High Court Of Delhi
D.T. & T.D.C. Ltd. vs. Assistant Commissioner Of Income Tax
Section 147, 147, proviso
Asst. Year 1997-98, 1998-99, 1999-2000
Badar Durrez Ahmed & Siddharth Mridul, JJ.
Writ Petn. No. 13603 of 2004
25th January, 2010
Counsel Appeared :
Rajiv Tyagi with Ms. Chanchal Biswal, for the Petitioner : Sanjeev Sabharwal, for the Respondent
JUDGMENT
BADAR DURREZ AHMED, J. :
This writ petition concerns three asst. yrs. 1997-98, 1998-99 and 1999-2000. Approval of the Committee on Disputes had been taken for pursuing this writ petition. Permission was granted on 26th Sept., 2008. The Government of National Capital Territory of Delhi (Delhi Administration at the relevant time) had authorized the petitioner (Delhi Tourism and Transportation Development Corporation Ltd.) (DTTDC) to run liquor vends throughout Delhi. The petitioner was required to keep aside a sum of Rs. 5 per bottle for the transport infrastructure utilization fund (TIUF) which was to be spent towards the activities of construction of flyovers and pedestrian facilities. The said fund was under the direct control of the Government of National Capital Territory of Delhi and utilized for the aforesaid purpose.
The fact that the petitioner kept aside a sum of Rs. 5 per bottle for the TIUF was disclosed by the petitioner in its IT return. In fact, the Department had, in respect of earlier assessment years, taken the stand that the said sum of Rs. 5 per bottle was taxable in the hands of the petitioner. However, in respect of the asst. yrs. 1990-91 and 1991-92 the matter was carried in appeal to the Tribunal, which by its decision dt. 31st Aug., 1995 [reported as Delhi Tourism & Transport Development Corpn. Ltd. vs. Dy. CIT (1996) 54 TTJ (Del) 316—Ed.], held the same not to be taxable, after recording a finding that it was nothing but diversion of income by overriding title. The reference is pending before this Court in respect of the said Tribunal’s decision dt. 31st Aug., 1995. In respect of the asst. yr. 1996-97, the Tribunal took a similar view in favour of the assessee by virtue of its order dt. 27th Oct., 2000. The Revenue preferred an appeal against the same which is pending before this Court.
The original assessment order was passed in respect of three assessment years in question namely 1997-98, 1998-99 and 1999-2000 on 28th March, 2002. In each of the assessment orders pertaining to each of the three assessment years the TIUF has been specifically noticed by the AO. He had brought the interest on such amount to tax but had not taxed the amount transferred to the TIUF. We may also point out that in the course of the assessment proceedings in respect of the three years in question, the AO had raised specific queries with regard to TIUF. The petitioner had submitted a detailed reply dt. 18th Jan., 2002 explaining the exact nature and purpose of TIUF. It is only thereafter that the assessment order was passed by the AO on 28th March, 2002. By three separate notices, all dt. 26th March, 2004, issued under s. 148 of the IT Act, 1961 (hereinafter referred to the ‘said Act’), the AO proposed to reopen the assessments in respect of the three assessment years in question. The reasons for reopening the assessments were supplied by virtue of the letter dt. 28th April, 2004 to the petitioner. The reasons in respect of the three years are virtually identical and we shall refer only to the reasons provided in respect of the asst. yr. 1997-98. The reasons disclosed are as under : “Sub-Reasons for reopening of case under s. 147 of the IT Act for asst. yr. 1997-98. Please refer to your letter dt. 19th April, 2004. The reasons for reopening assessment for asst. yr. 1997-98 are as under :
It was noticed that the assessee company has debited a sum of Rs. 13,70,08,125 in the P&L a/c towards “transportation infrastructure utilization fund”. Further, during the year the assessee company earned interest income of Rs. 1,31,19,000 on the outstanding balances of transportation infrastructure utilization fund (TIUF) and this interest income was also transferred to TIUF treating this as part of TIUF. In the notes annexed to and forming part of the accounts, it has been mentioned that : ‘Funds provided by the Government or funds diverted to “transportation infrastructure utilization fund” from sale proceeds of country liquor, as per the obligatory requirements of the Government of NCT of Delhi, are utilized for constructing flyovers and pedestrian facilities in Delhi and meeting establishment and other administrative expenses of engineering wing specially created for the purpose. In this regard the amount of retail margins to be diverted is being decided by the State Government from time to time.’
In the assessment orders for asst. yrs. 1990-91 1991-92, 1992-93, 1994-95 and 1996-97, the amount transferred to TIUF was disallowed by the then AO. While disallowing the same, the AO held that the expenses debited under the above head were an application of income and not the diversion of income as contended by the assessee company. And the amounts spent by the assessee company on the construction of flyover and pedestrian facilities etc. amounted to an expenditure of capital nature and was not allowable deduction. The findings of the AO was confirmed by the CIT(A) in all those years. However, the Tribunal decided the issue in favour of the assessee company holding that the expenditure actually incurred on the construction of flyovers and pedestrian facilities is revenue expenditure. In all the said years, the Department has filed reference/appeal against the decision of the Tribunal.”
The petitioner, thereafter, filed objections in respect of each of the years on 30th April, 2004 and submitted that what the AO was proposing to do amounted to a mere change of opinion which was impermissible under s. 147 of the said Act. We may point out at this juncture that prior to the furnishing of the reasons, the petitioner had approached this Court by way of a writ petition challenging the issuance of the s. 148 notices. During the pendency of the writ petition, the reasons were supplied and the objections were also taken by the petitioner. This Court disposed of the said writ petition by directing that the procedure prescribed in GKN Driveshafts (India) Ltd. vs. ITO & Ors. (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC) be followed and a speaking order be passed. Thereafter, the speaking orders dt. 26th July, 2004 have been passed in respect of each assessment year in question.
We have examined the purported reasons, as well as the objections and the speaking order and have also heard counsel for the parties. We are of the view that the reopening of the completed assessments amounted to a mere change of opinion, which is not permissible as per the settled legal principles. The AO had clearly applied his mind to the setting apart of Rs. 5 per bottle for the purpose of the TIUF. This is evident from a plain reading of the original assessment order itself as well as from the query and the detailed answer given by the petitioner with regard to the said fund.
We may also point out that insofar as the asst. yrs. 1997-98 and 1998-99 are concerned, the same would require application of the proviso to s. 147 of the said Act, in as much as the notices under s. 148 of the said Act in respect of these two years have been issued beyond the period of four years prescribed in the said provision. That being the case, before the AO could acquire jurisdiction for reopening the assessments in respect of these two years, it would have to be shown that the assessee did not file a return or that he did not make a full and true disclosure. It is an admitted position that the assessee had filed a return, therefore, the only question which remains to be open is whether the assessee made a full and true disclosure or not. In the present case there is no allegation in the reasons recorded by the AO that the assessee had failed to make a full and true disclosure of the relevant facts. In fact, there could be no such allegation because the assessee had clearly indicated the nature and contents of the TIUF and the treatment given by the assessee in its books of accounts. The same had also been examined by the AO as aforesaid. Thus, in respect of the asst. yrs. 1997-98 and 1998-99 this additional ground is also available in favour of the assessee/petitioner.
The position that a mere change of opinion would not entitle an AO to reopen a completed assessment is well settled. The latest decision being of the Supreme Court in Civil Appeal Nos. 2009-2011 of 2003 and Civil Appeal No. 2520 of 2008 decided on 18th Jan., 2010 [reported as CIT vs. Kelvinator of India Ltd. (2010) 34 DTR (SC) 49 : (2010) 228 CTR (SC) 488—Ed.] which approves this Court’s Full Bench decision in the case of CIT vs. Kalvinator of India Ltd. (2002) 174 CTR (Del)(FB) 617 : (2002) 256 ITR 1 (Del)(FB). The power of reassessment is different from the power of review. The AO has been given the power to reassess under s. 147 upon certain conditions being satisfied. The AO does not have the power of review. If a change of opinion were to be permitted as a ground for reassessment then it would amount to granting a licence to the AO to ‘review’ his decisions, which power he does not have.
Consequently, holding that initiation of the proceedings in question was based entirely on change of opinion, we find that the reassessment proceedings are without jurisdiction. The notices under s. 147/148 of the said Act and the proceedings pursuant thereto stand quashed. We make it clear that in this writ petition we have considered the case only from the standpoint of jurisdiction and not on the merits of the issues with regard to taxability of the amount transferred to TIUF.
12. The writ petition stands allowed accordingly. No order as to costs.
[Citation : 324 ITR 234]
