Gujarat High Court
Commissioner Of Income Tax -I vs Deversons Industries Private ... on 10 November, 2014
Author: Ks Jhaveri
Bench: Ks Jhaveri, K.J.Thaker
*/O/TAXAP/1193/2014 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 1193 of 2014
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COMMISSIONER OF INCOME TAX -I....Appellant(s)
Versus
DEVERSONS INDUSTRIES PRIVATE LIMITED....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 KS JHAVERI
and
HONOURABLE MR.JUSTICE K.J.THAKER
Date : 10/11/2014
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE KS JHAVERI)
1. By way of this appeal, the appellant-Revenue has challenged the judgment and order dated 23.5.2014 passed by the Income Tax Appellate Tribunal, Ahmedabad Bench 'B' in ITA No. 259/Ahd/2011 for A.Y. 2003-04, to consider the following substantial question of law:
"Whether the Appellate Tribunal has substantially erred in quashing the reopening of assessemtn u/s. 147 of the I.T. Act, 1961 ?
2. The facts of the present case are that the Page 1 of 6 */O/TAXAP/1193/2014 ORDER assessee filed returnof income on 21.10.2003 declaring total income of Rs. 4,62,25,450/-. The return was processed u/s. 143(1) of the Act. The assessment was finalized u/s. 143(3) of the Act, by the A.O. On 31.1.2006 assessing total income at Rs. 4,63,19,540/-. The case was taken up for reassessment and Notice u/s 148 of the Act was issued on 8.4.2008. In response to Notice issued u/s. 148 the assessee filed written submissions in which it was stated that the original return filed on 21.10.2003 be treated as return filed in response to notice issued under sec. 148. Subsequently, notices u/s. 143(2) were issued to the assessee on 24.3.2009 and ultimately, the assessment order has been passed, which was challenged by the assessee before the CIT(A) by way of appeal which was dismissed. Against the order of CIT(A), the assessee has preferred appeal before the Income Tax Appellate Tribunal which was allowed, against which the present Tax Appeal by the Revenue.
3. Learned advocate Mrs. Bhatt has contended that the learned Tribunal has committed an error in reversing the finding of the CIT(A). The learned advocate for the appellant has heavily relied on the decision of this court in the case of Dishman Pharmaceuticals and Chemicals Limited v. Deputy Commissioner of Income-tax (OSD)(No.1) reported in 346 ITR 228 (Guj), more particularly, para-8 and 15. The relevant part of para-8 reads Page 2 of 6 */O/TAXAP/1193/2014 ORDER as under:
"8. From the above judicial pronouncements, the following principles can be culled out:
(i) To confer jurisdiction to the Assessing Officer to reopen the assessment under section 147 of the Income-tax Act beyond four years from the end of the assessment year, the following two conditions must be satisfied (a) that the Assessing Officer must have reason to believe that the income chargeable to tax has escaped assessment; and (b) that the same was occasioned, on account of either failure on the part of the assessee to make a return of his income for that assessment year, or to disclose fully and truly all material facts necessary for assessment of that year; (ii) both the above conditions are conditions precedent and must be satisfied simultaneously before the Income-tax Officer can assume jurisdiction to reopen the assessment beyond four years of the end of the assessment year; (iii) such reasons must be recorded and if the reasons recorded by the Assessing Officer do not disclose satisfaction of these two conditions, reopening notice must fail; (iv) there is no set format in which such reasons must be recorded. It is not the language but the contents of such recorded reasons which assumes importance. In other words, a mere statement that the Assessing Officer had reason to believe that certain income has escaped assessment and such escapement of income was on account of non-filing of the Page 3 of 6 */O/TAXAP/1193/2014 ORDER return by the assessee or failure on his part to disclose fully and truly all material facts necessary for assessment would not be conclusive. Nor absence of any such statement would be fatal, if on the basis of reasons recorded, it can be culled out that there were sufficient grounds for the Assessing Officer to hold such beliefs."
4. However, while considering the case, the Tribunal has relied upon the decision of this Court in the case of Parle Sales and Services Pvt. Ltd. v. ITO reported in (2011) 337 ITR 203 (Guj) and the decision in the case of E.I. Dupont India Pvt. Ltd. and another reported in (2013) 351 ITR 290 (Delhi), in para-3, the Tribunal has observed as under:
"3. A reading of the above quoted reasons shows that in the above recorded reasons, there is not a whisper by the Assessing Officer that the assessee has failed to disclose fully and truly all material facts necessary for his assessment for the Assessment Year which led to allowing excess deduction u/s. 80IA of Rs., 10,m58,237/-. The Hon'ble Delhi High Court in the case of E.I. Dupont India Pvt Ltd and another (2013) 351 ITR 290 (Del) has held that notice under section 148 after 4 years without an allegation in notice of failure on the part of Assessee to disclose any material facts necessary for the assessment, the said notice is not valid. To the same effect is the decision of the Hon. Gujarat High Court Page 4 of 6 */O/TAXAP/1193/2014 ORDER in the case of Parle Sales and Services Pvt. Ltd. v. UTO (2011) 337 ITR 203 (Guj) where it was held that in the entire reasons recorded, there was nothing to indicate that there was any failure to disclose fully and truly all material facts on the part of the Assessee. In the circumstances, the basic requirement of invoking the provisions of section 147 after the expiry of period of 4 years from the end of the relevant year was not satisfied.
Hence, the A.O. could not have valid jurisdiction under section 147 of the Act. The notice under section 148 of the Act for reopening of the assessment under section 147 of the Act, therefore, could not be sustained. Therefore, the consequential re-assessment made in pursuance to such a notice is also bad in law and hence we quash the reassessment order passed under section 147 of the Act on 31.3.2009. Thus, this ground of appeal of the assessee is allowed."
5. In that view of the matter, the Tribunal has rightly observed that the basic requirement of invoking the provisions of section 147 after the expiry of period of 4 years from the ends of relevant year was not satisfied. Therefore, it is not necessary to refer the decision of this Court in the case of Ketan B. Mehta v. Assistant Commissioner of Income-Tax, reported in [2012] 346 ITR 254(Guj). The observation made by the CIT(A) in para 3.3 is perverse, and therefore, rightly upturn by the Tribunal. Therefore, we are in concur with the findings of the Tribunal as Page 5 of 6 */O/TAXAP/1193/2014 ORDER they are neither bad in law nor contrary to the record. In that view of the matter, no substantial question of law in the present Tax Appeal for our consideration. Hence, this appeal is dismissed.
(K.S.JHAVERI, J.) (K.J.THAKER, J) mandora Page 6 of 6