Madras High Court
The Principal Commissioner Of ... vs M/S.Mansi Finance (Chennai) Ltd on 23 February, 2021
TCA.No.71 of 2021
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 23.02.2021
CORAM :
The Honourable Mr.Justice T.S.SIVAGNANAM
and
The Honourable Ms.Justice R.N.MANJULA
Tax Case Appeal No.71 of 2021
The Principal Commissioner of Income Tax,
Corporate Circle - 4(1),
Chennai - 34. ...Appellant
Vs
M/s.Mansi Finance (Chennai) Ltd.,
No.22, Mulla Sahib Street,
Sowcarpet, Chennai - 600 079. ...Respondent
APPEAL under Section 260A of the Income Tax Act, 1961 against the
order dated 19.06.2018 made in ITA.No.2651/Chny/2017 on the file of the
Income Tax Appellate Tribunal, Madras 'D' Bench, for the assessment year
2008-09.
For Appellant: Mr.R.Karthik Ranganathan, SSC
assisted by
Mr.S.Rajesh, JSC
For Respondent: Mr.G.Baskar
assisted by
Ms.S.Sriniranjani
1/8
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TCA.No.71 of 2021
JUDGMENT
(Delivered by T.S.Sivagnanam,J)
This appeal, filed by the Revenue under Section 260A of the
Income Tax Act, 1961 ('the Act' for brevity) is directed against the order
dated 19.06.2018 made in ITA.No.2651/Chny/2017 on the file of the
Income Tax Appellate Tribunal, Madras 'D' Bench ('the Tribunal' for
brevity) for the assessment year 2008-09.
2. The Revenue has raised the following substantial questions of
law for consideration:
"1. Whether on the facts and circumstances of
the case and in law, the Hon'ble ITAT is right in
holding that the re-opening u/s 147 of the Income Tax
Act is invalid?
2. Whether on the facts and circumstances of the
case and in law, the Hon'ble ITAT was right and
justified in holding that the re-opening of the
assessment by the Assessing Officer is change of
opinion?"
3. We have heard Mr.R.Karthik Ranganathan, learned Senior
Standing Counsel assisted by Mr.S.Rajesh, learned Junior Standing
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TCA.No.71 of 2021
Counsel appearing for the appellant-Revenue and Mr.G.Baskar, learned
counsel assisted by Ms.S.Sriniranjani, learned counsel for the respondent.
4. The short issue, which falls for consideration, is whether the
reopening of the assessment done by the Assessing Officer culminated in
the assessment order dated 30.12.2016 was valid.
5. As could be seen from the assessment order, the reason for re-
opening is as hereunder:
"The expenditure in relation to income not
includable in total income under Sec. 14A was
calculated as per clause (iii) of Rule 8D(2), only,
the same should also have been calculated as per
clause (ii) of Rule 8D(2), which works out to
Rs.6,97,838/-, since the amount of interest
expenditure incurred being Rs.37,09,570/-."
6. The assessee resisted the notice issued for reopening by
contending that the reopening have been done beyond the period of four
years. Unless the assessee fails to fully and truly disclose all facts,
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TCA.No.71 of 2021
reopening cannot be done and if done so, it would amount to change of
opinion. The Assessing Officer did not accept the contention of the assessee
and completed the assessment. Aggrieved by the same, the assessee
preferred an appeal before the Commissioner of Income Tax (Appeals)-8,
Chennai [CIT(A)], which was dismissed by order dated 23.08.2017.
Challenging the said order, the assessee went before the Tribunal and the
Tribunal, by the impugned order, has allowed the appeal holding that the
reassessment proceeding was a clear case of change of opinion. Aggrieved
by the order passed by the Tribunal, the Revenue has filed the present
appeal.
7. Mr.R.Karthik Ranganathan, learned Senior Standing Counsel
would place heavy reliance on the decision of the Hon'ble Supreme Court in
the case of CIT Vs P.V.S. Beedies P. Ltd. reported in (1999) 103 Taxman
294. This judgment is pressed only to support his argument that if an audit
department points out a fact, which is being overlooked by an Assessing
Officer and based on such report, if an assessment is reopened, it would be
valid in law.
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TCA.No.71 of 2021
8. Firstly, we need to see as to whether there is any allegation
against the respondent-assessee having failed to fully and truly disclose all
the details before the Assessing Officer when the assessment was initially
completed under Section 143(3) of the Act on 31.12.2010. Admittedly, there
is no allegation against the assessee and the Tribunal was right in holding
that there was no negligence on the part of the assessee in furnishing
necessary materials in completing the assessment. If such is the admitted
factual position, the reason for reopening, stating that expenditure in
relation to income not includable in total income under Section 14A of the
Act should be calculated as per Clause (ii) of Rule 8D(2), would clearly
amount to change of opinion.
9. The stand taken by the Revenue before us by placing reliance
on the decision in the case of P.V.S. Beedies P. Ltd. is not substantiating their
case on account of the factual position in the case of P.V.S. Beedies P. Ltd. In
the said case, the audit department noted that the trust under the name of
P.V.S. Memorial Charitable Trust had been initially granted recognition,
which had expired on 22.09.1972 and therefore for the relevant years under
consideration in the said case, namely AY 1974-75 and 1975-76, the trust
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TCA.No.71 of 2021
was not a recognized charitable trust. Therefore, the audit department
having pointed out the same, the assessment was reopened. The factual
position in P.V.S. Beedies P. Ltd is quite distinct and different from the case
before us. Therefore, the said decision would not render assistance to the
case of the Revenue.
10. For the above reasons, we find no good grounds to interfere
with the order passed by the Tribunal. Accordingly, the appeal fails and it is
dismissed and the substantial questions of law are answered against the
Revenue. No costs.
(T.S.S.,J.) (R.N.M.,J.)
23.02.2021
Index:Yes/No
Internet:Yes/No
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TCA.No.71 of 2021
To
1. The Income Tax Appellate Tribunal,
Madras 'D' Bench, Chennai.
2. The Principal Commissioner of Income Tax,
Corporate Circle - 4(1),
Chennai - 34.
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TCA.No.71 of 2021
T.S.SIVAGNANAM,J
AND
R.N.MANJULA,J
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TCA.No.71 of 2021
23.02.2021
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