1 Court No. 3 A.F.R. Case : INCOME TAX APPEAL No. 21 of 2016 Appellant : Pr. Commissioner Of Income Tax II Lucknow Respondent : M/S U.P.State Bridge Corporation Ltd.M.M.M.Marg Lucknow Counsel for Appellant : Manish Misra Counsel for Respondent : Pradeep Agrawal Hon'ble Sudhir Agarwal,J. Hon'ble Virendra Kumar II,J. 1. Heard Sri Manish Misra, learned counsel for appellant and Shri Pradeep Agrawal, learned counsel for respondent. 2. This appeal has been filed by Principal Commissioner of Income Tax II, Lucknow under Section 260 of Income Tax Act, 1961(hereinafter referred to as 'Act, 1961) aggrieved by judgment and order dated 01.10.2015 passed by Income Tax Appellate Tribunal, Lucknow Bench, Lucknow (hereinafter referred to as 'Tribunal') in I.T.A. No. 317/LKW/2015 relating to Assessment year (hereinafter referred to as 'A.Y2005 06. 3. Though appellant has formulated four substantial questions of law but we find that only two following substantial questions of law need to be adjudicated in this appeal: (i) Whether notice under Section 147 of Act, 1961 issued to Assessee for reassessment after four years was barred by limitation? (ii) Whether reasons given by competent authority approving reassessment is within scope of Section 147 of Act, 1961? 4. brief facts necessary for adjudication of above substantial questions of law are as under: 5. For A.Y. 2005 06, assessment was completed under Section 143(3) on 07.12.2007 at total income of Rs.13,53,16,280/ against returned loss of Rs. 42,12,1425/ . 2 Assessment Order was revised vide order dated 19.02.2008 passed under Section 154; dated 30.06.2011 passed under Section 151, and, 30.12.2011 passed under Section 254 of Act, 1961. 6. Assessing Officer issued notice under Section 148 of Act 1961 on 30.03.2012 recording reasons for reopening of Assessment under Section 147 of Act, 1961 observing that Assessee claimed 100% deduction on temporary site accommodation at Rs. 5,98,17,813/ and on tools, minor equipments, shuttering, centering scaffolding, pile bridge and CCE, etc., at Rs. 10,34,07,097/ and debited same to its profit and loss account. Under Income Tax Rules, Assessee was entitled only to 7.5% depreciation on temporary accommodation and 15% depreciation on shuttering and minor equipments. Thus, Assessee had claimed excessive deduction and debited same to its profit and loss account resulting short disclosure of income. Assessing Officer, thus, observed that it has reason to believe that income of Rs. 5,53,31,477/ on account of excess deduction on temporary site accommodation and Rs. 8,78,96,032/ on account of shuttering and minor equipments, etc., as escaped assessment due to failure on part of Assessee. 7. Aforesaid reasons for reopening of Assessment were also provided to Assessee by Assessing Officer vide letter dated 27.07.2012. Notice was issued after getting approval from Commission of Income Tax, Lucknow. Thereafter, notices under Section 143(2) and 142(1) were issued. Assessee filed objections against initiation of proceedings under Section 148, which was disposed of vide letter dated 16.01.2013. Notice under Section 142(1) was issued on 26.02.2013 to Assessee 3 requiring to justify its claim of 100% deduction on temporary site accommodation at Rs. 5,98,17,813/ and to furnish complete details of tool, minor equipments, etc., for which it claimed deduction of Rs. 10,34,07,097/ . No reply was submitted and, thereafter, Assessing Officer passed revised assessment order dated 30.03.2013 adding Rs. 5,53,31,477/ , Rs. 8,78,96,032/ and Rs. 3,06,37,641/ (total Rs. 17,38,65,150/ ). Assessee preferred appeal before Commissioner of Income Tax (Appeal), Lucknow (hereinafter referred to as, 'CIT A'). Vide judgment and order dated 30.01.2015, CIT partly allowed appeal. Addition of Rs. 5,53,31,477/ and Rs. 8,78,96,032/ were confirmed while addition of Rs. 3,06,37,641/ was deleted. 8. Against aforesaid order of CIT A, Revenue as well as Assessee, both preferred appeals to extent both parties felt aggrieved by order of CIT A. Tribunal by judgment and order dated 01.10.2015 has allowed appeal preferred by Assessee and dismissed appeal preferred by Revenue, holding that reopening of assessment under Section 147 of Act, 1961 itself was bad, therefore, entire subsequent proceedings are annulled. Tribunal has held that firstly reassessment notice was issued after four years from relevant A.Y., therefore, it was barred by limitation and secondly that there was no failure on part of Assessee and entire things were disclosed by it while claiming 100% depreciation and nothing was detected subsequently by Assessing Officer, hence, Section 148 was not at all attracted in case in hand. 9. So far as first question is concerned, Shri Manish Misra, learned counsel for appellant drew attention of this Court to Section 149(1)(a) and (b), which read as under: 4 "149. (1) No notice under section 148 shall be issued for relevant assessment year, (a) if four years have elapsed from end of relevant assessment year, unless case falls under clause (b); (b) if four years, but not more than six years, have elapsed from end of relevant assessment year unless income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation. In determining income chargeable to tax which has escaped assessment for purposes of this sub section, provisions of Explanation 2 of section 147 shall apply as they apply for purposes of that section." (emphasis added) 10. He submitted that in present case, since amount of escapes assessment was more than one lac rupees, therefore, period of limitation is not four years but six years, and, admittedly, notice was issued within period of six years. 11. When confronted, learned counsel for Assessee could not dispute this fact and hence, otherwise view taken by Tribunal, in our view, cannot be sustained. Question No.1, therefore, is answered in favour of appellant and it is held that limitation in case in hand was six years under Section 149(i)(b), hence, notice under Section 147 was not barred by limitation and finding of Tribunal on this issue, which otherwise, is reversed. 12. Now coming to second question, it is not in dispute that entire amount and deduction claimed by Assessee was fully disclosed to Assessing Officer when assessment was made by allowing claimed deduction under Section 154, on 07.12.2007, and subsequent orders under Sections 144, 251 and 254 would make no substantial difference in this regard. That being so, we 5 have to examine whether here is case of change of opinion or it is case of genuine reason to believe to Assessing Officer that any income chargeable to tax has escaped assessment for A.Y. in question. 13. This issue has been considered time and again, hence, we do not add to length of this judgment by giving entire such decisions and suffice it to refer few such authorities. 14. In Commissioner of Income Tax Vs. Kelvinator of India Ltd. : (2010) 320 ITR 561 (SC), Three Judges' Bench held that where Assessing Officer has reason to believe that income has escaped assessment, Section 147 confers jurisdiction to re open assessment and after 1 st April 1989 power to re open assessment is much wider. Court further observed: "However, one needs to give schematic interpretation to words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to Assessing Officer to re open assessments on basis of "mere change of opinion", which cannot be per se reason to re open. We must also keep in mind conceptual difference between power to review and power to re assess. Assessing Officer has no power to review; he has power to re assess. But re assessment has to be based on fulfillment of certain pre condition and if concept of "change of opinion" is removed, as contended on behalf of Department, then, in garb of re opening assessment, review would take place. One must treat concept of "change of opinion" as in built test to check abuse of power by Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re open, provided there is "tangible material" to 6 come to conclusion that there is escapement of income from assessment. Reasons must have live link with formation of belief." 15. In Ganga Saran and Sons P. Ltd. Vs. ITO : (1981) 130 ITR 1 (SC), Court held that two distinct conditions must be satisfied before Income Tax Officer, who can assume jurisdiction to issue notice under Section 147(a). First, he must have reason to believe that income of Assessee has escaped assessment and, secondly, he must have reason to believe that such escapement is by reason of omission or failure on part of Assessee to disclose fully or truly all material facts necessary for his assessment. Court further said that, "if either of these conditions is not fulfilled, notice issued by Income Tax Officer would be without jurisdiction". 16. In Sheo Nath Singh Vs. AAC of I.T. : (1971) 82 ITR 147 (SC), Court said: "....There can be no manner of doubt that words 'reason to believe' suggest that belief must be that of honest and reasonable person based upon reasonable grounds and that Income tax Officer may act on direct or circumstantial evidence but not on mere suspicion, gossip or rumour. Income tax Officer would be acting without jurisdiction if reason for his belief that conditions are satisfied, does not exist or is not material or relevant to belief required by section. court can always examine this aspect though declaration or sufficiency of reasons for belief cannot be investigated by court". 17. In Calcutta Discount Co. Ltd. Vs. ITO (1961) : 41 ITR 1919 (SC), Court held that duty of disclosing primary facts 7 relevant to decisions of question before assessing Authority lies on Assessee and it is onerous duty of Assessee to disclose truly and fully all primary facts. Once all primary facts have been disclosed, Assessee thereafter is not required to provide any further assistance by way of disclosure to Assessing Officer. Relevant observations of Court are as under: "Does duty, however, extend beyond full and truthful disclosure of all primary facts ? In our opinion, answer to this question must be in negative. Once all primary facts are before assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else far less assessee to tell assessing authority what inferences, whether of facts or law should, be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that assessee must disclose what inferences whether of facts or law he would draw from primary facts." 18. This Court also in Arun Gupta Vs. Union of India and others, and other connected matters [(2015) 371 ITR 394 (All)] held, if information or material was already available in computation of income filed by Assessee in his return and nothing new has been received by way of information or by Assessing Officer then notice of reassessment would be without any cogent material justifying reassessment and it cannot be sustained. 19. In Vikrant Tyres Ltd. Vs. State of U.P. : (2006) 148 STC 122 (All) remark in respect of reassessment was made by this 8 Court as under: "Reassessment on same material by same authority, if permitted, for no valid reason, will open flood gate for arbitrary action exposing one to unending process, permitting uncertainty, reopening of closed chapters without assigning good reason, depending upon whims of individuals and in end precipitating anomalous situations." 20. Court further said that what naturally follows is that there has to be some valid ground, that is some relevant document or material having escaped notice or there has been wrong calculation due to human error bona fide committed, or ignorance of correct and complete facts due to mistake or ignorance of fraud/ misrepresentation. 21. Looking to aforesaid exposition of law and applying to facts of present case, it is not in dispute that Assessee has disclosed full and correct facts and there was no misrepresentation or concealment on part of Assessee at all. With open eyes, after examining entire matter, Assessing Officer, completed assessment under Section 143(3) and that being so, subsequent changed opinion that 100% depreciation has wrongly been allowed, it could not have issue notice under Section 147j. In this regard, view taken by Tribunal, we find is correct and in accordance with law. Question No.2, therefore, is answered against appellant and in favour of Assessee. 22. In view of our answer to Question 2, ultimate decision of Tribunal, setting aside reassessment proceedings to notice, cannot be faulted. 23. Appeal is accordingly dismissed. Order Date : 6.4.2017 Mustaqeem/Virendra Pr.CommissionerofIncome-tax-II, Lucknow v. U. P. StateBridgeCorporation Ltd