Bombay High Court
The Shri Saibaba Sansthan Trust … vs The Union Of India And 3 Ors on 20 December, 2024
Author: G. S. Kulkarni
Bench: G. S. Kulkarni
Digitally
2024:BHC-OS:21307-DBsigned by
PRASHANT
PRASHANT VILAS RANE
VILAS
Date:
RANE 2024.12.21
21:36:55
+0530 wp 4817-22.odt
Prajakta Vartak
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION NO. 4817 OF 2022
The Shri Saibaba Sansthan Trust (Shirdi) )
a Trust, constituted under the provisions )
of the Shri Saibaba Sansthan (Shirdi) )
Act, 2004 having its registered office at )
Sai Niketan, 804-B, Dr. Ambedkar Road, )
Dadar (East), Mumbai - 400 014. ) ..Petitioner
Versus
1. The Union of India )
2. The Commissioner of Income Tax )
(Exemptions), Mumbai )
th
having his office at 6 floor, Piramal )
Chamber, Lalbaug, Parel, Mumbai 400 012 )
3. Additional Commissioner of Income Tax )
Exemption (2)(1) Mumbai )
th
having his office at 5 floor, Piramal )
Chambers, Lalbaug, Parel, Mumbai 400 012 )
4. Deputy Commissioner of Income Tax )
(Exemption) 2(1) Mumbai )
having his office at Room No. 519 )
5th Floor, Piramal Chambers, Lalbaug, )
Parel, Mumbai 400 012. ) ..Respondents
__________
Mr. S. Ganesh, Senior Advocate with Mr. Ashwin Shete and Ms. Anvi
Vasani i/b. Jayakar & Partners for Petitioner.
Mr. Akhileshwar Sharma for Respondents.
__________
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CORAM:
G. S. KULKARNI &
FIRDOSH P. POONIWALLA, JJ.
RESERVED ON: 08 OCTOBER 2024.
PRONOUNCED ON: 20 DECEMBER 2024.
Judgment (per G. S. Kulkarni, J.):
1. This petition under Article 226 of the Constitution of India
challenges the validity of notice dated 31 March 2019 issued by
respondent no.4/Deputy Commissioner of Income Tax (Exemption)
Circle 2(1)-Mumbai, under Section 148 of the Income Tax Act, 1961 (for
short, “the IT Act”) to reopen the assessment of the petitioner for
Assessment Year 2014-15, as also an order dated 28 June 2022 passed by
respondent no.4 rejecting the petitioner’s objection to the reopening of the
assessment. The impugned reopening is within a period of four years.
2. The relevant facts need to be noted:-
The petitioner is a Public Trust deemed to be constituted and
governed under the State Legislation namely under the provisions of the
“Shri Saibaba Sansthan Trust (Shirdi) Act, 2004” (for short, “2004 Act”).
It is the petitioner’s case that the petitioner manages and administers the
“Sai Baba Temple”, at Shirdi which is worshiped by millions of devotees
from all over the world. Also, the petitioner is stated to be involved in
religious and charitable activities. The petitioner has described the history
in relation to Shirdi temple and the faith, which the people have in
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wp 4817-22.odtworshiping “Shri Sai Baba” who departed from the mortal world on 15
October 1918.
3. The formation of the petitioner trust and its aims, objectives were
inter alia to spread the universal religion of Saibaba. It is the case of the
petitioner that the devotees of Saibaba started worshiping the ‘Samadhi’
from 27 October 1918 being the “Bhandara Day”. They also started a
fund known as the “Samarth Sainath Kothi” for continuing the worship at
the Samadhi Mandir where his worldly remains were interred and
consequently, the Samadhi Mandir as well as the Shirdi town has become a
place of pilgrimage of national and international importance to the
millions of devotees of Saibaba.
4. The petitioner has contended that earlier in the year 1953, a Public
Trust under the name of “Shirdi Sansthan of Shri Saibaba” was constituted
and the same was registered under the provisions of the Public Trust Act,
1950 under Registration No.E-69, Ahmednagar, which is a classification
given to the Trusts whose objects are both religious and charitable. The
trust also obtained the registration under the provisions of Section 12A of
the IT Act from the Jurisdictional Commissioner of Income Tax, Mumbai,
as a Trust for charitable and religious purposes being Registration No.
TR/3033 dated 24 August 1977. Recently, by an order dated 17 March
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wp 4817-22.odt2008 passed by the Chief Commissioner of Income Tax, Mumbai in
exercise of the powers conferred by sub-clause (v) of Clause 23C of
Section 10 of the IT Act, an approval was granted to the petitioner for the
purposes of the said provision subject to the conditions as mentioned in
the said order. Also on 25 March 2009, the Director of Income Tax
(Exemption) issued a Certificate under Section 80G of the IT Act inter
alia on the conditions as contained in the said certificate.
5. It is the petitioner’s case that by a letter dated 27 January 2012, the
Director of Income Tax (Exemptions) while referring to the amendment
which was made to Section 80G(5)(vi) by the Finance Act (No.2) of
2009, it was stated that there was no need to seek a renewal of the
Certificate already issued under Section 80G and that the said certificate,
which was valid upto 31 March 2012, was held to be valid from 01 April
2012 onwards till it was rescinded. Such extension of the validity was
subject to the same terms and conditions as contained in the original
Certificate under Section 80G. It is stated that Certificate issued under
Section 80G of the IT Act was basically to enable the devotees who
intended to avail tax exemption, provided that the donations by devotees
were received by cheque or by cash upto Rs.2,000/- as specified in Section
80G(5D) of the IT Act. The petitioner contends that the administration
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wp 4817-22.odtof the public trust was thereafter regulated by a scheme framed by the City
Civil Court, Mumbai in Charity Suit No. 3457 of 1969 whereby, vide an
order dated 18 October 1982 (as confirmed by this Court in First Appeal
No.320 of 1982 decided on 23 July 1984), the management of the trust
was vested in the Board of Management constituted by the Charity
Commissioner of Maharashtra. It is stated that under such scheme, several
Trustees of the Board of Management were appointed. The Board of
Trustees were appointed for a period of five years i.e. from 1984-89, 1989-
94, 1994-99 and 1999-2004.
6. The petitioner has contended that with a view to provide for better
management, administration and control of the Saibaba Trust and to
enable it to undertake wider welfare activities for the benefit of the public,
the Maharashtra Legislature passed the 2004 Act (supra). It is stated that
on account of the promulgation of the said Act, the existing public trust
was reconstituted and the Shri Saibaba Sansthan Management Committee,
under the Trust Act, was appointed under the provisions and control of
the Government of Maharashtra, to enable the trust to carry out its
activities more effectively and efficiently. It is stated that Sections 19 and
21 of the 2004 Act specify the manner of the utilization and/or
expenditure to be made of the Trust funds by the Managing Committee.
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The petitioner makes a reference inter alia of Section 19 referring to
Bhakta Mandal and to Section 21 of the 2004 Act on the utilization of the
Trust Fund.
7. On 27 September 2014, the petitioner filed its return of income
with the income tax authorities for the assessment year 2014-15 and
subject matter of the present proceedings. A notice under Section 143(2)
of the IT Act was issued to the petitioner on 31 August 2015 inter alia
informing the petitioner that there were certain issues in connection with
the return of income submitted for the said assessment year on which
certain information was required. The petitioner replied to the said notice.
Also personal hearing was granted, when the petitioner’s representative
was heard on information as sought, as also satisfactory explanation was
offered. In pursuance thereto, on 17 June 2016, respondent no.2, referring
to the notice under Section 143(2) dated 31 August 2015, issued a further
notice under Section 142(1) of the IT Act calling upon the petitioner to
furnish further details/explanation as set out in such notice. A hearing on
such notice was fixed on 07 July 2016. The petitioner submitted its reply
to the said notice by its letter dated 07 July 2016 wherein all documents
and the information was submitted which included the income and
expenditure account along with the balance sheet which disclosed the
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income from other sources as well as in Schedule “R” thereto which
included donations received in the charity boxes, the general donation and
donation in kind.
8. On 12 August 2016, hearing of the case was held wherein the
Chartered Accountant represented the petitioner and submitted the
petitioner’s reply to the notice. The petitioner was again called upon on
20 September 2016 and submitted further documents on 21 September
2016. Again a hearing was held on 20 October 2016 when the petitioner
was represented before the Assessing Officer and submitted several
documents, the details of which are set out in the petition. Further
hearings were held on 01 November 2016 and 24 November 2016 when
further documents as described in paragraph 14(w) of the petition were
submitted.
9. On the aforesaid backdrop, on 24 November 2016, the Deputy
Commissioner of Income Tax (Exemptions) passed an assessment order,
which determined the income of the petitioner trust and computed the
same after taking into consideration all the accumulations under Section
11(1)(a) and 11(2) of the IT Act as ‘Nil’. The total income of the
petitioner as assessed under Section 143(3) was shown as ‘Nil’ in the said
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original assessment order. In such order, the Assessing Officer also
recorded that the petitioner had submitted all the details which were called
for, which were examined and discussed during the course of the
proceedings, when it was held that the exemption claimed by the
petitioner under Section 11 of the IT Act was found to be correct and the
same was allowed.
10. The petitioner thereafter had continued to file its return for the
subsequent assessment years. The petitioner was continued to be assessed
pursuant to scrutiny under Section 143(3) of the IT Act on similar basis.
However, for AY 2015-16, a notice under Section 142(1) of the IT Act was
issued to the petitioner. The same was duly replied. There were also
further notices issued and information/documents with respect to the
assessment provided by the petitioner. Despite past assessments, namely
for the AY 2014-15, the petitioner was issued a show cause notice as to
why the income of the petitioner received by way of anonymous donations
in the Hundi Boxes, should not be taxed under the provisions of Section
115BBC of the IT Act. The petitioner in its reply to the show cause notice
inter alia contended that Section 115BBC of the IT Act was not applicable
to a mixed purpose trust i.e. charitable as well as religious and therefore,
the petitioner was exempted under sub-section 2(b) of Section 115BBC.
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However, in the assessment order passed for the assessment year 2015-16,
Assessing Officer included the anonymous donations received by the
petitioner as the taxable income of the petitioner. Consequent to such
assessment order, a demand notice came to be issued to the petitioner for
payment of tax and recovery proceedings were also initiated.
11. In the aforesaid circumstances, the petitioner contends that the
petitioner approached this Court by filing Writ Petition No. 395 of 2018
challenging the assessment order passed for the assessment year 2015-16.
An order dated 09 February 2018 came to be passed on such writ petition
whereby this Court directed the Commissioner of Income Tax (Appeals)
[for short, “CIT (Appeals)”] to entertain the petitioner’s appeal, if filed and
that the grounds taken in the writ petition could be taken before the CIT
(Appeals).
12. In pursuance of such orders passed by this Court, the petitioner
filed an appeal before the CIT (Appeals). Also, a stay application was filed
by the petitioner. It is the petitioner’s case that although the petitioner
was heard on the appeal, there was an order passed on the stay application
that a lump-sum amount be deposited by the petitioner. In these
circumstances, the petitioner filed another writ petition being Writ
Petition No. 939 of 2018. On such writ petition, an order dated 27 March
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2018 was passed by this Court whereby the writ petition was disposed of
with a direction to the Revenue officers not to initiate any recovery
proceedings against the petitioner until the CIT (Appeals) disposed of the
petitioner’s appeal and thereafter for a period of two weeks after the
communication of the order to the petitioner.
13. The petitioner contends that coincidentally on the very day i.e. on
27 March 2018, the petitioner was served with a notice dated 23 March
2018 under Sections 147 and 148 of the IT Act for the assessment year
2013-14. By such notice, respondent no.4/Deputy Commissioner of
Income Tax (Exemption) 2(1) sought to re-open assessment for the AY
2013-14. The petitioner replied to the said notice as also requested
respondent no.4 to furnish to the petitioner the reasons for reopening of
the assessment. The request as made by the petitioner was complied by
respondent no. 4. The only reason as furnished to the petitioner for
reopening of the assessment was that the anonymous donations received
by the petitioner had escaped assessment.
14. The petitioner filed its objections to the reasons as furnished to it to
reopen the assessment. Such objections filed by the petitioner were
dismissed by respondent no.4. Hence, the petitioner again approached
this Court in the proceedings of writ petition being Writ Petition (L.) No.
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3278 of 2018 being aggrieved by the rejection of its objections. An order
dated 24 October 2018 came to be passed on such writ petition disposing
of the said writ petition, clarifying that the Court has kept open the
challenge as raised by the petitioner to be raised in the appropriate legal
proceedings. The petitioner being aggrieved by the order dated 24
October 2018 passed by this Court, approached the Supreme Court in the
proceedings of Special Leave Petition No. 30475 of 2018. The Supreme
Court while granting leave to appeal on the said proceedings, disposed of
the civil appeal (Civil Appeal No. 1070 of 2019) in terms of the following
directions:-
“i) The Assessing Officer shall complete the assessment for
Assessment Year 2013-14 pursuant to the notice for reassessment
which has been issued on 23 March 2018, in accordance with law;
ii) The issue as to whether the notice under Section 148 for
reopening the assessment for Assessment Year 2013-14 is valid is
kept open to be urged in appropriate proceedings after the
assessment order is passed;
iii) Upon the passing of the order of assessment for Assessment
Year 2013-14 and in order to enable the Assessee to pursue its
remedies before the Commissioner of Income Tax (Appeals) there
shall be an interim protection in terms of the order dated 27
March 2018 that was passed by the Division Bench of the Bombay
High Court in Writ Petition No. 939 of 2018;
iv) Both the appeals for the Assessment Years 2013-14 and
2015-16 shall be heard together by the Commissioner of Income
Tax (Appeals).
v) The appellant shall be at liberty to pursue its remedies in
accordance with law.”
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15. After the aforesaid orders were passed by the Supreme Court,
respondent no.1 addressed various letters/notices to the petitioner from
time to time seeking information and documents from the petitioner.
Such notices were complied by the petitioner.
16. It is the petitioner’s case that for another assessment year namely AY
2015-16, an appeal was filed by the petitioner before the CIT(Appeals),
Exemption (2). The said appeal filed by the petitioner was fixed a hearing.
The petitioner informed the appellate authority that as per the order
passed by the Supreme Court, the appeals for the AY 2015-16 and AY
2013-14 have to be heard together as the petitioner contended that the
issue as involved was similar, on the applicability of Section 115BBC of the
IT Act to the petitioner Trust. The petitioner therefore requested that
hearing of the appeal be deferred till an assessment order for AY 2013-14
was passed.
17. The petitioner has contended that thereafter on 19 March 2019,
respondent no.4 passed an assessment order for AY 2013-14, whereby it
was held that a sum of Rs. 175,53,26,649/- (anonymous donations) was
taxable under Section 115BBC of the IT Act and that on such amount, tax
payable was determined.
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18. The petitioner being aggrieved by the assessment order dated 19
March 2019 passed by respondent no.4 for the assessment year 2013-14,
filed an appeal before the CIT (Appeals). It is contended by the petitioner
that in the meantime, respondent no.4 initiated recovery proceedings
against the petitioner for the recovery of tax payable under order dated 19
March 2019. The petitioner responding to these proceedings, addressed a
letter dated 18 January 2019 inter alia recording that under the orders
passed by the Supreme Court, the recovery proceedings were stayed, till
the appeal filed by the petitioner before the CIT (Appeals) for AY 2013-14
was decided.
19. The petitioner contends that both the appeals filed by the petitioner
i.e. for the AY 2013-14 and AY 2015-16 were pending and no dates for
hearing were granted. It is on such backdrop, although when the
proceedings were pending, for the assessment year in question an
assessment order dated 24 November 2016 was passed. On such
backdrop, on 31 March 2019, the petitioner was issued the impugned
notice under Section 148 of the IT Act proposing to reopen its assessment
for the AY 2014-15 and calling upon the petitioner to file its revised
return. In pursuance thereto, on 26 April, 2017 the petitioner filed its
revised return of income, which was a NIL return whereby the petitioner
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had claimed a refund of tax of Rs. 12382780/-.
20. On 30 April 2019 the petitioner addressed a letter to the Assessing
Officer/respondent no.4 requesting respondent no.4 to provide the
petitioner with reasons for reopening of the assessment for AY 2014-15.
The reasons were supplied to the petitioner under respondent no.4’s letter
dated 13 September 2019 along with approval granted to it by respondent
no.3.
21. The petitioner contends that although the reasons were furnished to
the petitioner, some correspondence ensued between the parties i.e.
petitioner addressing two letters dated 16 November 2019 and 19
November 2019 to respondent no.4. On 03 December 2019 the
petitioner filed its objections to the reopening of the assessment for AY
2014-15.
22. The petitioner contends that although the objections to the reasons
for reopening raised by the petitioner were pending consideration, on 08
December 2019 respondent no.4 issued a notice to the petitioner under
Section 142(1) of the IT Act calling upon the petitioner to provide certain
information on or before 11 December 2019. Such information included
a confirmation of hospital receipts of Rs.75,63,16,395/- and receipt from
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educational activity of Rs. 1,32,26,364/- which had not been included in
Income and Expenditure Account, as also to provide along with AIR
reconciliation statement. Although such information was called for, on the
same day (i.e. on 08 December 2019) respondent no.4 passed an order
rejecting the objections as raised by the petitioner against reopening of the
assessment.
23. The petitioner being aggrieved by the order dated 08 December
2019, approached this Court by filing Writ Petition No. 627 of 2020. By
an order dated 19 December 2019 passed on the said writ petition, further
proceedings in connection with the reassessment proceedings for the AY
2014-15 were stayed. Such writ petition was ultimately disposed of by an
order dated 28 March 2022, whereby the impugned order rejecting the
petitioner’s objections dated 08 December 2019 was set aside and the
matter was remanded for de novo consideration keeping open all rights of
the petitioner. The said order reads thus:-
“1 Heard the counsel and also perused the reasons recorded
for re-opening, objections filed by petitioner to reopening and
order on objections dated 8th December 2019 rejecting
petitioner’s objections, which, alongwith the notice dated 31st
March 2019 issued under Section 148 of the Income Tax Act 1961
(the said Act), is impugned in this petition.
2 Mr. Ganesh pointed out that the entire reopening is based
on change of opinion and all the points have been scrutinized and
discussed in detail during the assessment proceedings. Mr. Ganesh
also submitted that the stand of petitioner in the order on
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wp 4817-22.odtobjections have not been denied in toto but the Assessing Officer
simply states what is submitted by petitioner is not discernible
from return of income.
3 Having considered the order on objections, in our view, the
concerned officer has not been able to really appreciate the
submissions of petitioner and it would have helped, had a personal
hearing been granted. The advantage of giving a personal hearing
is, this doubt that the concerned officer had that he was unable to
discern from return of income what petitioner has submitted,
would not have arisen. Therefore, we, without making any
observations on merits of the case set aside the order dated 8 th
December 2019 which is impugned in the petition. The matter is
remanded for denovo consideration and all rights and contentions
of petitioner are kept open.
4 Jurisdictional Assessing Officer (JAO) shall also give a
personal hearing to petitioner with atleast 7 working days advance
notice. JAO shall permit petitioner to also make written
submissions following the personal hearing. If in the order, the
JAO proposes to rely on any judgments or order passed by any
Court or Tribunal, he shall provide a list thereof to petitioner
alongwith the notice for personal hearing and give them an
opportunity to deal with those judgments or distinguish those
judgments and those submissions during the personal hearing.5 JAO shall pass a well reasoned order by 30 th June 2022
dealing with every submissions of petitioner and give complete
reasons for the conclusions that he will be arriving at. The
assessment proceedings will not be proceeded with for at least 30
days after passing the order on objections. The time spent from
the date of filing the writ petition till disposal and the time granted
for disposal of objections is to be excluded while computing the
period of limitation for completion of the assessment proceeding.6 Petition disposed. No order as to costs.”
24. Respondent no.4, in pursuance of the aforesaid order passed by this
Court, issued a notice to the petitioner under Section 142(1) dated 21
April 2022 calling upon the petitioner to remain present for hearing on 06
May 2022. Thereafter on subsequent dates, the Chartered Accountant of
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the petitioner was heard, as also submitted documents. A list of
documents as submitted by the petitioner is set out in paragraph 48 of the
petition. In furtherance thereto, by the impugned order dated 28 June
2022, the petitioner’s objections for reopening were partially allowed,
however, respondent no.4 permitted reopening of the assessment for the
AY 2014-15 under two heads, firstly on cash deposits (anonymous
donations) and secondly, investment in jewellery/ornaments in regard to
items received in donations. It is on the aforesaid backdrop, the
proceedings are before the Court.
25. Reply affidavit on behalf of the respondents is placed on record
opposing the petition inter alia contending that the petitioner’s case has
been reopened on two issues i.e. on the issue of the petitioner-trust being a
charitable institution and hence the anonymous donations required to be
taxed as per the provisions of Section 115BBC, and on the issue of
donations being received of ornaments and jewellery in regard to which
the petitioner not investing in the prescribed modes of investment as
mandated by the provisions of Section 11(5) of the IT Act. There are other
grounds of opposition to the writ petition including to contend that the
petition is premature.
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Submissions on behalf of the petitioner :-
26. On behalf of the petitioner, Mr. Ganesh, learned senior counsel
would submit that the impugned notice issued to the petitioner under
Section 148 as also the impugned order dated 28 June 2022 rejecting the
objections of the petitioner against reopening of the assessment are
issued/passed on the basis of material which was already available with the
Assessing Officer at the time of the assessment and not on any new
tangible material as derived by respondent no.4. It is hence submitted that
the impugned reopening of the assessment by respondent no.4 is without
forming any ‘reason to believe’ that the income has escaped assessment. It
is submitted that the impugned order has been passed merely on a change
of opinion. In supporting such contention, it is submitted that it is settled
position in law that the notice under Sections 147 and 148 can be issued
only on fresh tangible material being gathered, failing which the reopening
would be bad and illegal.
27. It is submitted that the impugned order dated 28 June 2022 in so
far as it rejects the petitioner’s objections on the reassessment, is on two
basic grounds i.e. (i) disallowance under Section 115BBC in respect of the
anonymous Hundi donations received by the petitioner and (ii) non-
compliance with the investment requirement laid down by Section 11(5)
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read with proviso (iia) to Section 13(1)(d). It is submitted that in so far as
disallowance under Section 115BBC is concerned, the impugned order
relied on the AIR return regarding cash deposit in the petitioner’s bank
accounts. It is submitted that however the AIR return was not only
available in the original proceedings but the same was also specifically
raised in the department’s queries and specifically answered in the
petitioner’s letter dated 12 August 2016 (page 265-266 of the paper-
book). It is hence submitted that after considering the petitioner’s
explanation, the Assessing Officer in the assessment order passed under
Section 143(3) of the IT Act did not make any addition under Section
115BBC. It is hence submitted that such ground to reopen the assessment
is therefore on a mere change of opinion and in fact amounting to a review
of the original assessment, which is expressly forbidden by law. In
supporting such submissions, reliance is placed on the decision of the
Supreme Court in CIT vs. Kelvinator of India Ltd. 1 and several other
decisions. It is submitted that apart from the AIR report, the fact of cash
deposit in the hundis is expressly referred at a number of places in the
petitioner’s audited balance sheets, which were materials before the
Assessing Officer. Our attention in this regard is drawn to such
documents which were before the Assessing Officer by referring to pages
1 (2010) 320 ITR 561
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198, 199 and 219 of the paper-book.
28. Insofar as the second ground namely of non-compliance with the
investment requirements laid down by Section 11(5) of the IT Act that the
petitioner had obtained donations in kind which were not converted into
the investments, prescribed and required by Section 11(5) i.e. donations of
gold, silver, other valuables, it is submitted that the receipt of these
donations in kind was expressly set out/revealed in the petitioner’s
balance-sheet, a copy of which is placed on record. It is submitted that
after considering the audited balance sheets, the Assessing Officer did not
apply Section 11(5) read with Section 13(1)(d) to these donations and no
query was raised to the petitioner in this issue. Mr. Ganesh would submit
that if such a query was to be raised by the Assessing Officer, then the
petitioner would have certainly placed reliance on such material already
available, as also to point out an injunction order dated 16 October 2012
passed by this Court in the proceedings of Civil Application No. 12056 of
2012 by which the petitioner was restrained from selling any valuables
received by it in kind. It is submitted that therefore it was not possible for
the petitioner to sell these valuables, and to convert the same into the
investments required by Section 11(5) of the IT Act as this would lead to
the petitioner acting contrary to the orders passed by this Court. In
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supporting such contention, Mr. Ganesh has placed reliance on the
decisions in case of Shipra Srivastava & Anr. vs. Assistant Commissioner of
Income Tax2, Bapalal & Co. Exports vs. Joint Commissioner of Income
Tax (OSD)3, Commissioner of Income Tax-V vs. Orient Craft Ltd. 4 and
Inductotherm (India) Pvt. Ltd. vs. M. Gopalan, Dy. Commissioner of
Income Tax or his Successor5 as also the decision in The Pr. Commissioner
of Income Tax, Bengaluru & Ors. vs. Fibres and Fabrics International Pvt.
Ltd.6 of the Karnataka High Court and the orders dated 25 April 2022 of
the Supreme Court rejecting Special Leave Petition to Appeal No. 6016 of
2022 arising from such order.
Submissions on behalf of the Revenue :-
29. On the other hand, Mr. Sharma, learned counsel for the Revenue
has submitted that in the present case as the reopening is within a period
of four years, the requirements as per the first proviso to Section 147 (as
on 31 March 2021) namely of a failure on the part of the petitioner to
disclose fully and truly all material facts as a pre-condition to issue notice
under Section 148 is not applicable. It is submitted that the assessment
order does not disclose that the Assessing Officer has applied his mind and
2 (2009) 319 ITR 0221 (Delhi HC)
3 (2007) 289 ITR 37 (Mad HC)
4 (2013) 354 ITR 536 (Delhi HC)
5 (2013) 356 ITR 0481 (Guj HC)
6 (2022) 139 taxmann.com 561 (Kar.)
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wp 4817-22.odtit is on such issue reassessment is initiated. It is submitted that as the
reopening itself is within 4 years, the Assessing Officer may find tangible
materials from the records which are already made available by the
petitioner so as to reopen the assessment. It is submitted that the tangible
material need not always be new tangible material, hence, to say that
tangible material to be new or fresh material would amount to reading the
first proviso below Section 147, as it stood on 31 March 2021 for cases,
which are re-opened within four years. In supporting such contention,
reliance is placed on the decision of this Court in case of Export Credit
Guarantee Corporation of India Ltd. vs. Additional Commissioner of
Income-tax7. The relevant observations made in the said decision read
thus :-
“8. To hold that the Assessing Officer must be deemed to have
accepted what he has plainly overlooked or ignored in the
assessment order would be to stretch the interpretation of Section
147 to a point where the provision would cease to have meaning
and content. Such an exercise of excision by judicial interpretation
is impermissible. When an assessment is sought to be reopened
within a period of four years of the end of the relevant assessment
year, the test to be applied is whether there is tangible material to
do so. What is tangible is something which is not illusory,
hypothetical or a matter of conjecture. Something which is tangible
need not be something which is new. An Assessing Officer who has
plainly ignored relevant material in arriving at an assessment acts
contrary to law. If there is an escapement of income in
consequence, the jurisdictional requirement of Section 147 would
be fulfilled on the formation of a reason to believe that income has
escaped assessment. The reopening of the assessment within a
period of four years is in these circumstances within jurisdiction.”
7 (2013) 30 taxmann.com 211 (Bom)
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Reasons and Conclusion :-
30. As seen from the facts to which we have made a reference in some
detail, it appears to be clearly not in dispute that the assessment order
under Section 143(3) of the IT Act was passed by the Assessing Officer on
24 November 2016 and after such assessment was completed, the
petitioner was issued with the impugned notice dated 31 March 2019
under Section 148 of the IT Act, whereby respondent no.4 sought to open
assessment for the AY 2014-15. The petitioner had requested respondent
no.4 by its letter dated 30 April 2019 that the reasons for reopening of the
assessment for AY 2014-15 be furnished to it and the same were furnished
to the petitioner by respondent no.4 under his letter dated 13 September
2019. It is seen that the reasons are purely on the basis of material which
was available with the Assessing Officer during the course of the
assessment proceedings. The primary reason to reopen the petitoner’s
assessment is in relation to the donations received by the petitioner in cash
or in kind, for the Assessing Officer to form an opinon/reason to believe
that the cash donations in box falls within the definition of “anonymous
donations” under Section 115BBC(3) of the IT Act, hence, such donations
were taxable under Section 115BBC(1) of the IT Act, unless exempted
under sub-section (2) of Section 115BBC. The other reason as recorded by
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wp 4817-22.odtrespondent no.4 was to the effect that the income received by the
petitioner in the form of ornaments and jewellery has not been disclosed
in the income and expenditure account, which prima-facie shows failure
on the part of the assessee to comply with the provisions of Section 13(1)
(d)(iia) of the IT Act. The relevant extract of the reasons as annexed to the
petition is required to be noted which reads thus:-
“3. During assessment proceedings, the source of cash deposit,
information and explanation about the Bank AIR return about the
cash deposited of over Rs. 10 lacs, was asked. In respect of the
huge cash deposits of Rs.360,28,44,424/-, the only explanation
submitted by the assessee vide their reply dated 12.08.2016, is that
many devotees of Shree Sai Baba are coming and they give
donation in cash or kind. The entire donations deposited in the
Bank are cash dropped in the Box or donation given in Counter.
All the records are kept updated and correctly and the funds are
fully deposited in cash in the Bank.
The cash donation in box clearly fall within the definition
of anonymous donation u/s. 115BBC(3) of the I. T. Act, the same is
taxable u/s. 115BBC(1) of the I.T. Act; unless it is excluded under
sub-section (2) of the same Section. It is important to note that in
the explanation dated 12/08/2016, it is clearly stated that the
assessee trust is mainly incorporated for the charitable objects
started by Shree Sai Baba in his lifetime, which prima facie shows
that the assessee is a charitable trust on which exclusion
u/s.115BBC(2) does not apply. Importantly, even in the earlier
reply dated 07/07/2016 also, it has been clearly stated that Shree
Sai Baba Sansthan Trust is registered ‘Charitable Trust’ having the
objects of charity to poor, to support, to education, to give free and
concessional facility of medical to poor and needy people. As per
these two letters, the assessee is admittedly a charitable Trust which
is not covered by exclusion of sub-section (2) of Section 115BBC.
Therefore, the above donation should have been disclosed by the
assessee in its Return of Income, which it has failed to do, leading
to escapement of income of assessee from assessment. The records
also show that the AO did not apply mind to the issue.
4. In the Return of Income in Col. 8, the voluntary
contribution forming part of corpus as per section 11(1)(d), has
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wp 4817-22.odtbeen claimed at Rs. 20,63,12,494/-. However, the Balance Sheet of
assessee shows the trust-corpus fund same as it was in the previous
year at Rs. 48,82,52,868/-. No accretion to corpus fund in Balance
Sheet shows that the claim of corpus donation of Rs.20.63 crores
u/s. 11(1)(d) is not correct and to this extent income has escaped
assessment. Further, even in Schedule J in the Return of Income
which is having a statement showing the investment of all funds as
on the last day of previous year is shown at Nil, which prima facie
shows that otherwise also, there is a violation of provisions of
section 11(5).
5. In the Return of Income, the assessee has claimed
deduction u/s.21(2) of the I. T. Act at Rs. 343,91,42,425/-. The
only detail submitted by the assessee in respect of this is Form
No.10. However, on perusal of Form No. 10, it is seen that no
amount which is accumulated is specified in the form. Further, as
per provisions of the Act, such accumulation has to be for specific
purposes, which need to be specified in Form No.10, However, the
purpose specified in Form No.10 is shown s “As per Resolution
enclosed”. No copy of Resolution was filed by the assessee where it
could have been ascertained as to the conditions prescribed in
Section 11(2) for allowing the above claim, is specified or not.
Importantly, in Schedule J of the Return of Income, which shows
statements showing an investment of all funds on the last day of
previous year, the details of investment or deposits made u/s. 11(5)
is shown at Nil. The claim of exemption u/s. 11(2) therefore, is not
proper as it can be inferred from the assessment records.
6. As per Balance Sheet, the total value of ornaments and
jewellery shown at cost has increased from Rs. 63.32 crores to Rs.
74.31 crores. The amount of surplus from sale of gold, silver coins
etc. forming part of other income is Rs.1.87 crores. Further, even
the donation in kind reflected in the financials merely Rs. 7.85
crores. This prima facie shows that the income received in the
form of ornaments and jewellery has not been disclosed in the
Income and Expenditure Account. It also prima facie shows the
failure of assessee to comply with the provisions of Section 13(1)
(d)(iia) of the I. T. Act.
7. On the basis of the above facts and discussion, I am satisfied
that income of assessee has escaped assessment and it is a fit case
for re-opening of assessment u/s. 147 of the I. T. Act by issue of
notice u/s.148 of the I. T. Act.”
31. The petitioner had objected to the aforesaid reasons by its detailed
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letter dated 03 December 2019 addressed to respondent no.4 inter alia
contending that the basis on which such satisfaction was derived by
respondent no.4 as seen from the reasons as furnished to the petitioner
was nothing more but from the records of the original assessment in the
proceedings under Section 143(3) which stood concluded vide an order
dated 24 November 2016, which was passed by respondent no.4. In
regard to all such reasons as informed to the petitioner, forming part of the
decision to reopen the assessment, it was pointed out that there was
complete absence of any fresh material that was received/ obtained by the
Assessing Officer on the completion of the impugned assessment under
Section 143(3). The petitioner stated that the assessment under Section
143(3) was completed accepting the view consistently adopted for the
previous undisputed assessments. It was also pointed out that the power
for reopening was not akin to having a review and that the existence of
true, complete and tangible new material received after completion of the
assessment, was necessary to ensure against an arbitrary exercise of power.
The decision supporting such proposition was also placed for
consideration in the objections. Such objections as raised by the petitioner
were rejected by the impugned order dated 08 December 2019.
32. Thus, the question which arises for consideration in the facts and
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circumstances of the case, whether it was permissible for the Assessing
Officer to issue the impugned notice under Section 148 and to reject the
objections as raised by the petitioner to the reasons for reopening of the
assessment by the impugned order dated 08 December 2019.
33. At the outset, we find substance in the contention as urged on
behalf of the petitioner that the reasons as furnished to the petitioner to
which we have made a detailed reference are not based on any fresh/new
tangible material but on a new opinon being formed on the legal
provisions. In fact, the reasons point out that such notice has been issued
on the basis of materials which were already part of the assessment
proceedings and which were furnished by the petitioner and which formed
basis of the assessment order passed under Section 143 dated 24
November 2016, as also conceded in the reply affidavit, that the reopening
is based on two issues namely on the issue of trust being a charitable
institution and hence the anonymous donations being required to be
taxed, as per the provisions of Section 115BBC, and on the issue of
accepting the donations in the form of ornaments and jewellery and not
investing the same in the prescribed modes of investment as mandated by
the provisions of Section 11(5) of the IT Act.
34. The reply affidavit does not point out that the reopening of the
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assessment for the assessment year in question is on the basis of fresh
tangible materials, which later on had come to the knowledge of the
Assessing Officer and which did not form part of the assessment
proceedings. However, case of the respondents is on the basis that as the
reassessment which is reopened within a period of four years, the materials
which were already available before the Assessing Officer and which
ultimately were considered in passing an assessment order under Section
143(3) of the IT Act, can form the basis of reopening of the assessment on
the ground that such materials were ignored in finalizing the assessment.
In our opinion, such proposition cannot be accepted in view of the settled
position in law as seen from catena of judgments. We discuss the legal
position hereafter.
35. At the outset we need to extract the provisions of Section 147 of the
IT Act as applicable to the assessment year in question and as it stood on
the date of notice i.e. 31 March 2019, which read thus:
“Income escaping assessment.
147. If the Assessing Officer has reason to believe that any income
chargeable to tax has escaped assessment for any assessment year,
he may, subject to the provisions of sections 148 to 153, assess or
reassess such income and also any other income chargeable to tax
which has escaped assessment and which comes to his notice
subsequently in the course of the proceedings under this section,
or recompute the loss or the depreciation allowance or any other
allowance, as the case may be, for the assessment year concerned
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wp 4817-22.odtthe relevant assessment year):
Provided that where an assessment under sub-section (3) of
section 143 or this section has been made for the relevant
assessment year, no action shall be taken under this section after
the expiry of four years from the end of the relevant assessment
year, unless any income chargeable to tax has escaped assessment
for such assessment year by reason of the failure on the part of the
assessee to make a return under section 139 or in response to a
notice issued under sub- section (1) of section 142 or section 148
or to disclose fully and truly all material facts” necessary for his
assessment, for that assessment year:
Provided further that nothing contained in the first proviso shall
apply in a case where any income in relation to any asset
(including financial interest in any entity) located outside India,
chargeable to tax, has escaped assessment for any assessment year:
Provided also that the Assessing Officer may assess or reassess such
income, other than the income involving matters which are the
subject matters of any appeal, reference or revision, which is
chargeable to tax and has escaped assessment.
Explanation 1.-Production before the Assessing Officer of account
books or other evidence from which material evidence could with
due diligence have been discovered by the Assessing Officer will
not necessarily amount to disclosure within the meaning of the
foregoing proviso.
Explanation 2-For the purposes of this section, the following shall
also be deemed to be cases where income chargeable to tax has
escaped assessment, namely:-
(a) where no return of income has been furnished by
the assessee although his total income or the total income of any
other person in respect of which he is assessable under this Act
during the previous year exceeded the maximum amount which is
not chargeable to income-tax;
(b) where a return of income has been furnished by the
assessee but no assessment has been made and it is noticed by the
Assessing Officer that the assessee has understated the income or
has claimed exces- sive loss, deduction, allowance or relief in the
return;
(ba) where the assessee has failed to furnish a report in
respect of any international transaction which he was so required
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under section 92E:
(c) where an assessment has been made, but-
(i) income chargeable to tax has been underassessed; or
(ii) such income has been assessed at too low a rate; or
(iii) such income has been made the subject of excessive
relief under this Act: or
(iv) excessive loss or depreciation allowance or any
other allowance under this Act has been computed;
(ca) where a return of income has not been furnished by
the assessee or a return of income has been furnished by him and
on the basis of information or document received from the
prescribed income-tax authority, under sub-section (2) of section
133C, it is noticed by the Assessing Officer that the income of the
assessee exceeds the maxi- mum amount not chargeable to tax, or
as the case may be, the assessee has understated the income or has
claimed excessive loss, deduction, allowance or relief in the return;
(d) where a person is found to have any asset
(including financial interest in any entity) located outside India.
Explanation 3. For the purpose of assessment or
reassessment” under this section, the Assessing Officer may assess
or reassess the income in respect of any issue, which has escaped
assessment, and such issue comes to his notice subsequently in the
course of the proceedings under this section, notwithstanding that
the reasons for such issue have not been included in the reasons
recorded under sub-section (2) of section 148.
Explanation 4.-For the removal of doubts, it is hereby
clarified that the provisions of this section, as amended by the
Finance Act, 2012, shall also be applicable for any assessment year
beginning on or before the 1st day of April, 2012.”
(emphasis supplied)
36. The present case would fall under Section 147 of the IT Act in the
part preceding the first proviso which ordains that if the Assessing Officer
“has reason to believe” that any income chargeable to tax has escaped
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assessment for any assessment year, he may subject to sections 148 to 153,
assess or reassess such income and also any other income chargeable to tax
which has escaped assessment and which comes to his notice subsequently
in the course of the proceedings under the said provision. Insofar as the
applicability of the provision for a period within four years as falling under
Section 147 as it reads prior to the proviso, it appears to be a well settled
position in law that unless there was fresh material which was available
with the Assessing Officer to disturb the reasoning which had gone into in
finalising the assessment under Section 143(3), the Assessing Officer
would not have jurisdiction to reopen the assessment. We refer to the
relevant decisions in this regard which reads thus.
37. In Shipra Srivastava & Anr. Vs. Assistant Commissioner of Income
Tax (supra) the return of income of the petitioner was duly processed
under Section 143(1) of the IT Act and thereafter, notices were issued
within four years under Section 147/148 of the IT Act, not on the basis of
any fresh material. In such context, the Division Bench of the Delhi High
Court held that the reasons which were recorded seeking reopening of the
assessment showed that there was no application of mind by the Assessing
Officer which could be said to be the mind of a reasonable person, to
arrive at a conclusion on the reasons recorded. It was observed that the
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reasons did not refer to any material which had come to the notice of the
officer subsequent to the finalization of the assessment under Section
143(1), and also it was not the case that the assessee had concealed any
material particulars or any facts from the department. The Court observed
that the conclusions which have been arrived at by the officer in seeking
reopening of the assessment, were in fact wholly without basis.
38. In Bapalal & Co. Exports Vs. Joint Commissioner of Income Tax
(OSD) (supra) the Division Bench of the Madras High Court was
concerned with the case of reopening of the assessment after expiry of
about three years and in such context it was observed that it was a settled
legal proposition from the decision of the Supreme Court, that once an
opinion is given in an assessment, it cannot be reopened by any other
authority except on fresh material, and as the notice was issued in the
“absence of any new material”, the Assessing Officer was not empowered
to reopen an assessment irrespective of the fact whether it is made under
section 143(1) or 143(3) of the Act.
39. In the Commissioner of Income-tax-V vs. Orient Craft Ltd. (supra)
a Division Bench of the Delhi High Court was dealing with the question
whether reopening of the assessment made under Section 143(1) is
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without jurisdiction in the absence of any tangible material available with
the Assessing Officer so as to form the requisite belief regarding
escapement of income. It was observed that in the absence of any new
tangible material with the Assessing Officer, there was no ground for
reopening of the assessment.
40. The Division Bench of the Karnataka High Court in The Pr.
Commissioner of Income Tax, Bengaluru & Ors. Vs. Fibres and Fabrics
International Pvt. Ltd. (supra), in an appeal under Section 260A of the IT
Act was dealing with the question whether the Tribunal was right in law to
hold that the re-assessment order passed in the case of assessee was null
and void, on the ground that the said proceedings are initiated based on
the “same set of information” as was available at the time of original
assessment proceedings and therefore, it amounts to mere change of
opinion. The Court observed that during the course of original
assessment proceedings, the details in regard to the expenditure incurred
by the assessee towards sales commission were furnished by the assessee
and formed part of the assessment proceedings. Thus, the assessee had
furnished all primary facts before the Assessing Officer and on such basis/
facts available with the Assessing Officer, an original order of assessment
was passed without making any disallowance of the expenditure in
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question. The Court in such context, observed that the re-assessment
proceedings were on the basis of the “same information”, which was
available with the Assessing Officer at the time when the original order of
assessment was passed and the inferences being drawn by the Assessing
Officer were on the same set of facts, cannot be said to be tangible
material. It was also observed that the mere fact that expenses were huge
in the opinion of the Assessing Officer cannot be a ground for re-opening
the assessment and necessity of incurring expenditure cannot be gone into
by the Assessing Officer. The aforesaid observations of the Division Bench
of the Karnataka High Court found concurrence of the Supreme Court in
the Supreme Court dismissing the revenue’s appeal by an order dated 25
April 2022 passed on Special Leave to Appeal (C) No.6016/2022. The
said order reads thus:
” Having heard Mr. N. Venkataramn, learned ASG,
appearing for the petitioner(s) and considering the impugned
judgment and order passed by the High Court and it is found that
there was no further tangible material available with the A.P.
which warranted the re-assessment and/or re-opening of the
concluded assessment, no interference of this Court is called for.
The Special Leave Petition stands dismissed.”
41. In Income Tax Officer, Ward No.16(2) vs. Techspan India Pvt. Ltd.
& Anr.8, the Supreme Court interpreting the provisions of Section 147 has
8 (2018)6 SCC 685
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held that the power to reopen assessment is conditional upon the fact that
the Assessing Officer has reason to believe that the income has escaped
assessment. It was observed that use of the words “reason to believe” in
Section 147 has to be interpreted schematically as the liberal interpretation
of the word would have the consequece of conferring arbitrary power on
the Assessing Officer who may initiate such reassessment proceeding
merely on the change of opinion on the basis of the same facts and
circumstances which have already been considered by him during the
original assessment proceedings. It was held that such could not be the
intention of the legislature, as, the said provision was incorporated in the
scheme of the IT Act so as to empower the assessing authorities to reassess
any income on the ground which was not brought on record during the
original proceedings and escaped his knowledge and the said fact would
have material bearing on the outcome of the relevant assessment order. It
was further held that Section 147 of the IT Act does not allow the
reassessment of an income merely because of the fact that the Assessing
Officer has a change of opinion with regard to the interpretation of law
differently on the facts that were well within his knowledge even at the
time of assessment. The Court observed that doing so would have the
effect of giving the Assessing Officer the power to review and Section 147
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confers the power to reassess and not the power to review.
42. The Division Bench of this Court in Plus Paper Food Pac Ltd. Vs.
Income-tax Officer and Anr.9 was dealing with the case of reopening of
assessment within the period of four years, initiated against the assessee
under Section 148 of the Act and rejecting the objections of the petitioner.
The primary contention as urged on behalf of the assessee was to the effect
that the Assessing Officer had no occasion to pass the impugned order in
rejecting the objections as raised by the petitioner for the reason that the
assessee had disclosed all material facts fully and truly in the course of the
assessment proceedings, and hence, there was no occasion for the
Assessing Officer to believe that the income has escaped assessment. In
upholding such contention as urged on behalf of the assessee as also
referring to the decision of this Court in the Division Bench in Export
Credit Guarantee Corporation of India Ltd. Vs. Additional Commissioner
of Income Tax and Others10 the Court held that it was a case where the
notice under section 148 had not been issued after the expiry of four years,
but within four years and in these circumstances, it was necessary that
there ought to have been a reason to believe that income chargeable to tax
has escaped assessment and which alone would enable the Assessing
9 2015 SCC OnLine Bom 4230
10 (2013)30 taxmann.com 211 (Bom)
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Officer to assess or re-assess such income. It is in such context the Court
observed that the Court did not agree with the reasoning of the Assessing
Officer for the reason that the assessment order had taken into
consideration all relevant documents and that there was “no new tangible
material”. The relevant observations of the Court are required to be noted
which read thus:-
18. We are unable to agree with the reasoning of the
Assessing Officer. In our view, the entire approach of the
Assessing Officer in the facts of the present case is misconceived.
The assessment order in the present case has obviously taken into
account the aspect of depreciation. Perusal of the assessment
order reveals that all relevant documents and details as called for
were filed. It is further recorded in paragraph 3 of the assessment
order that the details of the assessee-company along with the
return of income and those which were called for assessment
proceedings were scrutinized. There does not appear to be the
tangible material/reason for the Assessing Officer to reopen the
assessment proceedings in the facts of the present case. The
reasons offered by the Assessing Officer while rejecting the
objection that the issues involved in reassessment proceedings
were never examined by the Assessing Officer are not tenable.
No particulars whatsoever has been relied upon by the Assessing
Officer while rejecting the objections.
19. The facts reveal and we are satisfied that in the present
case, the order of reopening of the assessment will not be
justified. The decision to reopen assessment is not based on
proper reasons but obviously is a result of change of opinion.
This is impermissible. In the case of ECGC, there was specific
finding that there existed tangible material and reason to reopen
the assessment and that was evident from the record in that case.
It is not the case of the Revenue that in this case any new material
was forwarded to the Assessing Officer. In any event we are not
called upon to decide on the merits of the case and the proposed
reopening is not justifiable in the facts and circumstances of the
present case. Accordingly, the petition must succeed. We,
therefore, pass the following order:
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The impugned notice dated November 18, 2013, being exhibit
“H” to the petition issued under section 148 of the Income-tax
Act, 1961, in respect of the assessment year 2009-10 and the
order dated February 4, 2015, rejecting the objections of the
petitioner passed by respondent no. 1 are hereby set aside. There
will be no order as to costs.”
43. In this view of the matter, we cannot agree with the contentions as
urged on behalf of the Revenue including on the reliance as placed on the
decision of this Court in Export Credit Guarantee Corporation of India
Ltd. (supra) which was dealt in the decision in Plus Paper Food Pac Ltd.
(supra). Further, for similar reasons, the said decision would not be
applicable in the facts of the present case. It is thus a settled position in law
that once all materials which were furnished by the petitioner were subject
matter of consideration in the assessment order being passed under
Section 143(3) of the IT Act, in such event in the absence of any fresh
tangible material, the Assessing Officer could not have issued a notice
under Section 148 of the IT Act to reopen the petitioner’s assessment for
the reason that the Assessing Officer would not have jurisdiction under
the garb of re-assessment under Section 147, to reopen the petitioner’s
assessment merely on the basis of change of opinion and/or review the
assessment order passed against the assessee.
44. Mr. Sharma has also placed reliance on the decision of the Delhi
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High Court in Consolidated Photo & Finvest Ltd. Vs. Assistant
Commissioner of Income-tax11 wherein the Assessing Officer had not
applied his mind to the material placed on record. It is for such reason, the
Division Bench had formed an opinion that it was not a case of mere
change of opinion. Thus, this decision would not be applicable to the facts
in hand.
45. In the light of the above discussion and as crystal clear from the
reading of the reasons for reopening that the same have been issued on the
materials already available and on the record of the Assessing Officer in
the course of the assessment proceedings and to his knowledge. It was not
a fresh discovery to the Assessing Officer that the petitioner was receiving
anonymous donations in a cash and in kind. He also could not have been
oblivious to the provisions of Section 115BBC and Section 11(5) or
Section 13 of the IT Act, in finalizing the petitioner’s assessment for the
assessment year in question. On such backdrop, on a plain reading of the
reasons for reopening as furnished to the petitioner, it is clear that the
Assessing Officer has sought to reopen the assessment on a change of
opinion in the application of the provisions of the IT Act or on
interpretation of law differently, on facts which were abundantly within his
knowledge at the time of original assessment. This is certainly not
11 (2006)151 Taxman 41 (Delhi)
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permissible. Hence, such reopening of the assessment, being not on any
fresh tangible material, the Assessing Officer would not have jurisdiction
to proceed with the re-assessment, as this would be purely in the realm of a
review and / or on a mere change of opinion. If such course of action is
recognized, it would lead to arbitrary consequences and result in multiple
assessment orders being passed on the same materials available with the
Assessing Officer, which is not the legislative intention Section 147 would
wield.
46. There is another significant aspect on which there appears to be a
consensus that qua both the principal issues on the basis of which the
assessment of the petitioner in the present case is being reopened by the
impugned notice, itself stand addressed in view of the pronouncement of
this Court in the assessee’s own case in “Commissioner of Income Tax
(Exemptions), Mumbai Vs. Shree Saibaba Sansthan Trust- Shirdi 12
wherein a co-ordinate Bench of this Court of which one of us (G. S.
Kulkarni, J.) was a member, held that anonymous donations received by
the petitioner in the hundi were not liable to be taxed under Section
115BBC(1) of the Act. The Court had rendered such decision in relation
to the proceedings for the Assessment Year 2015-16, 2017-18 and 2018-
19. The Court held that the petitioner was a religious charitable trust and
12 2024 SCC OnLine 3224
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hence the assessee rightly and legitimately claimed an entitlement under
sub-section 2(b) of Section 115BBC of the Act that the anonymous
donations as received in hundi are not liable to be taxed.
47. We find that even the other ground for the Assessing Officer to
reopen the assessment by applying the provisions of Section 13 on the
issue of accepting donations in the form of ornaments and not investing
in the prescribed form as mandated by Section 11(5) of the Act, is
concerned, such ground also was of no consequence in view of the order
dated 16 October 2012 passed by the Aurangabad Bench of this Court in
Rajendra Bhausaheb Gondkar & Anr. Vs. The State of Maharashtra and
Ors.13. In such order, the Division Bench specifically directed that the
auction in respect of such precious items / articles stands stayed and
suspended forthwith. The Court also injuncted and restrained the
petitioner from converting precious metals in any form or melt it in any
form. If this be so, as to how the Assessing Officer can reopen the
assessment on such ground cannot be understood.
48. From the aforesaid discussion, it is quite clear to us that once
tangible material during the course of assessment proceedings was
available with the Assessing Officer and the same was considered in
13 Civil Application No.12056/2012 in PIL No.18/2011
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passing the assessment order under Section 143(3) of the IT Act, the
Assessing Officer, in the absence of any fresh material, could not have
proceeded to reopen the petitioner’s assessment on similar materials. Such
exercise would tantamount to a review of the assessment order on a mere
change of opinion. This is certainly not permissible. If such interpretation
of the provisions as canvassed on behalf of the respondents is accepted, an
assessment order would become vulnerable to be arbitrarily reopened,
merely on the ground that the Assessing Officer on the very material
intends to take a different view/opinion on the assessment order passed by
him. This would lead to a regime of total uncertainty. In our opinion, this
is neither the object nor the intention of the provisions of Section 147.
The provision is a special power, so as to check, discern and recall
concluded assessments, hence, such power cannot be exercised when it is
not a case, where the assessee had not withheld any information and/or the
Assessing Officer did not have any fresh tangible material. A second bite at
the cherry is not what is contemplated under Section 147, on the basis of
materials already available with the Assessing Officer, as the provision
would become applicable in the present facts. Also, Section 147 certainly
does not postulate a review jurisdiction so that the assessment can be
reviewed, on the Assessing Officer intending to form a different and/or a
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new opinion.
49. In the light of the above discussion, the petition needs to succeed. It
is accordingly allowed in terms of prayer clause (a) which reads thus:
“a) That this Hon’ble court be pleased to issue a Writ of
Certiorari and Prohibition or any other similar/appropriate Writ,
order or direction under Article 226 of the Constitution of India,
1950, calling for the record and proceedings in connection with
the present proceedings and after considering the legality and
validity of the Impugned Notice dated 31 st March 2019 issued by
the Respondent No.4 for reopening the assessment for the
Assessment Year 2014-15 as well as the Impugned Order dated
28th June, 2022 passed by the Respondent No.4, thereby rejecting
the Petitioner’s objections to reopening, to quash and set aside the
same and further restrain the Respondent No.4 from taking any
steps in pursuance of the said Impugned Notice and Impugned
Order.”
50. Rule is made absolute in the aforesaid terms. No costs.
(FIRDOSH P. POONIWALLA, J.) (G. S. KULKARNI, J.)
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