Income Tax Appellate Tribunal - Mumbai
Perfect Corporate Services Ltd, Mumbai vs Acit 4(3)(1), Mumbai on 20 March, 2019
आयकर अपीलीय अधिकरण "C " न्यायपीठ मब
ुं ई में ।
IN THE INCOME TAX APPELLATE TRIBUNAL " C" BENCH, MUMBAI
श्री महावीर स हिं , न्याययक दस्य एविं श्री मनोज कुमार अग्रवाल के मक्ष ।
BEFORE SRI MAHAVIR SINGH, JM AND SRI MANOJ KUMAR AGGARWAL, AM
Aayakr ApIla saM . / ITA No. 3100/Mum/2017
(inaQa- a rNa baYa- / Assessment Year 2009-10)
The Asst. Commissioner of M/s Perfect Corporate
Income Tax, Circle 4(3)(1), Services Ltd.
R.No. 649, 6thFloor, Aayakar 301, Sona Chambers
Vs.
Bhavan, Mumbai -400 020 507/509, JSS Road, Chira
Bazar, Marine Lines (East),
Mumbai-400 023
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
स्थायी ले खा िं . / PAN No. AADCP0907H
प्रत्याक्षे प स M . / CO No. 299/Mum/2018
(Arising in ITA No. 1938/Mum/2017 for AY 2009 -10)
M/s Perfect Corporate The Asst. Commissioner of
Services Ltd. Income Tax, Circle 4(3)(1),
301, Sona Chambers 507/509, R.No. 649, 6thFloor,
Vs.
JSS Road, Chira Bazar, Aayakar Bhavan, Mumbai -
Marine Lines (East), Mumbai - 400 020
400 023
(ApIlaaqaI- / Appellant) .. (p`%yaqaaI- / Respondent)
अपीलाथी की ओर े / Appellant by : Shri Abirama Karthikeyan, DR
प्रत्यथी की ओर े / Respondent by : Shri AK Ghosh, AR
ुनवाई की तारीख / Date of hearing: 20.03.2019
घोषणा की तारीख / Date of pronouncement : 20.03.2019
2
ITA No . 3 1 00 / Mu m /2 0 17
CO No. 31 6/ Mu m/ 2 01 8
AadoSa / O R D E R
महावीर स हिं , न्याययक दस्य/
PER MAHAVIR SINGH, JM:
These cross appeals are arising out of the order of Commissioner of Income Tax (Appeals)-9, Mumbai [in short CIT(A)], Appeal No. CIT(A)- 9/Cir.4/590/2015-16 vide order dated 16.01.2017. The Assessment was framed by the Dy. Commissioner of Income Tax, Circle-4(3)(1), Mumbai (in short 'DCIT/ITO/ AO') for the A.Y. 2009-10 vide order dated 23.03.2016 under section 143(3) of the Income Tax Act, 1961 (hereinafter 'the Act').
2. At the outset, the learned Counsel for the assessee stated that assessee in its CO has challenged the reopening of assessment and raised the legal grounds. Hence, he stated that let the assessee be allowed to argue the assessee's CO first. Accordingly, we take up the CO and the ground raised by assessee reads as under: -
"On the facts and in the circumstances of the appellant's case and in law the Ld. CIT(A) erred in dismissing the following legal grounds raised by the appellant relating to reopening of assessment and consequent assessment order passed u/s. 143(3) r.w.s 147 of the Act:-
(a) On the facts and in the circumstances of the appellant's case and in law, the Ld. A.O erred in re-opening the assessment u/s. 147 by issue of 3 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 notice u/s. 148 dated 24.03.2015, which is barred by limitation, illegal, bad in law, void-ab-
initio or otherwise void for want ,of Jurisdiction.
(b) On the facts and in the circumstances of the appellant's case and in law, the Ld. A.O, erred in re-opening the assessment uls. 147 by issue of notice dated 24.03.2015 u/s 148 which is barred by limitation in view of the first proviso to Section 147 of the I.T. Act, 1961."
3. Briefly stated facts ae that the assessee filed original return of income under section 139(1) of the Act on 25.09.2009 and the same was processed under section 143(1) of the Act. Subsequently, the AO reopened the assessment by issuing notice under section 148 of the Act dated 21.03.2014 and inconsequence to notice under section 148 of the Act, the assessee filed its return of income as originally filed by assessee on 15.04.2014. The relevant reasons recorded for issuance of notice under section 148 of the Act vide notice dated 21.03.2014 reads as under
(which is enclosed at page 20 of assessee's paper book): -
"Reasons for issuing of notice under section 148 .............
The assessee filed Return of Income for AY. 2009-10 on 25.09.2009 returning a Total Income of Nil. The return was processed u/s. 143(1) of the I.T. act, 1961 on 03.01.2011.
As per information received from the Director of Income Tax (Intell&CR.Inv.), Mumbai, vide letter 4 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 No.DlT(I&Cl)/F.No.233/ROC/2013-14 dated 26.03.2014 through CCIT(CCA), Mumbai, it was seen that the assessee has issued shares at a price which is over and above the nominal value of the shares the detail of which are as under:
Company name PAN Share No. of Face Total
Allotment shares Value premium
Type issued
Perfect Corporate AADCP0907H Cash 190500 10 17,145,000
Services Ltd.
The pre-requisite for issue of shares at premium is that there should be a substantial Increase in the net worth of the company. It is mainly profitability, credibility, goodwill of the concern which creates the opportunity and requirement of premium. On perusal of the balance sheet which has been e-filed there appears to be no corresponding accretion to the assets of the company which could justify the unreasonable high premium received from the issue of preference shares. The sale price of the preference/equity shares having face value of Rs.10 and a premium of Rs.90 per share is not correct as per the net worth of the shares of the company. The Intrinsic value of the shares in comparison to the premium received on the shares is not substantiated. Therefore, the large premium received by the assessee company amounting to Rs.17,145,000/- is unconvincing and unjustified.5
ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 In view of the above information, the total share premium amounting to Rs.17,145,000/-is extremely unjustified excessive and are not genuine. The premium amount of the preference/equity shares Is not correct as per the net worth of the company. On account of having a look at this fact, for bringing this amount to tax and as also the failure on the part of the assessee to disclose fully the details, I have reasons to believe that income to the extent of Rs.17,145,000/- has escaped assessment for the A.Y. 2009-10 within the meaning of section 147 of the Income Tax Act. I am satisfied that the assessee has not made a true and fair disclose in its return of income filed and that this is a fit case for issue of notice u/s. 148 read with section 149(1)(a) and Section 151(2) of the Income Tax Act, 1961. Hence, I proposed to re-open the assessment u/s. 147 of the I.T. Act, 1961 by Issuing notice u/s. 148 of the Income Tax Act, 1961.;
From the above, it seems that the notice under section 148 of the Act was issued and assessment was reopened in order to verify the genuineness of share capital raised by the assessee during the previous year 2008-09 relevant to AY 2009-10. The assessee during the course of reassessment proceedings in response to notice under section 142(1) dated 13.10.2014, filed various details including the details of share capital, share premium receipt by assessee along with the confirmations, 6 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 name, address, PAN No. of applicant of shares and various other details relating to the same as well as justification for share premium receipt by assessee. The assessee filed these details vide letter dated 28.10.2014. The AO after considering all the details completed the assessment and passed the assessment order under section 147 read with section 143(3) of the Act vide order dated 31.10.2014, which is enclosed in assessee's paper book at pages 22 to 35, wherein the AO has accepted the entire share capital including the share premium issued by the assessee during the year under consideration amounting to ₹ 1,71,45,000/-. No addition on this account was made despite the reasons recorded by the AO on this very reason.
4. Subsequently, again the AO issued notice under section 148 of the Act to reopen the complete assessment under section 147 read with section 143(3) of the Act dated 31.10.2014 vide notice issued under section 148 of the Act dated 24.03.2015. For this, the AO recorded the reasons which are enclosed in assessee's paper book at page 41 and the relevant reasons reads as under: -
"Reasons for issuing of notice u/s 148 ..........
The assessee filed its return of income on 25.09.2009 returning total income Nil. The same was processed under section 143(1) of the I.T. Act, 1961 on 03.01.2001. Scrutiny assessment completed under section 143(3) read with section 147 of the AY 2009-10 on 31.10.2014.7
ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 A search and seizure action was carried out in the case of Shri Praveen Kumar Jain group on 01.10.2013. In the statement recorded during the course of search proceedings, Shri Pravin Kumar Jain admitted that the only activity carried out by all concerns controlled by him is providing accommodation entries in the nature of bogus unsecured loans, share application money, bogs sales and LTCG etc. Further from the statements of dummy directors/ proprietors it was revealed that they were used to sign different papers for normal consideration given by Shri Pravin Kumar Jain, Pravin Kumar Jain himself is a director in few concerns only. However, through various dummy directors/ proprietors he controls, operates and manages a large number of concerns. All these concerns are not carrying out any genuine business. They do not have aby physical stock of goods. Further these concerns have not employed any persons except a few common accountants who manage accounts and banking transactions of all such concerns and all these concerns are indulged in the activity of providing accommodation entries only.
Subsequent to the search action in the case of Shri Pravin Kumar Jain, search and seizure action was carried out by the Mumbai 8 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 Investiation Wing in Kamla Land Mark Group and Subhlaxmi Group.
Kamla Land Mark Group involved in the business of real estate had taken accommodation entries on unsecured loans from various concerns including those run and operated by Shri Pravin Kumar Jain. During the course of search action, Shri Jity Jain the promoter of the group admitted in his statement recorded on oath under section 132(4) that the group had taken unsecured loans taken from two bogus entities viz. Faststone Trading Co. Pvt. Ltd. and New Planet Trading Co. Ltd controlled by Shri Praveen Kumar Jain.
Similarly, subhalaxmi Group engaged in the business of manufacturing of textiles, had taken accommodation entries of bogus share capital from various entry providers including the concerns of Shri Pravin Kumar Jain. In his statement recorded on oath under section 132(4), Shri Yogesh Agarwal, Promoter of the group admitted that such entries of share capital are in the nature of accommodation entries only.
The above search findings corroborate that all the concerns run, controlled and operated by Shri Pravin Kumar Jain are 9 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 indulged in the activity of providing accommodation entries only.
From the information received it is seen that the assessee has taken accommodation entries in the nature of purchase from the following accommodation entry operators run, controlled and operated by Shri Pravin Kumar Jain. The details are as under: -
Sl Name of Hawala Entry Operator Amount Nature of AY No. transaction
1. Ansh Mercandise Pvt. Ltd. (New 7,00,000 SAP 2009-10 Planet Trading Co. Pvt. Ltd)
2. Ansh Mercandise Pvt. Ltd (New 25,00,000 SAP 2009-10 Planet Trading Co. Pvt. Ltd)
3. Ansh Mercandise Pvt. Ltd (new 16,50,000 SAP 2009-10 Planet Trading Co. pvt. Ltd.)
4. Kush Hindustran Pvt. Ltd 16,20,000 SAP 2009-10
5. Olive Overseas Pvt. 16,20,000 SAP 2009-10 Ltd.(Realgold Trading P Ltd.)
6. Raghunandan Rayons Ltd. 16,20,000 SAP 2009-10
7. Triangular Infocom Ltd. (Lexus 25,00,000 SAP 2009-10 Infotech Ltd.)
8. Triangular Infocom Ltd. (Lexus 16,20,000 SAP 2009-10 infotech Ltd.)
9. Triangular Infocom Ltd. (Lexus 16,20,000 SAP 2009-10 infotech Ltd.) Total 1,54,30,000 In view of the above information, the total share application received by the assessee amounting to ₹ 1,54,30,000/- are not genuine and accordingly I have reason to believe that the same has escaped assessment for AY 2009-10 within the meaning of section 147 and am satisfied that this is a fit case of issue of notice under section 148 r.w.s 149(1)(a) and section 151(1) of the Income Tax Act, 1961.10
ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8
5. The learned Counsel for the assessee in view of the above reasons, tried to explain that the AO has applied his mind to the facts of the case mechanically to reopen the assessment on the basis of information received from Investigation Wing. He explained, that, it is particularly evident and established from the fact that the assessee has received share application money from the following three parties only: -
Sl Name of Hawala Entry Operator Amount No.
1. Ansh Mercandise Pvt. Ltd (new Planet 16,50,000 Trading Co. pvt. Ltd.)
2. Raghunandan Rayons Ltd. 16,20,000
3. Triangular Infocom Ltd. (Lexus 25,00,000 Infotech Ltd.) Whereas in the reasons recorded, the AO has satisfied that the assessee has received share application money of ₹ 1,54,30,000/- from the five parties, but the AO in the reasons have mentioned that 9 parties, which has been duplicated. Thus, in view of the above recording of the reasons, the AO has neither verified the assessment record nor applied is own mind but simply reopen the assessment mechanically on the basis of information received from investigation Wing. The assessee carried the matter before CIT(A) on jurisdictional issue as well as on merits. The CIT(A) decided the issue on merits in favour of assessee by observing in para 6.3.22 to 6.3.23 as under: -
"6.3.22 In the case before me the record also shows that to prove genuineness of impugned share application money from the said parties, the appellant has furnished to the AO the various details which has been also produced during the course of appellant proceedings and may be seen from the 11 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 appellant's submissions reproduced above and therefore, for the sake of brevity not being repeated here.
Details of share Contributor Shareholde Amount Remark
applicant/s 's capital r's Funds/ of Capital s
(share Net Worth/ contribut
capital + Equity of ed by this
Share the party to
capital Applicant Appellant
reserves) Company/
as on ies
31.03.200
8 of the
previous
year
(Preceedin
g FY prior
to FY in
which
contributio
n made)
Ansh Merchandise Pvt. 174,79,98 Share 25,00,00 An
Ltd 2 Capital ₹ 0 account
Office No. 211, Balaji 48,15,000/- payee
Arcade Buuilding, SV Reserve & cheque
Road, Kandivali (West), Surplus etc. has
Mumbai-400 067. ₹ been
PAN AABCN8176E 1,26,64,982 issued
CIN /- out of
U51909MH2003PT3142 its own
392 funds
through
banking
channel
Raghunandan Rayons 452,47,10 Share 16,00,00 An
Ltd. 504, Pawan Wing, 4 capital ₹ 0 account
Indraprastha Complex, 56,18,610/- payee
Satya nagar, Borivali Reserves & cheque
(West) Mumbai-400 092 Surplus etc. has
PAN AABCR1177R ₹ been
3,96,28,494 issued
12
ITA No . 3 1 00 / Mu m /2 0 17
CO No. 31 6/ Mu m/ 2 01 8
out of
its own
funds
through
banking
channel
Triangular Infocom Ltd. 310,81,68 Share 25,00,00 An
CS-1, Silver Anklet, Yari 2 Capital ₹ 0 account
Road, Versova, Andheri 2,48,22,000 payee
(West), Mumbai-400 053 /- Reserve cheque
PAN AAACL4648G & Surplus has
CIN etc. ₹ been
U74999MH1998PLC116 62,59,682/- issued
845 out of
its own
funds
through
banking
channel
The above chart has been culled out from various details filed by the appellant and will show that the relevant parties/ companies were in existence since they were having PAN number and regularly filing IT returns and also having ON number and were in existence in the records of Registrar of companies. The AO has not brought any adverse material against this.
As regards sufficiency of funds, it may be seen from the above chart that the respective parties had sufficient funds to advance loan or invest in share capital in any other entity including the appellant and the AO has not brought any material on record to prove that any undisclosed taxable income of the appellant company had 13 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 gone to the above stated concerns of Pravin Jain in any specific manner and the same has come back in the form of share capital/share application money to the appellant.
As regards transaction, the AG has nowhere been able to bring on record that any undisclosed cash amount of the appellant company was deposited in the bank account/any account of the share applicants and the same amount was utilized in issuing the cheque or RTGs or D.D by the share applicants to invest in the appellant's company. On the contrary, it has been submitted by the Ld.AR that the bank account show that no cash has been deposited before issuing the cheque/RTGs/D.D for the appellant.
6.3.23. Thus, it has to be said that the appellant had done everything in its power to prove the 3 ingredients required to prove the satisfactory nature of the loan transactions. In these circumstances, the onus had shifted to the AO. If the AO was still not satisfied, he had the option of making inquiries from the alleged share applicants by summoning them. However, as seen from the assessment order, he did not any such thing. Further, if the AO was not satisfied with what had been given to hint by the appellant, he was duty bound to specify what 14 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 more material he wanted the applicant to furnish. The AO never asked for any further material, though time and again the appellant asked in their submissions. This leads to the inescapable conclusion that the AO could not think of any further material to ask for and proceeded to reject the appellant's claims, relying upon the information/material, which he never even brought to the notice of the appellant for any rebuttal. The unequivocal conclusion is that all the 3 ingredients having been satisfied, the impugned share application money have to be treated as explained satisfactorily and the AO was not justified in having disregarded overwhelmingly supportive evidence. No cogent material was adduced by him to show that loans were unexplained. Therefore, the impugned addition of under the heading share application money as made in the assessment order, fails (RI several counts - (1) reliance on evidence that is totally inadequate; (2) failure to make available incriminating material (reports, statements etc.) forming basis for action by the AO; (3) failure to give due opportunity to the appellant to cross examine witnesses, whose statement might have been relief upon; and (4) failure to recognize the satisfactory nature of the explanation /evidence tendered by the appellant to explain identity of creditors, creditworthiness 15 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 of the creditors and the genuineness of the loan transactions. Hence the impugned addition cannot be sustained.
6.3.24. In view of the (acts and circumstances of the case as well as judicial pronouncements referred and relied above by me and also certain judicial pronouncements relied upon by the appellant in its written submission which has been produced above, addition made by the AC) under the heading share capital/ share application money including share premium amount cannot be sustained and therefore the AO is directed to delete the amount of ₹66,00,000/-."
But, confirmed the action of the AO in reopening the assessment.
6. Now before us, the assessee has challenged the reopening and Revenue has challenged the deletion of addition on merits. We have heard rival contentions and gone through the facts and circumstances of the case. We find that this is a unique case, where the AO while recording the reasons is not aware about the actual amount received by assessee as share application money. As evident from the details filed by the assessee during the course of first reopening of assessment that the assessee has received share application money from above parties only i.e. amounting to ₹ 66 lacs. In view of the above, the learned Counsel for the assessee argued that the AO has no reason to belief that the income to the extent of ₹ 1,54,30,000/- or ₹ 66 lacs has escaped assessment except the information received by the AO from the Investigation Wing.
16ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 Receipt of information from Investigation Wing without verifying the assessment records and without application of mind, the AO cannot form the basis of formation belief that the income has escaped assessment particularly after expiry of 4 years and originally the assessment was competed under section 147 of the Act read with section 143(3) of the Act exactly on same reasons.
7. In the similar circumstances, Hon'ble Supreme Court in the case CIT vs. Foramer France (2003) 264 ITR 566 (SC) has taken the view that the first proviso to section 147 of the Act lays down an exception whereby the AO is not permitted to exercise his jurisdiction in reopening the assessment beyond a period of four years from the end of the relevant assessment year. Once the exception carved out by proviso to s. 147 of the Act comes into play, the case would fall outside the ambit of s. 147 of the Act. As per proviso to s. 147 of the Act, no action under this section can be taken after expiry of four years from the end of the relevant assessment year, unless inter alia, income chargeable to tax had escaped assessment by reason of failure of the assessee to make full and true disclosure of all material facts necessary for assessment. In case, there being no whisper in the reasons supplied to assessee that income escaped assessment by reason of assessee's failure to make a full and true disclosure of all material facts necessary for assessment, notice under section 148 of the Act issued beyond four years from the end of relevant assessment year was barred by limitation under proviso to s. 147 of the Act, hence without jurisdiction. If either of these conditions is not fulfilled the notice is without jurisdiction. If the notice issued u/s 148 fails to satisfy either of the conditions, it deserves to be quashed. However, the officers have many time issued notices for reopening the assessments even beyond four years from the end of the assessment 17 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 year without fulfillment of any of the legal conditions as stipulated in the first proviso to this section. Such an action of the revenue authorities is strictly challenged by the taxpayers at large in the court of law and courts have quashed the notice issued by Revenue authorities or quashed the re-assessment orders. Hon'ble Supreme Court affirmed the judgment of Hon'ble Allahabad High Court in the case Foramer vs. CIT (2001) 247 ITR 436 (All) wherein Hon'ble Allahabad High court has considered the issue as under: -
"Having heard the learned counsels for the parties, we are of the view that these petitions deserve to be allowed.
It may be mentioned that a new section substituted section 147 with effect from 1-4- 1989. The relevant part of the new section 147 is as follows :
"147. Income escaping assessment.--If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the 18 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) :
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 under section 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."
This new section has made a radical departure from the original section 147 inasmuch as clauses (a) and (b) of the original section 147 have been deleted and a new proviso added to section 147.
10. In Rakesh Aggarwal v. Asstt. CIT[1997] 225 ITR 4961, the Delhi High Court held that in view of the proviso to section 147 notice for reassessment under section 147/148 should only be issued in accordance with the new 19 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 section 147, and where the original assessment had been made under section 143(3), then in view of the proviso to section 147 the notice under section 148 would be illegal if issued more than four years after the end of the relevant assessment year. The same view was taken by the Gujarat High Court in Shree Tharad Jain Yuvak Mandal v. ITO[2000] 242 ITR 612.
In our opinion, we have to see the law prevailing on the date of issue of the notice under section 148, i.e., 20-11-1998. Admittedly, by that date, the new section 147 has come into force and, hence, in our opinion, it is the new section 147 which will apply to the facts of the present case. In the present case, there was admittedly no failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for the assessment. Hence, the proviso to the new section 147 squarely applies, and the impugned notices were barred by limitation mentioned in the proviso.
11. The learned departmental counsel relied on section 153(3)(ii) of the Act and submitted that there was no bar of limitation in view of the said provision. We do not agree. Section 153 relates to passing of an order of assessment and it does not relate to issuing of notice under section 20 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 147/148. Moreover, this is not a case where reassessment is sought to be made in consequence of, or to give effect to, any finding or direction contained in the order of the Tribunal in Boudier Christian's case. As already stated above, Boudier Christian's case related to the employees of the company, whereas the impugned notice has been issued to the company. Hence, it cannot be said that the proposed reassessment in consequence of the impugned notice would be in consequence of, or to give effect to, any findings of the Tribunal in Boudier Christian's case.
A direction or finding as contemplated by section 153(3)(ii ) must be a finding necessary for the disposal of a particular case, that is to say, in respect of the particular assessee and in relevance to a particular assessment year. To be a necessary finding it must be directly involved in the disposal of the case. To be a direction as contemplated by section 153(3)(ii) it must be an express direction necessary for the disposal of the case before the authority or court vide Rajinder Nath v. CIT[1979]120 ITR 141 (SC); Gupta Traders v. CIT[1982] 135 ITR 5042 (All.); CIT v. Tarajan Tea Co. (P.) Ltd.[1999] 236 ITR 4773 (SC) and CIT v. Goel 21 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 Bros.[1982] 135 ITR 5114(All.), etc. The case of an expatriate employee was to be decided on the basis of the provisions of article XIV of the treaty, whereas corporate income was to be decided on the basis of either article III or article XVI of the treaty or section 44BB. Hence, the observation of the Tribunal in Boudier Christian's case was not a direction necessary for the disposal of the appeal relating to the petitioner. The eligibility of income of the petitioner from manning and management contracts was never an issue directly or indirectly involved in the case of Boudier Christian.
Moreover, the Tribunal in the appeal relating to the assessment of the petitioner's own case, vide Dy. CIT v. O.N.G.C. As agent of Foramer France[1999] 70 ITD 468 (Delhi), has considered the decision of the Tribunal in Boudier Christian's case. It is settled law that an appeal is a continuation of the original proceedings and, hence, when the Tribunal in the appeal relating to the petitioner has considered the decision of the Tribunal in Boudier Christian's case, the impugned notice under section 147/148 would obviously be on the basis of a mere change of opinion by the income-tax authorities, which would not be valid 22 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 as held by the Supreme Court in Indian & Eastern Newspaper Society v. CIT[1979] 119 ITR 996 1 ;Gemini Leather Stores v. ITO[1975] 100 ITR 1 (SC) and Jindal Photo Films Ltd. v. Dy. CIT[1998] 234 ITR 1702(Delhi), etc.
12. In the decision of the Tribunal in the assessee's own case O.N.G.C.'s (supra), it has been held that the income from the contract between the parties was business income and not fee for technical services.
13. Although we are of the opinion that the law existing on the date of the impugned notice under section 147/148 has to be seen, yet even in the alternative even if we assume that the law prior to the insertion of the new section 147 will apply, even then it will make no difference since even under the original section 147 notice for reassessment could not be given on the mere change of opinion as held in numerous cases of the Supreme Court, some of which have been mentioned above. Since the Tribunal in the appeal relating to the assessee-company had considered the Tribunal's earlier decision in Boudier Christian's case, it will obviously amount to mere change of opinion, and, hence, the notice under section 147/148 would be illegal."
23ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8
8. In view of the above facts of the present case and the judgment of Hon'ble Supreme Court in the case of Foramer France (supra), we confirm the order of CIT(A) quashing the re-assessment proceedings and allow this issue of Revenue's appeal. As we have decided the jurisdictional issue only, and set aside the order of CIT(A) the reassessment order framed by the AO, we refrain our self from adjudicating the issue on merits. Accordingly, the Cross Objection of the assessee is allowed and the Appeal filed by the Revenue, which is on merits, need no adjudication as we have already quashed the reassessment.
9. In the result, the appeal of Revenue is dismissed and the CO of the assessee is allowed.
Order pronounced in the open court on 20.03.2019.
Sd/- Sd/-
(मनोज कुमार अग्रवाल / MANOJ KUMAR AGGARWAL) (महावीर स ह
िं /MAHAVIR SINGH)
(लेखा दस्य / ACCOUNTANT MEMBER) (न्याययक दस्य/ JUDICIAL MEMBER)
मिंब
ु ई, ददनािंक/ Mumbai, Dated: 20.03.2019. सदीप सरकार, व.निजी सधिव / Sudip Sarkar, Sr.PS 24 ITA No . 3 1 00 / Mu m /2 0 17 CO No. 31 6/ Mu m/ 2 01 8 आदे श की प्रनिललपप अग्रेपिि/Copy of the Order forwarded to :
1. अपीलाथी / The Appellant
2. प्रत्यथी / The Respondent.
3. आयकर आयुक्त(अपील) / The CIT(A)
4. आयकर आयुक्त / CIT
5. ववभागीय प्रयतयनधि, आयकर अपीलीय अधिकरण, मुिंबई / DR, ITAT, Mumbai
6. गार्ड फाईल / Guard file.
आदे शािसार/ BY ORDER, त्यावपत प्रयत //True Copy// उप/सहायक पुंजीकार (Asstt. Registrar) आयकर अपीलीय अधिकरण, मुिंबई / ITAT, Mumbai