixed asset has been disclosed in the audited Balance Sheet though under the agreement the assessee become the owner of the two overpasses i.e. over bridges for 20 years. The petitioner preferred an appeal against the said order before the CIT (Appeals). However the CIT (Appeals) noticed the fact that the 4 assessee had been allowed deduction under Section 80-IA of the Act from the very inception i.e. 2001-02 to 2007-08 even though in the Balance Sheet asset was shown to be nil after the assessment year 2007-08 in view of the accounting system which was followed by the assessee. However the CIT (Appeals) allowed the deduction under Section 80-IA for the assessment year 2008-09 in view of the fact that when the assessee had been allowed the benefit under Section 80-IA of the Act it is eligible for such benefit for 10 consecutive years."
For assessment year 2006-07, there was assessment made under section 143(3) pursuant to notice earlier issued under section 143(2). Text of notice dated 24th October/19th November, 2007 under section 143(2) is reproduced below:
"There are certain points in connection with the return of income submitted by you on 28th November 2006 for the assessment year 2006-07 on which I would like some further information. You are hereby required to attend my office on 10th December 2007 at 11:00 AM either in person or by a representative duly authorised in writing in this behalf or produce or cause there to be produced at the said time any documents, accounts and any other evidence on which you may rely in support of the return filed by you."5
In the circumstances, attempt to reopen is on change of opinion. He relies on judgment of Supreme Court in CIT vs. Kelvinator of India Ltd. reported in (2010) 320 ITR 561 and submits, there is no tangible material disclosed in the reasons to believe, let alone any link with formation of the belief. He wants interference.
Mr. Trivedi, learned advocate appears on behalf of Revenue and relies on the reasons for belief. He argues, bills and vouchers towards construction of the bridges were not produced by assessee. Its claim of having constructed, remains unverified. During assessment proceeding, no confirmatory certificate was received from Executive Engineer, PWD (Roads) Division, in response to notice dated 7th October, 2010 under section 133(6). He submits, this is not a case of change of opinion but the Assessing Officer found, assessee had failed to fully disclose truly, all material facts necessary for assessment. As such the Assessing Officer got jurisdiction to reopen and reassess. The notice under section 148 is a good notice and should not be interfered with.
Supreme Court in Kelvinator of India Ltd. (supra) declared the law as summed up therein to be -
"Hence, after 1-4-1989, Assessing Officer has power to reopen, provided there is "tangible material" to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief." (paragraph 4) 6 There is no dispute regarding petitioner having earlier claimed and obtained the exemption. In the affidavit-in-opposition Revenue said, inter alia, as follows:
"In the previous years where assessment done under Section 143(3) from the Assessment Year 2003-04 to Assessment Year 2007-08, never the question was raised about the eligibility criteria of deduction under Section 80IA of the Income Tax Act, 1961 by the then Assessing Officers. The assessee's allegation is incorrect that the Assessing Officer had no new or fresh information for reopening of the same. The Assessing Officer reopened the case as soon as he came to know about the new information that the assessee company was not in the business of the infrastructural facility but in the business of out-door advertisement and not fulfilling the criteria for deduction under Section 80IA of the Income Tax Act, 1961."
In view of stand taken by Revenue on the reasons to believe, it must be seen whether they are good reasons, as based on tangible material having live link with formation of the belief.
Jurisdiction to reassess is assumed when the Assessing Officer has reason to believe, any income chargeable to tax has escaped assessment for any assessment year, subject to certain provisions. First proviso lays down parameters regarding assumption of this jurisdiction where an assessment under sub-section (3) in section 143 has been made for the relevant assessment 7 year. There is no dispute that for the relevant assessment year, a return under section 139 was filed by assessee. The notice issued under section 143(2) is pursuant to a notice issued under section 142(1). In such circumstances, scrutiny assessment under section 143(3) was made on the Assessing Officer having required disclosure of further particulars and information, to thereupon allow the exemption. Nothing has been disclosed by Revenue to give credence to the statement in the reasons to believe that in spite of repeatedly asking for copies of bills and vouchers towards construction of the bridges, assessee never produced any evidence, in the face of contents of said two notices issued under sections 142(1) and 143 (2). Court has once again looked at notice dated 24th October/19th November, 2007 issued under section 143(2) and earlier notice dated 9th April, 2007 under section 142(1).
The assertion in the affidavit-in-opposition that the Assessing Officer for the first time came to know that assessee was not in the business of infrastructural facility but in the business of outdoor advertisement, thereby not fulfilling criteria for deduction under section 80IA, is not based on any tangible material that has been placed before Court, either by the reasons or by subsequent disclosure. There is no disclosure in the affidavit-in-opposition. Letter of Executive Engineer, PWD (Roads) Department received on 14th January, 2011 in response to notice dated 27th October, 2010 issued under section 133(6), are correspondence post assessment order dated 14th July, 2008, in scrutiny assessment made under section 143(3). The notice dated 27th October, 2010 issued under clause (6) in section 133, according to the 8 Assessing Officer, drew belated response from Executive Engineer PWD (Roads) Department and not relied upon in the reasons, for being of doubtful genuineness. Absence of reliable answer from, such as appears to be given by a government functionary, being noticee under clause (6) in section 133, can be cause for further enquiry but not tangible material having live link with formation of the belief. The letter obviously does not support contention of Revenue. As such no material has been disclosed by Revenue. All this leads to inevitable conclusion that there has been change of opinion.
The writ petition succeeds. Impugned notice is set aside and quashed as are all proceedings taken pursuant thereto.
(ARINDAM SINHA, J.) sb/nm/A/s