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2007 Supreme(Del) 775
High Court Of Delhi
MADAN B. LOKUR,V. B. GUPTA
COMMISSIONER OF INCOME TAX - Appellant
Versus
FEATHER FOAM ENTERPRISES P. LTD - Respondents
ITA 1220 Of 2006
Decided On : 04/18/2007
P.L.BANSAL
The main legal point established is that when all relevant facts are disclosed during the original assessment, the Assessing Officer cannot initiate proceedings under Section 147 on a change of opinion, and the Assessing Officer has no power to review his order under Section 147.
Headnote:
Income Tax - Assessment Reopening - Section 260a, Income Tax Act, 1961 - 143(3), 148, 133(6), 69C - The court discussed the principles of assessment reopening, change of opinion, and the power of the Assessing Officer to review the original assessment. The court emphasized that when all relevant facts are disclosed during the original assessment, the Assessing Officer cannot initiate proceedings under Section 147 on a change of opinion. The court also highlighted that the Assessing Officer has no power to review his order under Section 147 and cannot substitute his opinion for that of the assessing Officer who made the original assessment.
Fact of the Case:
The Assessee filed its return of income, and the assessment was completed. Later, notice under Section 148 was issued, and re-assessment proceedings led to additions being made by the Assessing Officer. The Commissioner of Income Tax (Appeal) set aside the assessment and deleted the additions. The Tribunal dismissed the Revenue's appeal.
Finding of the Court:
The court found that the Assessing Officer's initiation of proceedings under Section 147 was not justified, and the additions made on merits were deleted by the Commissioner of Income Tax (Appeal). The Tribunal's decision was upheld, and the court dismissed the appeal.
Issues: The issues revolved around the validity of the assessment reopening under Section 147, the additions made by the Assessing Officer, and the decisions of the statutory authorities.
Ratio Decidendi: The court emphasized that when all relevant facts are disclosed during the original assessment, the Assessing Officer cannot initiate proceedings under Section 147 on a change of opinion. The court also highlighted that the Assessing Officer has no power to review his order under Section 147 and cannot substitute his opinion for that of the assessing Officer who made the original assessment.
Final Decision: The court upheld the Tribunal's decision, finding no merit in the Revenue's appeal, and dismissed the same.
V. B. GUPTA, J.
( 1 ) THIS appeal under Section 260a of the Income Tax Act, 1961 (in short as 'act') has been filed by the Revenue against the impugned order dated 13th january, 2006 passed by the Income Tax Appellate Tribunal ( for short as 'tribunal' ) in ITA No. 224/del/03 for the Assessment Year 1996-97 whereby the tribunal has held that no new material has come on record nor any new information has been received by the Assessing Officer and it was only a case of fresh application of mind by the Assessing Officer to the same sets of facts which tantamount to a change of opinion and therefore, it cannot be the basis for re-opening of a completed assessment and the Tribunal also deleted the additions on merits.
( 2 ) THE brief facts of this case are that the Assessee Company is carrying on the business of manufacturing PU foams and its products. The Assessee filed its return of income on 30th November, 1996 declaring an income of Rs. 30,93,980/ -. However, the assessment was completed under Section 143 (3) of the act, on 31st March, 1999 on a total income of Rs. 44,99,053/- by Joint commissioner of Income Tax, Special Range, New Delhi.
( 3 ) THE Assessee preferred an appeal against the assessment order before commissioner of Income Tax (Appeal) who vide order dated 4th August, 1999 set aside the assessment with directions to the Assessing Officer to frame a fresh assessment. In the meanwhile, notice under Section 148 of the Act was issued on 30th March, 2001 requiring the Assessee to file return of income. In response to this notice, the Assessee filed its return of income on 1st June, 2001 declaring an income of Rs. 30,93,980/ -. The Assessing Officer thereafter, issued notices under Section 143 (2) and 142 (1) of the Act. During the course of re-assessment proceedings, the Assessing Officer required the Assessee Company to file a copy of account of M/s. Kirti Associates for the period 1st April, 1995 to 31st March, 1996 as per their books of account.
( 4 ) IN reply, the Assessee stated that the account of M/s. Kirti Associates have been burnt in the fire. It was pointed out that this fact has already been placed before the Assessing Officer during the course of assessment proceedings for the Assessment Year 1997-98. It was also stated that it was not possible for the Assessee to produce the bank statement regarding payment made to M/s. Kirti Associates, since the record has been burnt in the fire.
( 5 ) THE Assessing Officer during the course of assessment proceedings for the Assessment Year 1997-98 called for information under Section 133 (6) of the act from M/s. Kirti Associates P. Ltd. requiring them to furnish a copy of account of the Assessee Company for the period 1st April 1995 to 31st March, 1996, to verify the payments made for the construction of factory building at silvassa.
( 6 ) M/s kirti Associates vide their letter dated 29th February, 2000 submitted that the building was under construction during the Financial Year 1st april, 1995 to 31st March, 1996 and they have received payments amounting to Rs. 1,06,25,460/- during the Financial Year from the Assessee Company and the same have been duly accounted for in their Profit and Loss Account.
( 7 ) THE Assessing Officer vide letter dated 16th March, 2000 asked the assessee to explain whether the sum of Rs. 1,06,25,460/- has been accounted for in their books of account and why the excess expenditure should not be added under Section 69 C of the Act. The Assessing Officer observed that the Assessee did not furnish any explanation in respect of this amount incurred and paid to m/s. Kirti Associates P. Ltd. and further the Assessing Officer observed that the perusal of Balance Sheet for the Assessment Year 1996-97 revealed that the assessee Company had shown capital work in progress for building account at Rs. 39,45,102/- (Silvassa unit ). So, according to the Assessing Officer, there was a difference of Rs. 71,80,358/- and as such the Assessee Company has no
