Case Law Details
CIT Vs. Swarna Andhra Ijmii Integrated Township Development (P) Ltd. (Andhra Pradesh High Court At Hyderabad)
Explanation 3 will be applicable in case where live issue, which was subsisting at the time of original assessment and if such issue has escaped the determination of the assessing officer, can be a ground for reopening. Any new issue that has cropped up subsequently on new set of facts, the aforesaid Explanation has no application. We think that the Explanation 3 has not really diluted cardinal object of section 147 of the Income Tax Act for reopening. The Explanation 3 has been given a retrospective effect with an idea there are so many assessment orders, which were passed earlier without deciding the issue subsisting at the time of original assessment. This Explanation has held to be reopened in those cases.
FULL TEXT OF THE HIGH COURT JUDGMENT / ORDER IS AS FOLLOWS:-
This appeal is sought to be preferred and admitted against the judgment and order of the learned Tribunal dated 21-6-2013 in relation to the assessment year 2005-06 on the following suggested question of law :–
“In the facts and circumstances of the case, Whether the Hon’ble Tribunal (ITAT) is correct in law in annulling the assessment order passed under section 143 read with section 147 of the Income Tax Act, 1961, when the said assessment order is valid and sustainable on the facts and merits of the case?
2. We have heard Mr. B. Narasimha Sarma, learned Counsel for the appellant, and have gone through the judgment and order of the learned Tribunal.
3. It appears that the learned Tribunal has found that the reasons recorded for reopening the assessment has no nexus with the income ultimately assessed under section 147 of the Income Tax Act, 1961. The finding of the learned Tribunal is reproduced here under :–
“Thus, it is very much clear that the reassessment has been made for assessment of income other than the income escaping assessment as per the reasons recorded for formation of belief while initiating proceeding under section 147 of the Income Tax Act, 1961.”
4. Mr. B. Narasimha Sarma, learned Counsel for the appellant, says that upon reading of Explanation 3 to section 147 of the Income Tax Act, the learned Tribunal should not have concluded as aforesaid, as the Explanation 3 has got retrospective effect.
5. We are of the view that the Explanation 3 to section 147 of the Income Tax Act on the given facts and circumstances of the case does not apply. Moreover, in which case and when Explanation 3 would be applicable has been decided by various High Courts, namely, Bombay High Court in case of CIT v. Jet Airways (I) Ltd. (2011) 331 ITR 236 (Bom); Delhi High Court in case of Ranbaxy Laboratories Ltd. v. CIT (2011) 336 ITR 136 (Del); Chhattisgarh High Court in case of ACIT v. Major Deepak Mehta (2012) 344 ITR 641 (Chhattisgarh) and Gujarat High Court in case of CIT v. Mohmed Juned Dadani (2014) 355 ITR 172 (Gujarat). In view of the consistent decision of these High Courts, we are not in a position to take a different view and the learned Tribunal has followed the consistent view of those High Courts. Even, we find that independent of the decision of those High Courts that the Explanation 3 will be applicable in case where live issue, which was subsisting at the time of original assessment and if such issue has escaped the determination of the assessing officer, can be a ground for reopening. Any new issue that has cropped up subsequently on new set of facts, the aforesaid Explanation has no application. We think that the Explanation 3 has not really diluted cardinal object of section 147 of the Income Tax Act for reopening. The Explanation 3 has been given a retrospective effect with an idea there are so many assessment orders, which were passed earlier without deciding the issue subsisting at the time of original assessment. This Explanation has held to be reopened in those cases.
6. Accordingly, the appeal is dismissed. No order as to costs.
7. Miscellaneous petitions pending, if any, shall stand closed.
