$~8 & 9
* IN THE HIGH COURT OF DELHI AT NEW DELHI
% Date of decision: 22nd January, 2014
+ ITA 308/2013
+ ITA 309/2013
CENTRAL WAREHOUSING CORPORATION ..... Appellant
Through: Mr. M. S. Syali, Sr. Advocate with
Ms. Husnal Syali Nagi and Mr.
Harkunal Singh, Advocates.
versus
CIT .....Respondent
Through: Mr. Rohit Madan with Mr. P.
Roychaudhuri, Advocates.
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE R.V.EASWAR
MR. JUSTICE S. RAVINDRA BHAT: (OPEN COURT)
The assessee by way of this appeal impugns the order of the
Income Tax Appellate Tribunal (ITAT) dated 09.09.2011. The impugned
order dismissed the appeal preferred by the assessee.
2. The brief facts of the case are that the appellant, a statutory
corporation, claimed the benefit of Section 10(29) contending that its
income was exempted from taxation as it carried on warehousing and
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storage activity. The original assessment for AY 1995-96 was made on
22.01.1998. The assessee's contentions were accepted in respect of a
portion of its income which was held to be exempted under Section
10(29) of the Income Tax Act, 1961. At that time the prevailing law had
been declared by the Supreme Court in UOI vs. UP State Warehousing
Corporation, (1991) 187 ITR 54. The eligibility of corporations and
companies carrying on warehousing activities to claim benefit of Section
10(29) was finally pronounced by the Supreme Court in Orissa State
Warehousing Corporation vs. CIT, (1999) 237 ITR 589 (SC). The
Supreme Court held that the question of exemption would arise and
pertain to that part of income which is derived by letting out of godowns
and warehouses for the purposes of Section 10(29) and the other income
would not be eligible for such benefits. The assessing officer issued
notice under Section 147/ 148 claiming that he has reasons to believe that
income had escaped assessment for AY 1995-96. The reasons to believe,
inter alia, cited the decision of Supreme Court in Orissa Warehousing
(supra). The appellant felt aggrieved by the reopening of assessment and
approached this Court which in its judgment and order dated 14.01.2011
in ITA Nos.464-465 and 473/2010 remitted the matter for reconsideration
by the Tribunal. The operative portion of this Court's directio ns are as
follows: -
ITA 308/2013 & 309/2013 Page 2 of 6
"33. The Tribunal has thus justified the action of the
Assessing Officer only on the basis of that judgment of
Supreme Court in the case of Orissa Warehouse (supra)
provided fresh opinion. The question as to whether this very
issue was discussed in the original assessment proceedings
or not has not even been touched upon. As far as these
assessment years are concerned, assessment was done under
Section 143(3) of the Act. Therefore, the argument of the
assessee that it was a case of change of opinion has not been
addressed at all by the Tribunal which should have been
gone into when it was so specifically raised by the assessee.
For this reason alone, we set aside the order of the Tribunal
and remit the case back to the Tribunal for fresh
consideration limiting its discussion only on the aspect as to
whether the reason given by the Assessing Officer for
reopening of the reassessment was the aspect considered
earlier in the original assessment proceedings and it would
be a case of mere change of opinion or this aspect was not
considered at all and, therefore, provided proper ground for
reopening the assessment.
34. We are remitting the case back for this limited
purpose for obvious reason that in so far as other grounds
raised by the assessee for challenging the validity of notice
under Section 147/ 148 of the Act are concerned, we have
concurred with the views expressed by the ITAT
hereinabove. The appeals stand disposed of in the aforesaid
manner."
3. By the impugned order the assessee's appeal has been rejected.
The grievance articulated by the petitioner is that the Tribunal has not
followed the directions that were spelt out in the order made by this Court
on 14.01.2011. It is contended that para 33 was specific as to whether the
question urged i.e. that the "reasons to believe" was based upon a mere
change of opinion, but has not been addressed at all despite a direction in
ITA 308/2013 & 309/2013 Page 3 of 6
that regard.
4. Counsel for the revenue urged that the Tribunal's order cannot be
faulted and the relevant aspects arising out of the assessee's contention
and specifically with respect to eligibility for exemptions under Section
10(29) has been suitably discussed and a reasoned order given by the
ITAT which does not require disturbance of this Court.
5. The impugned order in paras 1 to 5 notes the contentions of the
parties. The operative portion which discusses the relevant contentions
and concludes the issues against the assessee reads as follows: -
"We have heard rival contentions and perused the relevant
material available on record. We find merit in the argument
of learned DR. It is undisputed that Hon'ble Supreme Court
delivered its judgment in the case of Orissa State
Warehousing Corporation (supra) on 01.04.1999. The
original assessment orders for A.Y. 1995-96 & 1996-97
were framed by the AO dates mentioned above, prior to the
pronouncement of the judgment of the Hon'ble Supreme
Court. With the Hon'ble Supreme Courts decision it was
incumbent on AO to examine whether the claim allowed by
him u/s 10(29) during the original assessment proceedings
was in conformity with the same. We are unable to accept
the proposition advanced by the learned counsel that AO
had already exercised his opinion in respect of the matter
which is subsequently decided by the Hon'ble Supreme
Court was going to hold in Orissa State Warehousing
Corporation (supra). The Hon'ble Allahabad High Court in
the case of Kartikeya International (supra), has held that
subsequent Supreme Court judgment constitutes law of the
land and accordingly the AO's reassessment with
satisfaction that exemption u/s 10(29) has been granted to
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assessee which was at variance of Hon'ble Supreme Court
judgment and income had escaped assessment is justified.
The exercise of power u/s 148 by AO was to implement
Supreme Court judgment and not change of his opinion.
Therefore, the reopening was valid and sustainable. In our
view, the judgment in the case of Kartikeya International
(supra) is squarely applicable to assessee's facts.
Respectfully following the same we hold that the theory of
reassessment based on change of opinion is not applicable
to assessee's case as the AO was implementing the law of
the land as declared by the Hon'ble Supreme Court. Thus,
we find no force in the contention raised by the assessee in
its cross objections for both the assessment years in
question. Thus, we decide the issue of re-opening of
assessments in favour of revenue and against the assessee.
Consequent to our decision, the result of revenue's
appeals and assessee's C.Os for A.Y. 1995-96 & 1996-97
will remain as held in ITAT's consolidated order dated
31.0.2008 viz.
i. Revenue's appeals are partly allowed for
statistical purposes.
ii. Assessee's C.Os are partly allowed for
statistical purposes."
6. We are afraid that the Tribunal has misdirected itself as to the
scope of remand. Though in the earlier portion of the impugned order the
Tribunal extracted this Court's directions which specifically require the
Tribunal to go into the question as to whether the "reasons to believe"
under Section 147/ 148 in this case were based upon mere change of
opinion, no opinion has been recorded or arrived at; the order ex facie
discloses complete non-application of mind to the directions of this
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Court, resulting in a remand to ensure application of mind to the
assessee's contention in this regard. This Court is also mindful of the
circumstance that the question whether the reasons to believe constitute a
change of opinion is essentially for discussion in every case of where the
assessee challenges the notice under Section 148, in view of the dicta of
the Supreme Court in Kelvinator, 320 ITR 561 (SC).
7. For the above reasons the matter requires fresh consideration.
Accordingly, the matter is remitted for fresh consideration of the ITAT so
that the directions in the previous order of this Court are duly complied
with and specific findings recorded in respect of the fact whether the
reasons to believe constitute a change of opinion.
8. The appeal is allowed in the above terms.
S. RAVINDRA BHAT
(JUDGE)
R.V. EASWAR
(JUDGE)
JANUARY 22, 2014
hs
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