Commissioner Of Income Tax vs Sil Investments Ltd.
2010 Latest Caselaw 2466 Del

             THE HIGH COURT OF DELHI AT NEW DELHI

%                                    Judgment delivered on: 07.05.2010

+                       ITA 700/2010 and 701/2010
COMMISSIONER OF INCOME TAX                                       ... Appellant

                                      -versus-

SIL INVESTMENTS LTD.                                            ... Respondent

Advocates who appeared in this case:

For the Appellant       : Ms Suruchi Aggarwal and Mr Anish Kr
For the Respondent      : Ms Kavita Jha

CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE V.K. JAIN

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. These appeals are directed against the common order dated

11.09.2009 passed by the Income Tax Appellate Tribunal in ITA

No.2769/Del/2009 and 2770/Del/2009, pertaining to the Assessment Years

2001-02 and 2002-03 respectively. An identical issue had been raised

before the Tribunal in both these matters. The issue was with regard to the

validity of the assessment made by the Assessing Officer under Section

143/147 of the Income Tax Act, 1961 on account of the challenge to the

invocation of the provisions of Section 147 of the Act for re-opening of the

assessments which had been completed earlier.

2. It is an admitted position that the original assessments had been

completed prior to four years of their reopening and, therefore, the notices

under Section 148 could only be issued by invoking the proviso to Section

147 of the Income Tax Act, 1961. The said proviso makes it clear that no

case can be re-opened after four years from the end of the relevant

assessment year unless there is any income chargeable to tax which has

escaped assessment for such assessment year, inter alia by reason of the

failure on the part of the assessee to disclose fully and truly all material facts

necessary for the assessment of that assessment year.

In the present case, what has happened is that after the original

assessments were made, an amendment to Section 80 HHC was brought

about by way of Taxation Laws (Amendment) Act, 2005 with retrospective

effect from 01.04.1998. In terms of this amendment, certain conditions were

to be fulfilled for allowability of the deduction under Section 80HHC in

respect of the Duty Entitlement Pass Book scheme where the turnover of the

assessee was more than Rs 10 crores. It is also an admitted position that

these conditions were not there in the relevant section at the time when the

assessee filed the return or even when the original assessments were made. It

was, therefore, the contention of the assessee that it could not have furnished

details or disclosed facts indicating fulfillment of such legal conditions

which were not even applicable on the date on which the return was filed

and on which the original assessments were completed. It is only on the

basis of the subsequent amendment which has been introduced with

retrospective effect that the Revenue has sought to invoke the provisions of

Section 147 for the purposes of re-opening of the assessments.

3. The Commissioner of Income Tax (Appeals) as well as the

Income Tax Appellate Tribunal agreed with the submission made by the

assessee and held the invocation of Section 147 to be invalid. The re-

assessments under Section 147/148 were set aside on this ground.

4. We have heard the counsel for the Revenue and have also

examined the orders passed by the authorities below. It is clear that for

invoking the proviso to Section 147 beyond the period of four years, there

must be failure on the part of the assessee to either make a return under

Section 139 or in response to a notice under Section 147/148 or to disclose

fully and truly all material facts necessary for the assessment for that

assessment year. Insofar as the filing of the return is concerned, that is not in

dispute and, therefore, the focus is entirely on whether the assessee had

failed to disclose fully and truly all material facts necessary for the

assessment. The Tribunal, on an examination of the material on record,

concluded that all the relevant facts were available on record and that it

could not be said that at the time when the assessee filed the return, he had

failed to disclose fully and truly all material facts necessary for the

assessment because the amendment which was introduced retrospectively

was not there at all. The Tribunal also observed, and in our view rightly so,

that the law cannot contemplate the performance of an impossible act. It was

not expected of the assessee to foresee or forecast a future amendment which

was to be brought into effect retrospectively. Therefore, The Tribunal has

rightly concluded that the proviso to Section 147 could not be invoked

merely because there was an amendment in the future which was introduced

retrospectively and covered the period in question. The Tribunal has

correctly appreciated the law and applied the same to the undisputed facts.

We see no reason to interfere with the impugned order as no substantial

question of law arises for our consideration. However, we make it clear that

we have only examined the jurisdictional issue qua validity of the Section

147 proceedings and have not examined the merits of the matter.

The appeals are dismissed.

(BADAR DURREZ AHMED, J) JUDGE

(V.K. JAIN) JUDGE

MAY 07, 2010 'bg'