BOMBAY HIGH COURT
PCIT VS M/S. INARCO
LIMITED
23-07-2018
I T A No.102 of 2016
P. C:
This Appeal under
Section 260A of the Income Tax Act, 1961 (the Act), challenges the order dated
28.1.2015 passed by the Income Tax Appellate Tribunal (the Tribunal). The
impugned order dated 28.1.2015 is in respect of Assessment Year 2005-06.
2. Revenue urges the
following questions of law, for our consideration:
“ Whether on the facts and
in the circumstance of the case and in law, the tribunal was justified in law in
dismissing the revenue's appeal by holding that reopening notice under section
148 of the act is bad in law without appreciating the fact that the applicability
or otherwise of provisions of section 50c was not examined at all by the assessing
officer in the assessment order passed u/s 143(3) on 26.12.2007 ?”
3. For the subject
Assessment Year, the Assessing Officer had completed regular assessment on
26.12.2007 under Section 143(3) of the Act. Thereafter on 11.3.2010 a notice
under Section 148 of the Act was issued seeking to reopen assessment for the
subject Assessment Year 200506. Reasons in support of the notice dated
11.3.2010 read as under:
“The assessee disclosed
long term capital gain of Rs. 60,35,865/ on sale of land at thane. sales
consideration of the land was Rs. 2,24,00,000/. The assessee disclosed the long
term capital gain on the basis of the sales consideration as per sale deed of the
land. however, the assessee failed to furnish the copy of the sale deed of the land.
subsequently, it came to notice that the land was valued on the day of the sale
by stamp duty authority at Rs. 2,83,71,988/. in view of the provisions of
section 50c of the it act, the capital gain is to be computed by adopting the
value of the land as determined by stamp duty authority as sales consideration.
the omission on the part of the assessee, resulted in escapement of income of capital
gain by Rs. 59,71,938/.”
4. The Respondent
objected to the issue the reopening notice dated 11.3.2010 as being without
jurisdiction as it is based on change of opinion. This as the issue was subject
of consideration in proceedings leading to the Assessment Order dated
26.12.2007 in the regular assessment proceedings. However, the Assessing
Officer did not accept the objection and by his order dated 22.12.2010 passed
reassessment order under Section 143(3) read with Section 147 of the Act for
the Assessment Year 200606. Thus, reassessing the Respondent on sale of its
land on application of Section 50C of the Act i.e. taking stamp duty valuation as
the adopted sales value for the sale of the land to compute capital gains.
5. Being aggrieved with
the Assessment Order dated 22.12.2010, the Respondent filed an appeal to the Commissioner
of Income Tax (Appeals) [CIT(A)]. In appeal, CIT(A) found on facts that copy of
sale deed was filed during the regular assessment proceedings and the Respondent
had during the regular assessment proceedings disclosed long term capital gain
on the sale of land at Thane. It is on the disclosure on the aforesaid facts that
a view had been taken by the Assessing Officer in the regular assessment
proceedings. Thus, the CIT(A) by order dated 18.12.2012 held the notice dated
11.3.2010 was bad in law. Consequently, reassessment order dated 22.12.2010 passed
under Section 143(3) read with 147 of the Act was annulled.
6. Being aggrieved with
the order dated 18.12.2012 of the CIT(A), the Revenue carried the issue in
Appeal to the Tribunal. By the impugned order dated 28.1.2015, the Tribunal records
the fact that copy of the sale deed was very much part of the record before the
Assessing Officer and the issue of computation of capital gain was subject
matter of enquiry during regular assessment proceedings. In these
circumstances, the impugned order held that the reopening notice dated
11.3.2010 being based on change of opinion is bad in law. Therefore, the view
of the CIT(A) as recorded in his order dated 18.12.2012 was upheld.
7. The grievance of the
Revenue before us is that the Assessing Officer omitted to consider Section 50C
of the Act while passing the order dated 26.12.2007 under Section 143(3) of the
Act. Thus, it is submitted that the reopening notice dated 11.3.2010 is valid
in law. In support reliance is placed on the decision of the Supreme Court
A.L.A. Firm v. CIT [1991]55 Taxman 497. Thus, the appeal be entertained.
8. We find that both
the CIT(A) as well as the Tribunal have on facts found that during the regular
assessment proceedings the copy of the sale deed was produced by the Respondent
and it was subjected to consideration as queries were made by the Assessing
Officer on the issue of capital gains on sale of land. It was on consideration
of all the facts and the law applicable that the Assessment order dated
26.12.2007 under Section 143(3) of the Act was passed. We further find that the
reasons recorded do not state that the Assessing Officer had failed to consider
the provisions of Section 50C of the Act during the regular Assessment
Proceedings but it proceeds on the basis that the Respondent had failed to
furnish copy of sale deed of land. This is found to be factually incorrect both
by the CIT (A) as well as the Tribunal. Thus the submission on the part of the
Revenue seems to be at variance with the reason recorded in support of the
impuged notice. This is not permissible as held by this Court in Hindustan
Lever Ltd. v. R. B. Wadkar 268 ITR 332.
9. The reliance upon
the decision of the Supreme Court in A. L. A. Firm (Supra) in the present facts
is not appropriate. In the above case the Assessing Officer completed regular
assessment proceedings being ignorant that the issue stood covered by a
decision of the Madras High Court in G. R. Ramachari & Co. v. CIT 41 ITR
142, although the decision was rendered sometime before the assessment order
was passed. The basis of reopening the assessment in A. L. A. Firm (Supra) was
the decision in the case of G. R. Ramachari & Co. (Supra) coming to the
knowledge of the Assessing Officer subsequent to the completion of assessment
proceedings. In this case it is not the case of the Revenue that the Assessing
Officer was not aware of Section 50C of the Act at the time of passing the
Assessement Order dated 26.12.2007 under Section 143 of the Act. In this case
the trigger to reopen assessment proceedings as recorded in the reasons is
nonfurnishing of copy of the sale deed by the Respondent. This has been found
factually to be incorrect. Therefore, once the sale deed was before Assessing
Officer and enquiries were made during the assessment proceedings regarding the
quantum of capital gains, it must follow that the Assessing Officer had while passing
the order dated 26.12.2007 under Section 143(3) of the Act had taken view on
facts and in law as in force at the relevant time. Thus, this is a case of
change of opinion.
10. One must not loose
the sight that the reassessment proceedings are not proceedings to review of
the order already been passed but only a power to reassess. As observed by the
Supreme Court in CIT v. Kelvinator 320 ITR 561, 'We must Also keep in mind the
concept UAl difference between power to review And power to reassess'.
11. In the above facts
and circumstances, the question of law as proposed on behalf of the Revenue
does not give rise to any substantial question of law. Thus, not entertained.
12. Accordingly, Appeal
dismissed. No order as to costs.
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