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2015 (7) TMI 297 - HC - Income TaxValidity of reopening of assessment - payment of purchase price in excess to the SMP - petitioners are Sugarcane Factory Societies - Held that:- In absence of any allegation in the notice under Section 148 of the Act that there was any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, considering first proviso to Section 147 of the Act, the assumption of jurisdiction is absolutely wholly without jurisdiction and illegal. Under the circumstances, impugned notices under Section 148 of the Act beyond the period of 4 years cannot be sustained on the aforesaid ground alone and the same deserve to be quashed and set aside. So far as the initiation of impugned reassessment proceedings and the impugned notices under Section 148 of the Act within 4 years is concerned, it appears that the reopening has taken place only on one ground that the assessee has paid price of sugarcane more than the SMP. It is required to be noted that in all these cases the assessments were completed under Section 143(3) of the Act after holding necessary inquiry by the Assessing Officer. It also appears that the inquiry was made and the issue was gone into detail. It is also required to be noted that in some of the cases the practice of paying more prices to the cane growers than the SMP declared by the Government has been consistently followed since many years and the same has been accepted and no objection has been raised at any point of time earlier. It appears that the reason to believe and/or formation of the opinion by the Assessing Officer that the income chargeable to tax has escaped assessment is on the ground that the assessee has paid more price than the price determined / declared by the Government and therefore, the same is nothing but distribution of profits and/or passing of profits on the basis of the decision of the Hon'ble Supreme Court in the case of Shri Satpuda Tapi Parishar SSK Ltd. (2010 (1) TMI 117 - SUPREME COURT ). However it is required to be noted that once at the time of original assessment under Section 143(3) of the Act the Assessing Officer after applying the mind accepted the return, thereafter reopening of the assessment can be said to be on mere change of opinion of the Assessing Officer and as per the catena of decisions of the Hon'ble Supreme Court as well as this Court mere on change of opinion of the Assessing Officer, reassessment proceedings are not permissible. It is also required to be noted that even the Control Order provides for additional price for sugarcane purchased and it also further provides that no additional price determined under sub-clause (2) or sub-clause (3) of Section 5A shall become payable by a producer of sugar who pays a price higher than the minimum sugarcane price fixed under Clause (3) to the sugarcane growers, provided that the price so paid shall in no case be less than the total price comprising the minimum sugarcane price fixed under clause (3) and the additional price determined under sub-clause (2) or subclause (3) as the case may be of Clause 5A. Therefore, even in the Control Order itself there is a reference to the additional purchase price which can be more than the purchase price fixed under clause (3). However, as observed hereinabove, in a given case after holding inquiry if it is found that the purchase price paid in excess to the SMP is so exorbitant and/or unreasonable it can be said to be distributing the profits and/or passing of the profits. However, for that purpose there must be some further inquiry and/or tangible material with the Assessing Officer. Under the circumstances, the impugned notices under Section 148 of the Act to reopen the proceedings beyond 4 years and within 4 years on the aforesaid ground i.e. on the ground that the payment of purchase price in excess to the SMP has escaped the assessment cannot be sustained and the same deserves to be quashed and set aside. - Decided in favour of assessee.
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