Gujarat High Court
Principal Commissioner Of Income Tax - 2 vs Gsl Nova Petrochemicals ... on 7 June, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
O/TAXAP/354/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 354 of 2017
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PRINCIPAL COMMISSIONER OF INCOME TAX - 2....Appellant(s)
Versus
GSL NOVA PETROCHEMICALS LTD....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 07/06/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. This appeal is filed by the Revenue challenging the judgment of the Income Tax Appellate Tribunal ('the Tribunal' for short) dated 07.06.2016. In the appeal, following question is presented for our consideration.
"Whether the Appellate Tribunal has erred in law and on fact by quashing the issuance of notice u/s.148 of the Act by the Assessing Officer?"
2. The issue pertains to reopening of assessment which the Commissioner (Appeals) and the Tribunal did not permit. The notice for reopening was issued Page 1 of 5 HC-NIC Page 1 of 5 Created On Fri Aug 18 03:51:59 IST 2017 O/TAXAP/354/2017 ORDER beyond a period of four years from the end of relevant assessment year. For doing so, the Assessing Officer had recorded following reasons:
"The assessee company had filed return on 01.11.2004 showing total loss at Rs. 9,59,87,357/. The assessment u/s. 143(3) was finalized on 29.12.2006, determining total income at Rs.Nil.
2. On verification of records, it is seen that during the course of original assessment proceedings, the Assessing Officer disallowed depreciation on captive power plant at an amount of Rs.63,66,750/. However, in the order passed u/s. 143(3) of the Act, the Assessing Officer has given excess depreciation of Rs.2,09,56,984/. This figure has been worked out, based on the figure of depreciation to be allowed, which was mentioned by Assessing Officer at the time of working out disallowance, at para 4.3 of the assessment order in respect of various assets. The working of excess depreciation, allowed by the Assessing Officer, is as under
: Date of purchase of asset Name of Rate of 1st Half 2nd Half Depreciatio Depreciati Excess asset depreci n allowable on allowed depreciation ation in asst, order Factory 10% 5894517 41808447 2679874 4475571 1795696 building power Pipe 25% 2920964 6030261 1484024 1872686 388662 fittings Plant & 25% 21764331 148872479 24050143 39938661 15888519 machinery Electrical 25% 23888614 46961459 11842335 14726442 2884107 installation s Page 2 of 5 HC-NIC Page 2 of 5 Created On Fri Aug 18 03:51:59 IST 2017 O/TAXAP/354/2017 ORDER Total excess depredation allowed Rs.20956984 The excess depreciation allowed, as worked but above, is required to be withdrawn.
3. Further, it is also seen that the interest expenses claimed by assessee include interest payment to LBBW, amounting to Rs.41,27,287/, which has been incurred as expenditure in foreign currency, on which no TDS has been made. Hence, this expenditure was required to be disallowed as the assessee has not complied with the provisions of Section 195 of the Act.
4. Hence, I have reason to believe that income chargeable to tax has escaped assessment in the form of underassessment of income within the meaning as envisaged by section 147 r.w explanation 2(c)(i) & (iv) of the Act.
Hence notice u/s148 is issued accordingly."
3. While confirming the view of the Commissioner of Income Tax (Appeals) and rejecting the Revenue's appeal, the Tribunal on the question of reopening of the assessment was of the view that there was no failure on the part of the assessee to disclose fully and truly all material facts. In fact, the Assessing Officer had not even so alleged. The Tribunal observed as under:
"As observed earlier, the interdiction provided in the proviso appended to section 147 of the Income Tax puts an embargo upon Page 3 of 5 HC-NIC Page 3 of 5 Created On Fri Aug 18 03:51:59 IST 2017 O/TAXAP/354/2017 ORDER the powers of the AO to issue notice under section 148 of the Income Tax Act, in cases where, the original assessment was made under section 143(3) and four years have expired. The AO has been denuded from his powers to issue notice in such cases unless it is established that income chargeable to tax has escaped the assessment on account of failure of the assessee to disclose all the material facts fully and truly in respect of its income. The AO has nowhere alleged any failure of the assessee. The ld.CIT(A) has rightly appreciated the facts. We do not see any reason to interfere in the order of the ld.CIT(A) on this issue. Accordingly, the appeal of the Revenue is dismissed."
4. We find no error in the view of the Tribunal. The perusal of the reasons would suggest that according to the Assessing Officer, there were two heads, under which, income chargeable to tax had escaped assessment. One was of ground of excess deduction by the Assessing Officer during the original assessment and the another was of non disallowance of expenditure paid to a foreign company without deducting tax at source. With respect to the first ground, the Assessing Officer himself in the reasons had recorded that it was on verification of records that the said ground that they imparted, clearly eliminating any possibility of the assessee having not disclosed true facts. Perusal of the reasons would further show that Page 4 of 5 HC-NIC Page 4 of 5 Created On Fri Aug 18 03:51:59 IST 2017 O/TAXAP/354/2017 ORDER if at all it was an error of the Assessing Officer to have granted larger relief than what was available to the assessee. On the second ground of payment without deducting tax at source, there is nothing to suggest that there was any failure on the part of the assessee to disclose truly and fully all material facts.
5. Tax Appeal is therefore dismissed.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) ANKIT Page 5 of 5 HC-NIC Page 5 of 5 Created On Fri Aug 18 03:51:59 IST 2017