S.147 Of IT Act Doesn't Postulate Review Jurisdiction Such That Assessment Can Be Reviewed By AO Intending To Form Different Opinion: Bombay HC

Section 147 does not postulate review jurisdiction, so that assessment can be reviewed by the Assessing Officer intending to form different and/or a new opinion, added the Court.

The Division Bench of Justice G S Kulkarni and Justice Firdosh P Pooniwalla observed that AO cannot assume jurisdiction under garb of re-assessment u/s 147, to reopen assessment merely on basis of change of opinion and/or review assessment order passed against assessee.

Once tangible material during course of assessment was available with AO and same was considered in passing assessment order u/s 143(3), then AO in absence of any fresh material, could not have proceeded to reopen assessment on similar materials, added the Bench.

Facts of the case:

The petitioner/ assessee is a Public Trust, which manages and administers the "Sai Baba Temple", at Shirdi. 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 and also obtained registration u/s 12A of I-T Act. In the year 2008, an approval was also granted u/s 10(23C) and in the year 2009, certificate u/s 80G was also given. Later, 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, which specified manner of utilization of the Trust Fund. In the year 2014, the assessee filed its return disclosing income from other sources, which included donations received in the charity boxes, the general donation and donation in kind. In thev year 2016, the Deputy CIT (Exemptions) passed an assessment order, which determined the income of the trust, after taking into consideration all the accumulations under Section 11(1)(a) and 11(2) as 'Nil'. During the course of proceedings, it was held that the exemption claimed by assessee u/s 11 was found to be correct and the same was allowed. Despite past assessments, namely for the AY 2014-15, the AO included income received by way of anonymous donations in the Hundi Boxes, should be taxed u/s 115BBC. Consequent to such assessment order, a demand notice came to be issued for payment of tax and recovery proceedings were also initiated.

The assessee therefore filed an appeal before the CIT(A) and also approached the High Court challenging the assessment order, which came to be disposed of with a direction to the Revenue officers not to initiate any recovery proceedings against assessee until the CIT(Appeals) disposed of the assessee's appeal. Coincidentally on the very same day, the assessee was served with a notice u/s 148 seeking to re-open assessment. The only reason as furnished to the assessee for reopening of the assessment was that the anonymous donations received by assessee had escaped assessment. The objections filed by assessee were also dismissed. Hence, the assessee again approached this High Court, which came to be disposed of. The assessee then approached the Supreme Court, where it was directed that the issue as to whether the notice u/s 148 for reopening the assessment is valid, was kept open to be urged in appropriate proceedings after the assessment order is passed. Thereafter, an order was passed holding that a sum of Rs. 175,53,26,649/- of anonymous donations, was taxable u/s 115BBC and that on such amount, tax payable was determined. In the meantime, recovery proceedings were also initiated against the assessee for the recovery of tax payable, even though the recovery proceedings were stayed by the Supreme Court till the appeal filed by assessee before the CIT(A) was decided.

Observations of High Court:

The Bench found that the primary reason to reopen the assessment is in relation to the donations received by assessee in cash or in kind, for the AO to form an opinion/ reason to believe that the cash donations in box falls within the definition of "anonymous donations" u/s 115BBC(3), hence, such donations were taxable u/s 115BBC(1), unless exempted u/s 115BBC(2).

The other reason as recorded by AO was to the effect that the income received by assessee 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), added the Bench.

The Bench pointed that reopening notice has been issued on basis of materials which were already part of the assessment proceedings and which were furnished by the assessee, which formed basis of assessment order passed u/s 143.

Reopening is based on the issue of trust being a charitable institution and hence the anonymous donations being required to be taxed, as per the provisions of Sec 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 Sec 11(5), added the Bench.

The Bench observed that unless there was fresh material which was available with the AO to disturb the reasoning which had gone into in finalising the assessment u/s 143(3), the AO would not have jurisdiction to reopen the assessment.

It is 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 AO in course of assessment proceedings and to his knowledge, added the Bench.

Therefore, while concluding that review of assessment order on a mere change of opinion, is not permissible, the High Court allowed Assessee's petition.

Counsel for Petitioner/ Assessee: Senior Adv S Ganesh along with Advocates Ashwin Shete and Anvi Vasani

Counsel for Respondent/ Revenue: Akhileshwar Sharma

Case Title: Shri Saibaba Sansthan Trust (Shirdi) vs. Union of India

Case Number: Writ Petition No. 4817 of 2022

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