Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2023 (8) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (8) TMI 826 - HC - Income TaxValidity of reopening of assessment u/s 147 - reasons to believe - reliance on dictates on audit department - non independent application of mind by AO - proposed re-opening is after expiry of four years from the end of relevant Assessment Year - gain on foreign exchange fluctuation - HELD THAT:- If one considers the reasons recorded, there is not even a whisper that there was failure on the part of Petitioner to disclose fully and truly all material facts. In our view, on this ground alone, the notice issued u/s 148 has to be quashed. Moreover, in the computation of income that Petitioner filed along with Profit & Loss Account, Petitioner has disclosed the business income and has deducted from the business income gain on Foreign Exchange Fluctuation. As during the course of assessment proceedings, Petitioner was called upon by a notice issued u/s 142(1) to furnish various details, one of which was copy of computation of income and annual accounts with annexures, if any, and copy of the E-return (Acknowledgment) filed for the year under consideration. Petitioner replied vide its letter and provided the computation of income with annual accounts with annexures. Subsequently, Petitioner received another notice issued u/s 142(1) when the scrutiny proceedings commenced, calling upon Petitioner to furnish in writing the 21 separate heads of information called for in the notice - Petitioner replied vide its letter again in which Petitioner has recorded about the hearing held on 16th November 2015 and various details that were submitted. Annexure 2 is a copy of an opinion from an Advocate in which Petitioner has been advised to treat gain on foreign exchange fluctuation as capital gain and, therefore the gain would not be taxable under the Income Tax Act. Thereafter, the Assessment Order came to be passed in which there is no discussion about gain on foreign exchange fluctuation. It is settled law that once a query is raised during assessment proceedings and the assessee has replied to it, it follows that the query raised was subject matter of consideration while computing the Assessment and it is not necessary that an Assessment Order should contain reference and/or discussion to disclose satisfaction in respect of query raised. Therefore, on this ground also, the notice impugned in the Petition is required to be quashed and set aside. Also notice to re-open came to be issued in view of the audit objection raised. A copy of the audit objection reveals that because for the subsequent year, i.e., AY 2014- 15, the Department had not accepted assessee’s contention and added back the foreign exchange gain after treating it as revenue receipt, to take a consistent stand on the same issue, the Assessment has to be reopened. From this communication also, it is quiet clear that there has not been non-disclosure of any material fact but only change of opinion. Thus reasons for re-opening Assessment was not that of the AO alone issuing notice but he has acted merely on the dictates of another person for issuing the notice, i.e., audit department. Decided in favour of assessee.
|