Bombay High Court
Dcw Limited vs Assistant Commissioner Of Income Tax, ... on 4 July, 2022
Author: Abhay Ahuja
Bench: Dhiraj Singh Thakur, Abhay Ahuja
35-WPL-6546-2022-DST-AA,JJ.doc
IN THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODGING) NO. 6546 OF 2022
Digitally
signed by
SHRADDHA
DCW Limited
SHRADDHA KAMLESH
KAMLESH TALEKAR 3rd Floor, Nirmal Building,
TALEKAR
Backbay Reclamation,
Date:
2022.10.20
19:02:42
+0530
Nariman Point, Mumbai 400 021.
PAN : AAACD0559N ... Petitioner
Vs.
1. Assistant Commissioner of Income
Tax, Circle 3(4), Mumbai
29th Floor, Centre 1,
World Trade Centre, Cuffe Parade,
Mumbai - 400 005.
2. Joint Commissioner of Income Tax,
Range 3(4), Mumbai,
29th Floor, Centre 1,
World Trade Centre, Cuffe Parade,
Mumbai - 400 005.
3. National Faceless Assessment
Centre, New Delhi.
4. Union of India,
through the Joint Secretary & Legal Adviser,
Branch Secretariat, Department of
Legal Affairs, Ministry of Law and
Justice, 2nd Floor, Aayakar Bhavan,
M.K. Marg, New Marine Lines,
Mumbai - 400 020. .... Respondents
****
Mr.P.J. Pardiwalla, Senior Advocate with Mr.Sukhsagar Syal i/b
Mr. Atul K. Jasani, Advocate for petitioner.
Mr.Akhileshwar Sharma, Advocate for respondents.
****
Shraddha Talekar, PS 1/9
35-WPL-6546-2022-DST-AA,JJ.doc
CORAM : DHIRAJ SINGH THAKUR AND
ABHAY AHUJA, JJ.
DATE : 4th JULY 2022
****
PER COURT :
1. In the present petition, the petitioner challenges the notice dated 27th March 2021 issued under section 148 of the Income Tax Act, 1961 ('the Act') by respondent No.1 for reopening the assessment for the assessment year 2015-16. The petitioner also challenges the order dated 28 th February 2022 passed by respondent No.3, whereby the petitioner's objections against the reopening of the assessment had been rejected.
2. Briefy stated the material facts are as under :
(a) The petitioner fled its return of income on 30th November 2015 for the assessment year 2015-16. The return of income was processed and an intimation under section 143(1) of the Act was issued. Subsequently, the case was selected for scrutiny assessment in the course of which, the respondent No.1 called upon the petitioner to fle several details pertaining to the claim of deduction under section Shraddha Talekar, PS 2/9 35-WPL-6546-2022-DST-AA,JJ.doc 32AC of the Act as also to fle details with regard to its claim of deduction of electricity duty of Rs.4.22 crores.
(b) It is stated that in respect of the claim of deduction under section 32AC of the Act, the petitioner fled the requisite details of `plant and machinery for which the deduction under the said section was claimed. This was done vide letters dated 12th September 2017 and 17th October 2017. With regard to the claim of deduction of electricity duty, the petitioner claims that it had a copy of the challan showing the payment of such duty as also the legal opinion of an Advocate on the correctness of the withdrawal of exemptions from payment of electricity duty.
(c) It is stated that the assessment was completed under order dated 2nd November 2017 passed under section 143(3) of the Act. The petitioner's case is that two audit objections, dated 25th June 2018 came to be raised on the Deputy Commissioner of Income Tax ('DCIT') by an Audit Offcer of the department pertaining to the petitioner's assessment for the assessment year 2015-16, wherein it was observed that the petitioners' claim of deduction under section 32AC and Shraddha Talekar, PS 3/9 35-WPL-6546-2022-DST-AA,JJ.doc the electricity tax were not in order.
(d) It is stated that in response to the objections above, the DCIT rendered a detailed explanation with regard to the queries raised and also informed the concerned offcer that all the relevant facts pertaining to the issues had been considered during the course of the assessment proceedings, and therefore, in that context stated that the audit objections be treated as settled.
(e) It is stated that subsequently the respondent No.2 then called upon respondent No.1 to give its report on the audit objection, wherein the stand earlier taken was reiterated that the objections were not acceptable to the department. Nonetheless in the report dated 4 th March 2021, it was submitted by respondent No.1 that to protect the interest of revenue, action could be taken under sections 147, 154 or 263 of the Act.
(f) It was stated that thereafter respondent No.1 recorded the reasons to believe in consonance with the audit objections that the petitioner's claim of deduction under Shraddha Talekar, PS 4/9 35-WPL-6546-2022-DST-AA,JJ.doc section 32AC of the Act and of the electricity tax, were not in order. Respondent No.2 is stated to have granted approval of the said recorded reasons. The Joint Commissioner of Income Tax, Range 3(4), Mumbai-6 then is stated to have granted approval of the said recorded reasons vide approval dated 23rd March 2021.
3. Notice under section 148 of the Act, dated 27 th March 2021 then came to be issued by respondent No.1, directing the petitioner to deliver to him return in the prescribed form for the assessment year 2015-16. Return was fled and a copy of the reasons recorded, demanded by the petitioner which reasons refected the view of the Audit Offcer in the two audit objections, raised prior thereto.
4. Counsel for the petitioner states that the present exercise for reassessment initiated by the respondents was nothing but a change of opinion formed earlier, that there was no tangible material which would lead the Assessment Offcer to believe that any income chargeable to tax had escaped assessment. It is also stated that the approval granted by respondent No.2 was not in Shraddha Talekar, PS 5/9 35-WPL-6546-2022-DST-AA,JJ.doc accordance with section 151 of the Act. It is stated that as per sub-section (1) of section 151 of the Act, a notice under section 148 of the Act could have been issued after a period of 4 years from the end of the relevant assessment year only after obtaining approval of the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax, which in the instant case had been granted by the Joint Commissioner, who was not competent to grant such sanction. Reliance in this regard is placed on a judgment of this Court in the case of J.M. Financial and Investment Consultancy Services Private Limited Vs. Assistant Commissioner of Income Tax, Circle 3(2)(1) & Ors. 1.
5. In the aforementioned case, which also pertained to assessment year 2015-16 and in which approval was granted on 26th March 2021 by the 'Additional Commissioner of Income Tax', was held to be bad inasmuch as it was held that having been issued beyond the period of four years from the relevant assessment year, the approval ought to have been accorded by the Principal Chief Commissioner or Chief Commissioner or Principal 1 Writ Petition No.1050-2022 dt.4-04-2022 Shraddha Talekar, PS 6/9 35-WPL-6546-2022-DST-AA,JJ.doc Commissioner or Commissioner of Income Tax and not by the Additional Commissioner of Income Tax. The Court also held that the provisions of the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 ('Relaxation Act') may have extended the time to issue a notice under section 148 of the Act but did not have the effect of amending the provisions of section1 151 of the Act. This Court held :
"5 Respondents have relied upon a letter dated 18th March 2021 issued by one Income Tax Offcer, who has given an opinion to the Additional Commissioner of Income Tax that in view of the Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitation, inter alia, under provisions of Section 151(1) and Section 151(2), which were originally expiring on 31st March 2020 stand extended to 31st March 2021. According to the Income Tax Offcer, in view of the above, Assessment Year 2015-2016 which falls under the category within four years as on 31st March 2020, the statutory approval for issuance of notice under Section 148 of the Act for the Assessment Year 2015-2016 may be given by the Range Head as per the said provisions. Mr. Sharma clarifes that the Income Tax Offcer is only conveying the view of the Principal Commissioner of Income Tax because this letter has been issued on the letterhead of Principal Commissioner of Income Tax.
6 Even for a moment we agree with the view expressed by the Principal Commissioner of Income Tax, still it applies to only cases where the limitation was expiring on 31st March 2020. In the case at hand, the assessment year is 2015-2016 and, therefore, the six years limitation will expire only on 31st March 2022. Certainly, therefore, the Relaxation Act provisions may not be applicable. In any event, the time to issue notice may have been extended but that would not amount to amending the provisions of Section 151 Shraddha Talekar, PS 7/9 35-WPL-6546-2022-DST-AA,JJ.doc of the Act."
6. In the present case, counsel for the respondents reiterated the stand of the revenue as was taken before the Court in the aforementioned case. However, we do not fnd any reason to take a view different from the one which has already been taken by this Court in the aforementioned judgment.
7. Without going into any other issues, since the issue of grant of approval by an authority, as prescribed under section 151 of the Act goes to the root of the matter, we wish to deal only with the said issue and hold that even in the present case, the approval ought to have been granted by either the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner and not by the Additional Commissioner of Income tax.
8. Since the notice was being issued beyond the four years period prescribed under the un-amended provisions of section 151(1) of the Act, it ought to have the satisfaction accorded by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax which is not so in Shraddha Talekar, PS 8/9 35-WPL-6546-2022-DST-AA,JJ.doc the present case.
9. For the reasons mentioned above, the writ petition is allowed. The notice dated 27th March 2021 issued under section 148 of the Act as also the order dated 28 th February 2022 passed by respondent No.3, are set aside.
[ABHAY AHUJA, J.] [DHIRAJ SINGH THAKUR, J.] Shraddha Talekar, PS 9/9