Pr. Commissioner of Income-tax-Central-4 v. J.M. Financial Institutional Securities Ltd
[Citation -2020-LL-0106-77]

Citation 2020-LL-0106-77
Appellant Name Pr. Commissioner of Income-tax-Central-4
Respondent Name J.M. Financial Institutional Securities Ltd.
Court HIGH COURT OF BOMBAY
Relevant Act Income-tax
Date of Order 06/01/2020
Assessment Year 2006-07
Judgment View Judgment
Keyword Tags original assessment proceedings • original assessment order • reassessment proceedings • escapement of income • material on record • change of opinion • tangible material • material facts • reopening of assessment • full and true disclosure of material facts • audit memo
Bot Summary: As per the Section 147, since the note was issued beyond period of four years, the proceedings could have been initiated if there was a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment. The Tribunal, after considering the material on record and reasons for re-opening the assessment, which are reproduced in impugned order, observed thus :- 2/4 45. The above facts show that the assessee has disclosed all material facts at relevant places during original assessment proceedings u/s. No new tangible material has come to the knowledge of the AO so as to justify the reopening. After 1 st April, 1989, the Assessing Officer has power to reopen, provided there is tangible material to come to be conclusion that there is escapement of income from assessment. Further, the Hon ble apex Court in the case of CIT vs. Foramer France 264 ITR 566(SC) has clearly laid down the principle that where there is no failure on the part of the assessee to disclose material facts, the reassessment proceedings after the expiry of four years is not possible in view of the provisions of Sec.147 of the Act. In view of the clear finding of the Tribunal that there was no failure on the part of the Respondent Assessee to disclose fully and truly all material facts and that nothing contrary is demonstrated as to why this finding is incorrect, the questions of law proposed do not give rise to any substantial question of law.


IN HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.1361 OF 2017 Pr. Commissioner of Income Tax-Central 4 ..Appellant vs. M/s. J.M. Financial Institutional Securities Ltd. ..Respondent Mr. Suresh Kumar for appellant. Mr. Jehangir Mistri, Senior Counsel a/w. Mr. Atul K. Jasani for respondent. CORAM : NITIN JAMDAR & M.S.KARNIK, JJ. DATE : 6 JANUARY 2020 P.C.:- Heard learned counsel for parties. 2. Appellant has challenged order dated 11/8/2016 passed by Income Tax Appellate Tribunal ( Tribunal for short) in Income Tax Appeal No.179/Mum/2016 (Assessment Year 2006-07). 3. present Appeal relates to Assessment Year 2006-07. 4. Appellant Revenue has framed following questions as substantial questions of law :- 1/4 45. itxa 1361-17.doc (A) Whether under facts and circumstances of case, Hon ble Income Tax Appellate Tribunal was justified in holding re-assessment proceedings as invalid, without appreciating fact that issue was not subject matter of verification in original assessment proceedings hence re-assessment is not based on change of opinion ? (B) Whether under facts and circumstances of case, when there is no discussion in assessment order on issue of sundry creditors and when there is no finding positive or negative in original assessment order on this issue, whether Hon ble Income Tax Appellate Tribunal was justified in not appreciating that there is no change of opinion and in denying applicability of decision in case of Ess Ess Kay Engineering Co. P. Ltd. vs. CIT [247 ITR 818 (SC) ? 5. Appeal arises from proceeding taken out in respect of notice for re-assessment issued on 22 March 2013 under Section 148 of Income Tax Act, 1961. note was admittedly issued beyond period of four years. As per Section 147, since note was issued beyond period of four years, proceedings could have been initiated if there was failure on part of assessee to disclose fully and truly all material facts necessary for assessment. 6. Tribunal, after considering material on record and reasons for re-opening assessment, which are reproduced in impugned order, observed thus :- 2/4 45. itxa 1361-17.doc 7. above facts show that assessee has disclosed all material facts at relevant places during original assessment proceedings u/s. 143(3) of Act. AO himself asked for specific questions and full details were supplied by assessee. AO examined these documents and framed assessment only after proper application of mind. There was no failure on part of assessee to fully and truly disclose all material facts. Thus, reassessment is being sought by AO on mere change of opinion and apparently on basis of Audit Memo, which is not permissible. No new tangible material has come to knowledge of AO so as to justify reopening. following observation of Hon ble Apex Court in case of CIT vs.Kelvinator of India Ltd. 320 ITR 561 would be relevant here :- Assessing Officer has no power to review ; he has power to reassess. But reassessment has to be based on fulfillment of certain preconditions and if concept of change of opinion is removed, as contended on behalf of Department, then, in garb of reopening 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 1 st April, 1989, Assessing Officer has power to reopen, provided there is tangible material to come to be conclusion that there is escapement of income from assessment. Reasons must have live link with formation of belief. Further, Hon ble apex Court in case of CIT vs. Foramer France (2003) 264 ITR 566(SC) has clearly laid down principle that where there is no failure on part of assessee to disclose material facts, reassessment proceedings after expiry of four years is not possible in view of provisions of Sec.147 of Act. In circumstances of case and after appreciating statutory 3/4 45. itxa 1361-17.doc provisions and judicial pronouncements, we conclude that reassessment proceedings are bad in law and same are set aside. Accordingly, appeal of assessee is allowed. 7. In view of clear finding of Tribunal that there was no failure on part of Respondent Assessee to disclose fully and truly all material facts and that nothing contrary is demonstrated as to why this finding is incorrect, questions of law proposed do not give rise to any substantial question of law. Appeal is dismissed. (M.S.KARNIK, J.) (NITIN JAMDAR, J.) 4/4 Pr. Commissioner of Income-tax-Central-4 v. J.M. Financial Institutional Securities Ltd
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