M/S Messina Beej Private Limited vs The Principle Chief ...
2023 Latest Caselaw 3660 Patna

          IN THE HIGH COURT OF JUDICATURE AT PATNA
                   Civil Writ Jurisdiction Case No.14645 of 2021
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M/S Messina Beej Private Limited, A company incorporated under Indian Companies Act, 1956 having Registered office at Tajpur Road, District- Samastipur, Bihar- 848101 through its Managing Director, Anil Kumar Misra Gender- Male S/O- Late Data Ram Misra, Tajpur Road, District- Samastipur, Bihar- 848101

... ... Petitioner/s Versus

1. The Principle Chief Commissioner, Income Tax, Central Revenue Building Virchand Patel Path, Patna.

2. The Principal Commissioner/Commissioner-2, Income Tax, Central Revenue Building, Veerchand Patel Path, Patna.

3. The Joint Commissioner of Income Tax, Range-2, Lok Nayak Bhavan, Dakbanglow, Patna.

4. The Income Tax Officer, Ward 2(1), Patna.

... ... Respondent/s ====================================================== with Civil Writ Jurisdiction Case No. 4093 of 2020 ====================================================== M/s Messina Beej Private Limited, Tajpur Road, Samastipur, Bihar-848101 through its director Anil Kumar Mishra, aged about 72 years, Gender-Male, Son of Data Ram Mishra, Resident of E-24, Marg one, P.O.- Greater Kailash- 2, Grater-Kailash, P.S.- Neharu Marg, South Delhi, Delhi-110048

... ... Petitioner/s Versus

1. The Principal Chief Commissioner Income Tax, Central Revenue Building, Virchand Patel Path, Patna

2. The Principal Commissioner/Commissioner-2 Income Tax, Central Revenue Building, Virchand Patel Path, Patna

3. The Joint Commissioner of Income Tax, Range-2, Lok Nayak Bhavan, Dakbanglow, Patna

4. The Income Tax Officer, Ward 2(1), Patna

... ... Respondent/s ====================================================== Appearance :

(In Civil Writ Jurisdiction Case No. 14645 of 2021) For the Petitioner/s : Mr. Krishna Mohan Mishra, Advocate For the Respondent/s : Mrs. Archana Sinha, Sr. SC. Income Tax Dett. (In Civil Writ Jurisdiction Case No. 4093 of 2020) For the Petitioner/s : Mr. Krishna Mohan Mishra, Advocate For the Respondent/s : Mrs. Archana Sinha, Sr. SC. Income Tax Dett. ====================================================== Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

CORAM: HONOURABLE THE CHIEF JUSTICE and HONOURABLE MR. JUSTICE PARTHA SARTHY ORAL JUDGMENT (Per: HONOURABLE THE CHIEF JUSTICE)

Date : 01-08-2023

The writ petitions are concerned with the

assessment years 2012-13 and 2013-14, and they challenge the

re-assessment proceedings taken under Section 147 and 148 of

the Income Tax Act-1961 (for brevity the Act). The return of

income filed for the respective years are produced by the

identical petitioner as Annexure-P/2 in C.W.J.C. No. 4093 of

2020 and C.W.J.C. No. 14645 of 2021, concerned with the

assessment years 2012-13 and 2013-14.

2. For the assessment year 2012-13, which is the

subject matter of C.W.J.C. No. 4093 of 2020, a notice was

issued dated 29.03.2019 under Section 148 of the Act. By

Annexure-P/4, the petitioner sought for the reasons which

prompted the Assessing Officer to issue the notice, relying on

the judgment of the Hon'ble Supreme Court in GKN

Driveshafts (India) Ltd. V. I.T.O (2002) 259 ITR 19. By

Annexure- P/5, the petitioner was informed the reasons to

entertain the belief of escaped assessment which also spoke

about the necessary approval having been obtained from the

Principal Commissioner of Income-Tax-1, Patna. The reasons Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

for the belief entertained by the Assessing Officer were that the

information available on record shows the assessee company

having taken fresh unsecured loan of Rs. 10,82,563/- and

returned an agricultural income of Rs. 18,96,114/-. It is stated

that information was called for under Section 133 (6) of the Act

with prior approval of the Principal CIT. The information called

for, were the copy of the balance sheet for the assessment year

2012-13, the full details of the person/persons from whom the

unsecured loan was availed, the relationship with such persons

and the details of lands from which agricultural income was

earned. The assessee failed to furnish the requisite information

and hence, the unsecured loan and the agricultural income were

proposed to be treated as having escaped assessment.

3. The assessee filed a petition under Section 144A

before the Joint Commissioner of Income Tax, by Annexure-

P/6, which was partly allowed, but the addition of agricultural

income, upheld. The Assessing Officer passed an assessment

order as Annexure-P/1, in accordance with Annexure-P/6; which

is impugned in C.W.J.C. No. 4093/2020.

4. Similarly in C.W.J.C. No. 14645/2021 for the

assessment year 2013-14 an identical addition was made of

agricultural income coming to Rs. 5,68,302/-, by assessment Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

order produced along with I.A 1/2022 as Annexure P/1 dated

26.03.2022.

5. The learned counsel for the assessee claimed that

the assesse had been deriving agricultural income and returning

it right from the assessment year 1998-1999 and hence there is

no question of any further proof being produced of the lands

from which such income was earned.

6. The learned counsel also relied on the decision

of the Division Bench of this Court in Ravindra Kumar (HUF)

v. CIT; (2019) 419 ITR 0308. It was held, on identical

circumstances, that re-assessment cannot be made without any

tangible material. The mere reason of the default of the assessee

to produce evidence in support of agricultural income returned

and accepted earlier, cannot be the reason for a proceeding

under Sections 147 & 148 of the Act.

7. We do not think that, the mere fact of the

agricultural income having been accepted in the earlier

assessment years would restrict the Assessing Officer from

calling for details regarding the agricultural income derived, in a

subsequent assessment year; since every assessment year gives

rise to a separate cause of action. However, we are definite in

our minds that the said enquiry has to be conducted at the initial Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

stage and does not fall for consideration under Section 148,

since it would lead to a mere change of opinion.

8. The challenge is confined to the reassessment

initiated for the purpose of disallowing the exemption claimed

of agricultural income, treating it as escaped income. In the

present cases, in both the assessment years, the petitioner was

called upon to provide information about the agricultural land

from which income was derived under Section 133(6) of the

Act, after the assessment was completed on the basis of the

return filed. The Assessing Officer had at the first instance

accepted the income returned by the assessee and allowed the

exemption with respect to the agricultural income. In the re-

assessment proceedings, the Assessing Officer had again called

for the details regarding the lands from which such agricultural

income was derived. The absence of any details having been

supplied to the Assessing Officer would not result in a tangible

material being available with the Assessing Officer for the

purpose of issuing a notice under Sections 147 & 148 of the Act.

9. CIT v. Kelvinator of India Ltd., reported in

(2010) 2 SCC 723 considered the effect of the amendment

brought about to Section 147 by Amendment Act 1987, and the

Amendment Act, 1989. Section 147 as it existed before the Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

amendments enabled the income tax officer to proceed under

Section 147, inter-alia, if there is reason to believe that, in

consequence of information in his possession income chargeable

to tax has escaped assessment; even if there is no omission or

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

material facts necessary for assessment in a given year. By the

Direct Tax Laws (Amendment) Act, 1987, Section 147 stood

amended and the Assessing Officer was enabled to proceed, for

reasons to be recorded by him in writing if he is of the opinion

that any income chargeable to tax has escaped assessment for

any assessment year, subject to the provisions of Sections 148 to

153.

10. Again by the Amending Act of 1989, the word

opinion was omitted and the Assessing Officer was empowered

to proceed under Section 147, only if he had reason to believe

that any income chargeable to tax has escaped assessment for

any assessment year, subject to the provisions of Section 148 to

153.

11. As per the amendment of 1987 and 1989 any

income chargeable to tax, which the Assessing Officer notices in

the course of the proceedings under Section 147 or

re-computation of loss or depreciation allowance or any other Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

allowance, could also be reckoned for such assessment or

reassessment, even if that was not a ground on which the

Assessing Officer entertained the initial belief of escapement of

income tax. However, this does not detract from the fact that the

reason to believe to be entertained by the Assessing Officer

should be of some tangible material in his possession, which he

receives after the initial assessment is completed, for coming to

a conclusion that there was an escapement of income chargeable

to tax. The income so alleged; to have escaped assessment

should thus have a live link with the formation of belief by the

Assessing Officer.

12. In the present case as has been found in

Ravindra Kumar (HUF) (supra), the belief entertained by the

Assessing Officer is only on the premise that there was nothing

produced by the assessee in pursuance of a notice under Section

133(6); regarding the agricultural income, which was shown as

exempted income under the returns and accepted by the

Assessing Officer. There was no tangible material on which the

Assessing Officer proceeded under Section 147 and in that

circumstance it is a mere change of opinion which is, as held in

Kelvinator of India (supra), a review in the garb of reopening

the assessment.

Patna High Court CWJC No.14645 of 2021 dt.01-08-2023

13. On the above reasoning, it has to be held for the

two assessment years, that the proceedings were issued without

jurisdiction, since the reassessment initiated under Section 147

was not on any tangible material and there was nothing

available with the Assessing Officer to entertain a belief that the

assessee had wrongly claimed exemption of the agricultural

income or of the unsecured loans. The agricultural income

shown as exempted in the return was accepted by the Assessing

Officer initially and so were the unsecured loans. There is no

scope for a review of the same and when there was nothing

available with the Assessing Officer, there could not be a

reopening of assessment, under Section 147. Both the

assessment orders challenged in the writ petitions are set aside.

14. The writ petitions stand allowed.

(K. Vinod Chandran, CJ)

( Partha Sarthy, J) aditya/-

AFR/NAFR
CAV DATE
Uploading Date          17.08.2023.
Transmission Date