Bombay High Court
Pr. Commissioner Of Income Tax 7 vs M/S Merck (India) Limited Formerly E ... on 9 January, 2019
Bench: Akil Kureshi, B.P. Colabawalla
5. os itxa 1069-16.doc
R.M. AMBERKAR
(Private Secretary)
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
O.O.C.J.
INCOME TAX APPEAL NO. 1069 OF 2016
Pr. Commissioner of Income Tax - 7 .. Appellant
Versus
M/s. Merck (India) Ltd .. Respondent
...................
Mr. Suresh Kumar for the Appellant
...................
CORAM : AKIL KURESHI &
B.P. COLABAWALLA, JJ.
DATE : JANUARY 9, 2019.
P.C.:
1. Revenue is in the appeal against the judgment of the Income Tax Appellate Tribunal ("the Tribunal" for short) dated 20.3.2015 raising following questions for our consideration:-
"(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in holding that the assessment is passed under Section 143 read with Section 147 of the Income Tax Act, 1961 is invalid by stating that the department has failed to provide the reasons for reopening without appreciating the fact that the procedural regularity, if any was automatically rectified when the assessee has participated in the appellate proceedings as envisaged by the Hon'ble Allahabad High Court in the case of CIT Vs. Hrsingar Gutkha Pvt Ltd (2014) 44 Taxmann.com 101 (Allahabad) and ITO Vs. Varia Pratik Engineering (2009) 17 DTR (AHD)(Trib.)?"
1 of 5 ::: Uploaded on - 10/01/2019 ::: Downloaded on - 11/01/2019 03:03:50 :::
5. os itxa 1069-16.doc
(b) Whether on the facts and in the circumstances of the case and in law, the Tribunal is right in holding that the assessment passed under Section 143 read with Section 147 of the Income Tax Act, 1961 is invalid by stating that the department has failed to provide the reasons for reopening without appreciating the fact that the ground on which that case was reopened had been provided letter dated 16.7.2013 enclosed with notice under Section 143(2) of the Income Tax Act, 1961?"
2. Respondent - assessee is a Company registered under the Companies Act. The return filed by the assessee for the assessment year 1999-2000 was subjected to reassessment notice issued by the Assessing Officer on 26.2.2004.
Admitted fact however is that the Assessing Officer did not provide reasons recorded to the assessee despite the procedure set up by the Supreme Court in case of GKN Driveshafts (India) Ltd Vs. I.T.O. 1. On this background, the Tribunal, by the impugned judgment, held that the reassessment carried out by the Assessing Officer was invalid. The Tribunal held and observed as under:-
"7. We have carefully perused the contents of this letter which is placed at page-3 of the paper book. We find that this letter is nothing but a questionnaire served upon the assessee. By any stretch of imagination, a questionnaire cannot replace or supplement the supply of reasons to the assessee which in the 1 [2003] 259 ITR 19 2 of 5 ::: Uploaded on - 10/01/2019 ::: Downloaded on - 11/01/2019 03:03:50 :::
5. os itxa 1069-16.doc light of the judicial decisions discussed herein above is sine- qua- non for reassessment. Further, the Ld. DR could not adduce any evidence which could suggest that the reasons were actually supplied to the assessee. Considering the facts of the case in the light of the judicial decisions referred to herein above, we set aside the assessment order for want of jurisdiction and quash the reassessment order for both the years under consideration."
The view adopted by the Tribunal is consistently followed by this Court. Reference in this regard is made to the case of CIT Vs. Videsh Sanchar Nigam Ltd2 in which the Court observed as under:-
2. The finding of fact recorded by the Income Tax Appellate Tribunal is that in the present case the reasons recorded for reopening of the assessment though repeatedly asked by the assessee were furnished only after completion of the assessment.
The Tribunal following the judgment of this Court in the case of CIT V/s. Fomento Resorts & Hotels Limited; IT Appeal No. 71 of 2006, dated 27-11-2006, has held that though the reopening of the assessment is within three years from the end of relevant assessment year, since the reasons recorded for reopening of the assessment were not furnished to the assessee till the completion of assessment, the reassessment order cannot be upheld. Moreover, Special Leave Petition filed by the Revenue against the decision of this Court in the case of Fomento Resorts & Hotels Limited Supra) has been dismissed by the Apex Court vide order dated 16th July 2007.
2 [2012] 21 taxmann.com 53 (Bombay) 3 of 5 ::: Uploaded on - 10/01/2019 ::: Downloaded on - 11/01/2019 03:03:50 :::
5. os itxa 1069-16.doc
3. In a recent decision, the Karnataka High Court in case of Pr. CIT Vs. Ramaiah3 reiterated this position by making following observations:-
"7. The Tribunal has clearly noted in its order after looking into the record of the case that the reasons which were placed before the learned Tribunal itself only for the first time were never communicated to the assessee during the contemporary period. Mere participation of the assessee or authorized representative in the reassessment proceedings does not amount to the assessee being made aware or known of the reasons for such reopening. The reasons now quoted by the learned Tribunal in the impugned order clearly indicates that they are purportedly detailed reasons and had the assessing authority given the said reasons before hand, the assessee could have raised objections before the assessing authority and the assessee could have rebutted the material on the basis of which the impugned reassessment proceedings were undertaken by the assessing authority. The assessee in the present case twice made a request to the assessing authority, but despite the specific requests, the assessing authority did not comply with the said request and supplied the reasons to the assessee. That casts a doubt even on the fact of the recording of the reasons in the contemporary period by the assessing authority. The fact that such reasons are supplied before the learned Tribunal only for the first time was enough for the learned Tribunal to hold that in view of the decision of the Hon'ble Supreme Court, the assessing authority lacked the jurisdiction in invoking the reassessment proceedings and therefore, the impugned reassessment order deserves to be quashed.
3 [2018] 409 ITR 580 (Karn) 4 of 5 ::: Uploaded on - 10/01/2019 ::: Downloaded on - 11/01/2019 03:03:50 :::
5. os itxa 1069-16.doc
4. In the result, we find no merits in the appeal. The Income Tax Appeal is dismissed.
[ B.P. COLABAWALLA, J. ] [ AKIL KURESHI, J ] 5 of 5 ::: Uploaded on - 10/01/2019 ::: Downloaded on - 11/01/2019 03:03:50 :::