Delhi High Court
Commissioner Of Income Tax vs Indian Sugar And Gen. Ind. Ex. on 30 July, 2007
Author: Madan B. Lokur
Bench: Madan B. Lokur, V.B. Gupta
JUDGMENT Madan B. Lokur, J.
1. The Revenue is aggrieved by an order dated 3rd January, 2005 passed by the Income Tax Appellate Tribunal, Delhi Bench 'G' in ITA No. 2336/Del/2001 relevant for the Assessment Year 1990-91.
2. The assessed had filed its return of income and the assessment was completed under Section 143(3) of the Income Tax Act, 1961 on 27th May, 1992. The Assessing Officer allowed a deduction to the Assesee under Section 80HHC of the Act.
3. On 27th March, 1997, the Assessing Officer issued a notice to the assessed under Section 148 of the Income Tax Act, 1961 with a view to reopen the completed assessment.
4. The reasons for reopening the assessment are not placed before us but it has been mentioned in the order of the Tribunal that the reasons were merely to the effect that the Assessing Officer while framing the original assessment was not right in allowing deduction under Section 80HHC of the Act in relation to the income of service charges/commission realised.
5. On a consideration of these reasons, the Commissioner of Income Tax (Appeal) took the view that the case was one of a mere change of opinion and therefore the Assessing Officer could not have exercised his power to issue a notice to the assessed to reopen the assessment.
6. In an appeal before us under Section 260A of the Income Tax Act, 1961, it has been contended on behalf of the Revenue that no opinion has been expressed by the Assessing Officer in the original assessment and in the absence of any opinion having been expressed by him there is no question of a change of opinion by a subsequent Assessing Officer. Reliance in this regard has been placed upon the Commissioner of Income Tax v. T.T. Krishnamachari and Co. . The Madras High Court observed that:
An item of income noticed by the Income-tax Officer, but not examined by him from the point of view of its taxability or non-taxability, cannot be said to have been considered by him. Consideration does not mean incidental or collateral examination of any matter of the Income-tax Officer in the process of assessment. There must be something in the assessment order to show that the Income-tax Officer applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection.
7. Prima facie, we are not in agreement with the view expressed by the Madras High Court in view of a decision of the Full Bench of this Court.
8. In Commissioner of Income Tax v. Kelvinator of India Ltd. [2002] 256 ITR 1 at 19, the Full Bench observed as follows:
We also cannot accept the submission of Mr. Jolly to the effect that only because in the assessment order, detailed reasons have not been recorded an analysis of the materials on the record by itself may justify the Assessing Officer to initiate a proceeding under Section 147 of the Act. 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-suction (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. In view of the opinion expressed by the Full Court, we are entitled to assume that the Assessing Officer applied his mind to the entire facts of the case and took a decision when the earlier assessment order was passed by him. There is nothing on record to suggest that there was no application of mind which would entitle the succeeding Assessing Officer to issue a notice to the assessed to reopen the assessment.
10. Learned Counsel for the assessed has also drawn our attention to the proviso to Section 147 of the Income Tax Act, 1961 which is to the effect that after the expiry of a period of four years no action shall be taken to reopen a completed assessment made under Section 143(3) of the Act unless the assessed has failed to disclose wholly and truly all material facts necessary for his assessment.
11. In the present case, the earlier assessment was made under Section 143(3) of the Act and there is nothing to show or even suggest that the assessed had failed to fully and truly disclose all material facts necessary for the Assessment. If the Assessing Officer chose not to investigate the facts then, as pointed out by the Full Bench, it would "amount to giving a premium to an authority exercising quasi-judicial function to take benefit of its own wrong."
12. In view of the above, we are of the opinion that no substantial question of law arises in this appeal.
13. The appeal is dismissed with costs of Rs. 5,000/- to be paid to the Delhi High Court Legal Services Committee within four weeks by cheque.
14. List for compliance on 19th September, 2007.