Case Law Details
ITO Vs Krish Homes Private Limited (ITAT Jaipur)
In point no. (c) of the reasons so recorded, the Assessing officer has stated that “While computing ‘book profit’ u/s 115JB, the assessee has reduced the amount of Rs. 13,98,46,990/-, which was credited in P&L account as “Capital Gain from sale of Agricultural Land”. The claim of the assessee was allowed by the AO.” Therefore, the fact that there was gain on sale of agriculture land amounting to Rs 13,98,46,990, the fact that the such gains were credited by the assessee company in its profit/loss account and the fact that the assessee company has reduced such gains on sale of agricultural land so credited in the profit/loss account while computing ‘book profit’ u/s 115JB were available on record at the time of original assessment proceedings and the Assessing officer was duly ceased of such factual position and claim of the assessee company and basis examination thereof, the claim of the assessee company was allowed by the Assessing officer while completing the original assessment proceedings under section 143(3) of the Act. This is a factual position which is clearly emerging from the reasons so recorded by the Assessing officer and we therefore donot have to go any further to establish the fact that there is no new material brought on record by the Assessing subsequent to completion of original proceedings u/s 143(3) and the matter was duly examined during the original assessment proceedings and it is therefore clearly a case of change of opinion where on the same facts and material on record, the Assessing officer wishes to take a different view than the view taken earlier and a mere change of opinion cannot per se be a reason for reopening as held by the Hon’ble Supreme Court in case of Kelvinator of India ltd.
In such a situation, the question that arises for consideration is where there is no new material brought on record by the Assessing subsequent to completion of original proceedings u/s 143(3) and where the matter was duly examined during the original assessment proceedings, whether the Assessing officer can still acquire jurisdiction by exercising powers u/s 147 of the Act.
In this regard, we again refer to point no. (d) of the reasons so recorded by the Assessing officer where it has been stated that the assessee has reduced an amount of Rs. 13,98,46,990/- credited in P&L account as “capital gain from sale of agricultural land” claiming that it is agricultural income and provision of section 10(1) applied to it. However, the term ‘agricultural income’ is defined u/s 2(1A) to mean any rent or revenue derived from land which is situated in India and is used for agricultural purposes and in view of the said definition of “agricultural income” given u/s 2(1A), the amount of Rs. 13,98,46,990/- credited in P&L account as “capital gain from sale of agricultural land” is not an “agricultural income” deductible form the “book profit” u/s 115JB of the Act. In support, reliance has also been placed on two decisions of the Hon’ble Kerala High Court reported in the year 1997 and 1987 respectively. These provisions were very much on the statue books at the time of original assessment proceedings and even the judicial pronouncements were available very much at time of completion of original proceedings and the Assessing officer had taken a view in the matter and the Assessing officer through the reasons so recorded is basically saying that such a view was erroneous and wrong interpretation of provisions of law. The issue therefore involves erroneous application/interpretation of provisions of section 10(1) and section 2(1A) of the Act for the purposes of computation of book profits u/s 115JB of the Act by the Assessing officer while completing the original assessment proceedings. In such a situation, where the Assessing officer has incorrectly or erroneously applied law and income chargeable to tax has escaped assessment, the Revenue is not without remedy and resort to provisions of section 263 could have been made by the ld CIT. In fact, the revisionary jurisdiction u/s 263 is meant to deal with such type of cases where the ld CIT can step-in and correct the Assessing officer. In the instant case, the original assessment proceedings were completed vide order u/s 143(3) dated 29.02.2016 and therefore, the provisions of section 263 could have been invoked by the ld CIT by 31.03.2018. However, instead of invoking the revisionary jurisdiction u/s 263 by ld. CIT, the Assessing officer has assumed the jurisdiction u/s 147 of the Act by issuance of notice dated 28.02.2017. Interestingly, for such assumption of jurisdiction, the ld CIT has accorded the approval u/s 151 of the Act. It is therefore a case where matter was referred to the ld CIT for seeking his approval and the ld CIT instead of holding that the matter falls under section 263 and not under section 148 has given the approval u/s 151 of the Act which shows non-application of mind and mechanical grant of approval. Therefore, in the instant case, the assumption of jurisdiction u/s 147 by issuance of notice u/s 148 cannot be sustained and held as invalid in eyes of law. We therefore find force in the contention of the ld AR that there is a distinction between power to review and power to reassess and the AO doesn’t have power to review his own order and such power is enshrined under section 263 of the Act and bestowed on the ld CIT which cannot be ceded to the Assessing officer.
Further, for assumption of jurisdiction, in the reasons so recorded, the Assessing officer has also stated that assessee has failed to fully and truly disclose all material facts necessary for the assessment. What material facts have not been disclosed by the assessee company have not been spelt out by the Assessing officer and as we have noted above, the Assessing officer has himself stated that the assessee has credited capital gain on sale of agricultural land in its profit/loss account and the same have been reduced while working out book profits u/s 115JB of the Act. Therefore, we find that all primary facts have been duly disclosed by the assessee company and it is for the Assessing officer to draw correct legal inference therefrom. Further, we find that while alleging such failure on the part of the assessee company, the Assessing officer has apparently drawn reference to the proviso to section 147 of the Act which is not applicable in the instant case as the notice u/s 148 dated 28.02.2017 has been issued within four years from the end of impugned assessment year A.Y 2013-14. Thus, the proviso to section 147 and the condition so specified therein cannot be invoked to assume jurisdiction u/s 147 of the Act.
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