IN THE HIGH COURT OF DELHI AT NEW DELHI
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ITA 308/2013
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ITA 309/2013
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CENTRAL WAREHOUSING CORPORATION ..... Appellant
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Through: Mr. M. S. Syali, Sr. Advocate with Ms. Husnal Syali Nagi and
Mr. Harkunal Singh, Advocates.
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versus
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CIT .....Respondent
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Through: Mr. Rohit Madan with Mr. P. Roychaudhuri, Advocates.
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CORAM:
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HON?BLE MR. JUSTICE S. RAVINDRA BHAT
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HON?BLE MR. JUSTICE R.V.EASWAR
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O R D E R
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22.01.2014
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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.
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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 search
activity. The original assessment for AY 1995-96 was 1 on 22.01.1998.
The assessee?s contentions were partly accepted in respect of portion of
its income which was held to be exempted under Section 10 and 12 of 29 of
the Income Tax Act, 1961. At that time the prevailing law had been
declared by this Court in CWC vs. ACIT, 239 ITR 460 (Del), the
eligibility of corporations and companies and were housing activities to
claim benefit of Section 10(29) was finally pronounced by the Supreme
Court in CIT vs. Kelvinator, (2010) 320 ITR 561 (SC). The Supreme Court
held that the question of exemption would arise and pertain to that part
of income which is by letting out of godowns and warehouses for the
purposes of Section 10(29) and the other income would not be eligible for
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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 directions are as follows: -
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?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.
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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.?
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3. By impugned order the assessee?s appeal has been rejected. The
grievance articulated by the petitioner that had been spelt out in the
order made 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, has not been addressed at all
despite a direction in that regard.
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4. Counsel for the revenue urged that the Tribunal?s order cannot be
faulted and the relevant aspects belonging to 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.
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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: -
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?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 and 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 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.
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Consequent to our decision, the result of revenue?s appeals and
assessee?s C.Os for A.Y. 1995-96 and 1996-97 will remain as held in ITAT?s
consolidated order dated 31.0.2008 viz.
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i. Revenue?s appeals are partly allowed for statistical purposes.
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ii. Assessee?s C.Os are partly allowed for statistical purposes.?
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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 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 ex facie discloses complete non-
application of mind to the directions of this Court, insisting a remand
to ensure application of mind to the assessee?s contention in this
regard. This Court also mindful of the circumstance that the question
whether the reasons to believe constitute a change of opinion is
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essentially for discussion in every case of aware and assessee challenges in view of the dicta of the Supreme Court in Kelvinator, 320 ITR 561
(SC).
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7. For the above reasons the substantial question of law framed
requires fresh consideration. Accordingly, the matter is remitted for
fresh consideration of the ITAT in view of the fact that previous order
of this Court are duly complied with specific findings recorded in
respect of the fact whether the reasons to believe constitute a change of
opinion.
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8. The appeal is allowed in above terms.
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S. RAVINDRA BHAT, J
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R.V.EASWAR, J
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JANUARY 22, 2014
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$ 28 to 31
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