Gujarat High Court
Commissioner Of Incomer Tax ... vs Gmdc Science And Research ... on 7 June, 2016
Author: Akil Kureshi
Bench: Akil Kureshi, A.J. Shastri
O/TAXAP/437/2016 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 437 of 2016
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COMMISSIONER OF INCOMER TAX (EXEMPTIONS)....Appellant(s)
Versus
GMDC SCIENCE AND RESEARCH CENTRE....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE A.J. SHASTRI
Date : 07/06/2016
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. Revenue has challenged the judgment of Income Tax Appellate Tribunal dated 03.12.2015, raising following question for our consideration.
"Whether on facts and in the circumstances of the case the Appellate Tribunal is correct in law on quashing the order passed u/s 143(3) r.w.s. 147 of the Act, particularly when the assessee has wrongly claimed exemption u/s 11(1)(a) of the Act on accumulated income and thereby has failed to disclose truly and fully all material facts?"
2. As can be seen from the question, the issue Page 1 of 4 HC-NIC Page 1 of 4 Created On Thu Jun 09 00:59:36 IST 2016 O/TAXAP/437/2016 ORDER pertains to the validity of the proceedings for reopening of the assessment. The respondent assessee is a Trust. For the assessment year 200607 the return of income was taken in scrutiny and scrutiny assessment was framed. Beyond the period of four years from the end of the relevant assessment year, the Assessing Officer issued notice for reopening such assessment. He had recorded following reasons for issuing the notice.
"On verification of the case records, it is noticed that the assessee trust had income under the head 'other source' amounting to Rs. 11,65,15,622/- including unspent accumulated funds of Rs.9,80,09,658/- under section 11(3) to be treated as deemed income for A. Y. 2006-07. This deemed income was related to A.Y. 1996-97 in which fund/income accumulated u/s. 11(2) of the Act. In the statement of the income for A.Y. 2006-07 the assessee claimed statutory exemption under section 11(l)(a) of the Act amounting to Rs.1,74,77,343/- (i.e. 15% of Rs.11,65,16,622/-) and the same was allowed in scrutiny assessment. Thus, the claim of the assessee for set apart/accumulation (15%) of income also included the deemed income in addition to the income of A.Y. 2006-07 amounting to Rs.1,91,14,931/-.
However, as per the Board circular 29 dated 23/08/1969, no accumulation/ on the deemed income is allowable. Thus, the set apart allowed on deemed income of Rs.9,80,09,658/- pertaining to A.Y. 1996-97 was not to be allowed to the assessee trust. The incorrect set apart/accumulation of Rs.1,46,10,104/- is worked out as Under:
Set apart claimed and allowed (15% of Rs.
Page 2 of 4
HC-NIC Page 2 of 4 Created On Thu Jun 09 00:59:36 IST 2016
O/TAXAP/437/2016 ORDER
11,65,16,622)-
Rs. 1,74,77,343/-
Less: Allowable set apart (15% of Rs.
1,91,14,931/-
income
for A. Y. 2006-07 Rs. 28,67,239/-
Rs.28,67,239/-
Excess set apart -
Rs.1,46,10,104/-
In view of the above, I have reason to believe that, income chargeable to tax has escaped assessment and hence it is fit case for re-opening the assessment within the meaning of Sec. 147 of the Act."
3. The assessee questioned the very validity of the notice for reopening before the Revenue Authorities and lastly before the Tribunal. The Tribunal held that the proceedings of reopening were invalid. Hence, this appeal.
4. From the reasons recorded with the Assessing Officer for issuing notice for reopening, it can be seen that it was only upon verification of case records that he noticed certain discrepancies in the tax liability of the assessee. Neither in the reasons recorded there is any reference that income chargeable to tax escaped assessment due to failure on the part of the assessee to disclose truly and fully all material facts, nor such factor can be inferred upon Page 3 of 4 HC-NIC Page 3 of 4 Created On Thu Jun 09 00:59:36 IST 2016 O/TAXAP/437/2016 ORDER giving all the reasons. In fact, the reasons start with the expression "on verification of the case records, it is noticed that ...". Thus, the relevant facts were very much on record when the original assessment was framed and even according to the Assessing Officer, there was no failure on the part of the assessee to disclose material facts. Reopening of assessment beyond the period of four years was therefore correctly permitted by the Tribunal. Tax Appeal is therefore dismissed.
(AKIL KURESHI, J.) (A.J. SHASTRI, J.) ANKIT Page 4 of 4 HC-NIC Page 4 of 4 Created On Thu Jun 09 00:59:36 IST 2016