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2020 (9) TMI 927 - HC - Income TaxReopening of assessment - non-availing of the procedure by the petitioner - Exemption u/s 10(15)(iv)(h) denied on interest received on tax free bonds - Revenue submits that the writ petition filed is not maintainable in as much as the procedure laid down in GKN Driveshafts (India) Limited Vs. Income Tax Officer [2002 (11) TMI 7 - SUPREME COURT] has not been followed by the petitioner - HELD THAT:- The present case is one were the impugned notice issued under section 148 of the Act is clearly beyond four years from the end of the assessment year in question. What is relevant to note is that AO must have or form reason to believe that any income of the petitioner chargeable to tax has escaped assessment by reason of the failure on the part of the petitioner to disclose fully and truly all material facts. Change of opinion cannot be a ground for re-opening concluded assessment. In the instant case, the impugned notice was issued on 30.03.2001 and the reasons were furnished by respondent No.1 to the petitioner on 04.12.2001; all before the judgment was rendered in GKN Driveshafts (India) Limited [2002 (11) TMI 7 - SUPREME COURT]. Therefore, a view can be taken that since the impugned notice and furnishing of reasons had preceded the judgment in GKN Driveshafts (India) Limited, the later may not have applicability in the present case. As in the first Ajanta Pharma case i.e. [2003 (11) TMI 32 - BOMBAY HIGH COURT] this Court after referring to the Constitution Bench judgment in Calcutta Discount Company Limited Vs. Income Tax Officer, [1960 (11) TMI 8 - SUPREME COURT] held that Supreme Court in GKN Driveshafts (India) Limited (supra) nowhere lays down the law to the effect that the noticee is totally debarred from approaching the High Court under Article 226 of the Constitution of India when the exercise of power by the authority under section 148 of the Act ex-facie appears to be without jurisdiction. This writ petition was admitted for hearing by issuing rule way back on 27.06.2002. Having admitted the petition for hearing and such a long period having elapsed, it would neither be fair nor reasonable to relegate the petitioner to file objection to the reasons recorded before respondent No.1. This is more so because respondent No.1 has filed affidavits justifying the reasons recorded and issuance of the impugned notice. In other words, to direct the petitioner to file objection before respondent No.1 would be a mere formality, respondent No.1 having already disclosed his mind. We are unable to accept the preliminary objection raised on behalf of the revenue. Reason to believe that income of the petitioner chargeable to tax for the assessment year 1990-91 had escaped assessment by reason of failure on the part of the petitioner to disclose fully and truly all material facts necessary for assessment? - Assessee company was entitled to a rebate on the gross dividends and not on the net dividends i.e., not after deducting proportionate management expenses. Though section 14A was inserted in the Act by Finance Act, 2001 with retrospective effect from 01.04.1962, the same may not be of any assistance to the revenue in as much as the retrospective amendment of law would only negate the inference sought to be drawn of the failure to disclose material facts, which aspect was highlighted by this Court in DIL Limited [2012 (2) TMI 85 - BOMBAY HIGH COURT] As a matter of fact, respondent No.1 has stated in the affidavit that its action of seeking to reopen the assessment is not based on section 14A of the Act. No reasonable view can be taken that there was failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year 1990-91. If that be so then respondent No.1 could not have formed any reason to believe that any income of the petitioner chargeable to tax for the said assessment year had escaped assessment. Condition precedent for re-opening the concluded assessment of the petitioner is absent in the present case. In such circumstances, issuance of the impugned notice under section 148 of the Act is clearly without jurisdiction and is therefore illegal and invalid. - Decided in favour of assessee.
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