Delhi High Court - Orders
Principal Commissioner Of Income Tax - 7 vs Psb Industrial (India) Pvt. Ltd., on 8 February, 2024
Author: Yashwant Varma
Bench: Yashwant Varma, Purushaindra Kumar Kaurav
$~3
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ ITA 575/2018
PRINCIPAL COMMISSIONER OF INCOME TAX - 7
..... Appellant
Through: Mr. Vipul Agrawal, Sr.
Standing Counsel along with
Mr. Gibran Naushad and Ms.
Sakashi Shairwal, Jr. SC.
versus
PSB INDUSTRIAL (INDIA) PVT. LTD.,
..... Respondent
Through: Ms. Swaralipi Deb, Adv.
CORAM:
HON'BLE MR. JUSTICE YASHWANT VARMA
HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR
KAURAV
ORDER
% 08.02.2024
1. Notice. Since the respondent is duly represented, no further steps need be taken.
2. Having heard Mr. Agarwal, we find that the Income Tax Appellate Tribunal ["ITAT"] has essentially upheld the view taken by the Commissioner of Income Tax (Appeals) ["CIT(A)"]. The CIT(A) while considering the aspect of reopening under Section 147 of the Income Tax Act, 1961 ["Act"] has principally held as follows:-
"3.1. The original assessment was done u/s 143(3) read with 147 on 29.09.2009. The assessment was reopened again on 30.03.2011 and therefore proviso to section 147 is applicable and the same is as follows:
"Provided that where an assessment under sub-section(3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return u/s This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/02/2024 at 21:51:30 139 or in response to a notice issued under sub-section 1 of section 142 or section 148 or to disclose fully, and; truly all material facts necessary for his assessment for that assessment year. "
3.2 The proviso makes it explicit that in a case where the assessment was done u/s 143(3) and in which four years have elapsed, the assessment can be reopened only if there is failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The reason for reopening mentioned by the AO superficially mentions this aspect but is not categorical enough to specify the actual failure of the appellant to disclose fully and truly all material facts necessary for the assessment. Perusal of the reasons recorded above indicates that the present AO is of the view that there was failure on part of the AO who framed the earlier assessment order dated 29.09.2009. There is mention in the reasons recorded· that the earlier assessment was completed without examining the aspect of interest free deposit received by the appellant of Rs.67 crores for 25 years. There is also mention that in the earlier assessment order, the AO had not considered that the company had not carried out any manufacturing and trading activity during the year and therefore no expense is to be allowed under business expenses. Therefore, this appears to be a clear case of 'change of opinion'. In this connection, it is pertinent to mention the relevant portion of the original reassessment order dated 29.09.2009 which is as follows:
"3. Assessee had originally shown ALV of property as Rs.1 lakh. However, it has shown ALV of Rs.65,76,835/- in the return filed incompliance to notice u/s 148 of the Act. Assessee was asked to furnish valuation report in respect 1 of annual rental value of the property. Assessee filed Valuation Report of Govt. Approved Valuer on 29.09.2009. As per this Valuation Report ALV of the property, was worked out at Rs. 76,02,877/-. Thus, there is huge deference in/rental value shown by the assessee in its original return, in its return filed in compliance to notice u/s 148 and the one determined by the approved valuer. This issue was discussed with the counsel of the assessee. The ALV shown by the assessee in original return was enhanced by the assessee itself in the return filed by it -incompliance to notice u/s 148 of the Act. This was again determined at a different figure by Govt. Approved Valuer. Assessee has not given any basis for showing two different ALVs in the two return whereas the Approved Valuer has determined ALV giving proper basis for doing so. Thus, ALV as determined by the Approved Valuer is being adopted for the computation of assessee's income from house property. ALV of the property as per the This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/02/2024 at 21:51:30 Valuation Report of the Govt. Approved Valuer obtained and filed by the assessee itself is Rs. 76,02,877/-, which is taken as the correct ALV of the property instead of Rs. 65,76,835/- as disclosed by the assessee in the return filed in compliance to notice u/s 148 of the Act. Assessee itself has filed a revised computation of its income on29.09.2009 in which it has shown ALV of the property a Rs. 76,02,877/-. Accordingly, income from house property is computed by taking, ALV of Rs. 76,02,877/- of the property, situated at Khandsa Road, Gurgaon."
3. It would appear from the aforesaid recitals as appearing in the order of the CIT(A) dated 28 February 2013 that it was an undisputed fact that full disclosure of the Annual Letting Value ["ALV"] in respect of the property in question came to be made only in the return which was submitted after the issuance of notice under Section 148 of the Act.
4. In that view of the matter, prima facie, we are of the considered opinion that the reassessment could not be described as being based on a "change of opinion". We consequently admit this appeal on the following question of law: -
A. Whether non-disclosure of material facts required for determination of ALV subsequent to original assessment proceedings would have not qualified the test of non-disclosure of true and full material facts as per the First Proviso to Section 147 of the Act?
5. Consequently, list again on 12.03.2024 YASHWANT VARMA, J.
PURUSHAINDRA KUMAR KAURAV, J.
FEBRUARY 8, 2024/neha This is a digitally signed order.
The authenticity of the order can be re-verified from Delhi High Court Order Portal by scanning the QR code shown above. The Order is downloaded from the DHC Server on 12/02/2024 at 21:51:31