9911796707
TMI Blog2014 (3) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... "the impugned notice") issued by the respondents ("the Revenue") under Section 148 of the Income Tax Act, 1961 ("the Act") on 14-03-2012, for Assessment Year ("AY") 2005-2006. It is undisputed that the reasons to believe that income had escaped assessment recorded by the revenue were disclosed to the assessee, for the first time, through a communication dated 01-10-2012. 2. The facts, necessary for deciding the present petition are that the assessee engages itself in the business as a telecom service provider. It filed its return for AY 2005-06 claiming a loss of Rs. 3,50,99,31,672/-. On 20-12-2007, the assessment order was finalized. The Assessing Officer ("AO") added back some amounts out of the claim for commission expenses. This disall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ualify for deduction under the Act. In this regard, it was alleged that: "1.1 The assessee had made a provision of Rs.2,34,65,038/- on account of Provision of WPC-License fee which was debited to the accounts. As the provision made was not an ascertained liability the amount should also have been disallowed and added back by the assessee to its income. The failure to do so resulted in overassessment of Loss of Rs.2,34,65,038 involving potential tax effect of Rs.8586444." The second reason cited was that Section 47(1) of Act provides that any expenditure not being of a capital nature laid out or expended wholly or exclusively for the purpose of the business is allowable as deduction in computing income chargeable under the head 'profit and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... preciation amounting to Rs.6786,8051- at the rate of 25% on addition of Rs.27147218 as adjustment of foreign Exchange fluctuation in the assets (plant and machinery). As the amount represents intermediate exchange fluctuation not backed by the actual remittance, the depreciation of Rs.67,86,8051- claimed on the addition of Rs.271472181- on account of foreign exchange fluctuation should have been disallowed. This has resulted in incorrect allowance of depreciation amounting to Rs.67,86,805/-" 4. After considering the objections, the AO proceeded to frame the re-assessment order on 30-12-2010. The first, third and fourth grounds on the basis of which reassessment was opened, were upheld and amounts originally proposed to be added back, were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k by the Assessing Officer is unjustified and against the interest of revenue. Thus, it is clear that the expenditure was not actually incurred by the assessee. If the commission would have been paid to parties by the assessee then TDS should have been deducted and deposited to the Government account which has been deducted and deposited by the assessee; Hence the expenditure as a whole should have been disallowed and added back to the income of the assessee. The mistake resulted in incorrect carry forward of loss of Rs. 80,96,77,500/- involving potential tax effect of Rs.29,62,81,239/-." 6. Vodafone argues that the Revenue's repeated attempts to reopen the question of dealers' commission, on one ground or the other, are barred and untenab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t reassessment notices can be issued, provided the objective statutory conditions are satisfied in that regard. 8. What constitutes valid and justifiable grounds for re-opening of assessment is established. After Kelvinator (supra), it is now acknowledged that a tax administrator would act within jurisdiction if notice of reassessment is issued in a given case, based on "tangible" or fresh material. Re-appraisal of previously assessed returns, based on a change of opinion or an improved understanding of the law, would not pass muster as the basis for a valid reassessment proceeding, because the law would not uphold such change of opinion as it amounts to an impermissible review. Equally, an erroneous previous view warranting exercise of re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt on this aspect, is a matter of inference because in the first reassessment order, no addition was made on this score. 10. It is evident from the above discussion that during the assessment proceeding, and the first reassessment proceeding (pursuant to the earlier reassessment notice of 03-03-2010) the question of dealers' commission as well as TDS on those amounts, had been gone into. The attempt to revisit this issue a third time, in the given circumstances of the case, is nothing but the tax authorities' effort to overreach the law and resultantly a sheer harassment of the petitioner. The impugned notice and all further proceedings conducted pursuant to it are, therefore, without jurisdiction and hereby quashed. The writ petition is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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