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2018 (1) TMI 1525 - DELHI HIGH COURTApplicability of Section 40(a)(ia) and (3) read with Section 194C - HELD THAT:- Revenue’s appeal had to be examined on its merits as to the applicability or otherwise of Section 194C of the Act in the facts of the case. Legality of re-assessment proceedings - HELD THAT:- There cannot be per se conclusion that failure to furnish reasons would invariably invalidate all the assessment proceedings. The assessee concededly reiterated its returns previously filed; the assessee was put on sufficient notice – in the sense, if, it felt aggrieved, it could have approached the Court under Article 226 of the Constitution of India for an order compelling the Revenue to disclose the reasons. More crucially, the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. vs. Commissioner of Income Tax, [2002 (11) TMI 7 - SUPREME COURT] no doubt directs the Revenue Authorities and Tax Administration to furnish copy of the “reasons” and also deal with the representations through a reasoned order. However, to characterise that requirement – though a matter of law, by raising Article 141 of the Constitution of India as mandatory and resulting in nullity of the reassessment proceedings, would be going too far. The Court notices that GKN Driveshafts (supra) has not been assimilated through statute. This aspect is important because in the absence of a consequence spelt out either by statute or through judgment, it cannot be said that invariably every assessee would suffer the same amount of prejudice as to nullify or invalidate the entire assessment proceedings; much will depend on the circumstances of the case. In the present case, the assessee was issued with questionnaires calling for particulars, which it complied with. Especially therefore, there was no prejudicial consequence as is sought to be urged. For these reasons, the ground urged is not tenable and therefore rejected. “Tangible material” to support the reassessment notice - the original assessment was completed or framed under Section 143(1) of the Act. Furthermore, the notice under Section 147 of the Act was issued within the four years period. Clearly, the framing of assessment itself does not result in judicial application of mind and an order, as held in Indu Lata Rangwala vs. Deputy Commissioner of Income Tax, [2016 (5) TMI 804 - DELHI HIGH COURT] Furthermore, the Court recollects the decision of the Supreme Court in Commissioner of Income Tax vs. Zuari Estate Development and Investment Co. Ltd., [2015 (8) TMI 480 - SUPREME COURT] which clearly states that the filing under Section 143(1) of the Act does not result in any expression of judicial opinion. For these reasons, the second ground urged to attack the reassessment is rejected. Additions on the grounds and facts other than on the issues for which reassessment notice was premised, and has not made additions on those grounds in the reassessment proceedings - This Court specifically is of the opinion that the Karnataka High Court’s view in the case of N. Govind Raju [2015 (8) TMI 271 - KARNATAKA HIGH COURT] is a more accurate one. In this Court’s view the emphasis placed in Jet Airways’s case [2010 (4) TMI 431 - HIGH COURT OF BOMBAY] on “and also” undermines the essential objective of Section 147 of the Act and unduly restricts and narrows it. The circumstance clarifies existence of an additional power to bring to tax other sums. This per se would not mean that the sums or amounts sought to be brought to tax in a reassessment notice (which are ultimately not the subject of the final reassessment orders), act as a limitation. Having regard to the facts, this Court is of the opinion that since there is some doubt as to the accuracy of the interpretation in the case of Ranbaxy Laboratories Limited [2011 (6) TMI 4 - DELHI HIGH COURT] and which was subsequently followed in the case of Monarch Educational Society [2016 (2) TMI 971 - DELHI HIGH COURT] the appropriate course would be to refer the issue to a larger Bench. The following issue is accordingly framed for reference to the Full Bench i.e. whether the view expressed in the case of Ranbaxy Laboratories Limited (supra) [following Jet Airways’s case (supra) of the Bombay High Court and followed later in Monarch Educational Society’s case (supra)] with respect to the interpretation of Section 147 read with Explanation (3) of the Act, is restrictive, so as to sustain only additions made in the course of reassessment proceedings subject to the additions of amounts adverted to in the reassessment notice in the “reasons to believe” under Sections 147/148 of the Act and notice pursuant thereof? The office is directed to register the question as a reference and lay the papers before the Hon’ble the Acting Chief Justice subject to whose orders, the matter would be listed before the appropriate Full Bench.
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