TMI Blog2015 (7) TMI 363X X X X Extracts X X X X X X X X Extracts X X X X ..... perused by the officers before deposing on oath. We do not find any application of mind by the Assistant Commissioner of Income Tax to these aspects at all. She rejected the objections on 26th February, 2015. We are surprised that neither she makes any reference to the Assessment and Appellate proceedings, the specific disallowance but files an affidavit in reply in the Court and merely copies the reasons which have been recorded by her predecessor. It was her bounden duty to have referred to all factual averments in the writ petition, the documents in support thereof and their contents and thereafter dealt with the same. There is a sanctity which is attached to the principles evolved by this Court and equally the Hon'ble Supreme Court. We do not find that the impugned notice can be sustained. Once we have arrived at this conclusion and on all counts, the assessee's objections refer to the materials which were before the assessing officer for the earlier assessment year, some of which were also the subject matter of revisional/Appellate proceedings, then, we would be failing in our duty if we do not interfere with the Notice in our writ jurisdiction. Once we come to this co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 2007-08. 6. Respondent Nos.1 2 are the officers who exercise powers under the statute being Income Tax Act, 1961 and exercised in this case and which is captioned under 148 of that Act. 7. The circumstance in which the petition came to be filed have been narrated elaborately. That on 7th November, 2007 a e-return in the electronic form was filed by the petitioner and it declared income of ₹ 21,86,10,187/-. On 7th August, 2008 the said return was selected for scrutiny by issuing notice under section 143(2)/142(1) of the I.T. Act. Annexure-B is a copy of notice dated 29th July, 2009 in respect thereof. 8. On 17th August, 2009, the first respondent issued a detailed questionnaire calling for various details. It is alleged that these details were sought on several items such as loans and advances, additions to and sale of fixed assets, depreciation, details of interest expenditure claimed under section 36(1)(iii) of the I.T. Act, expenses relating to exempt income, reconciliation of TDS with income, etc. Annexure-C is a copy of the questionnaire dated 17th August, 2009. 9. The case of the petitioner is that on receipt of the questionnaire, the petitioner forwar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o passed an order in reassessment proceedings initiated in the case of the petitioner for immediately preceding assessment year 2006-07. The issues concern the depreciation on windmills and reconciliation of the tax deducted at source on the income assessed to tax. Thus, the assessment was reopened for the preceding assessment year 2006-07 in exercise of powers under section 148 of the I.T. Act. Some of the issues were revisited. The reassessment order was passed and the claim of the assessee is that the first respondent accepted the stand of the petitioner and no addition/disallowance had been made in the reassessment order for the said assessment year. 14. It is in this backdrop that the petitioner received a notice under section 148 of the I.T. Act dated 28th March, 2014 (impugned notice) seeking to reopen/reassessment completed during the assessment for the assessment year 2007-08. On receipt of this notice, the petitioner addressed two letters dated 1st April, 2014 and 7th April, 2014 requesting the respondents to forward the reasons for reopening, since they had not been communicated. The petitioner also and we are informed in terms of a routine procedure stated by letter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... response to section (1) of section 147 or 148 of the I.T. Act or to disclose fully and truly all material facts necessary for that assessment year. Mr.Irani submits that the impugned notice falls short of this requirement and the legal mandate. He has tendered a chart/table for our benefit and convenience and a copy of which is handed over to respondents' Advocate Mr. Pinto. 20. Mr.Irani submits that the first issue is disallowance under section 14A of the I.T. Act. The reasons for re-opening are that the disallowance has been calculated in terms of this section after considering interest income of ₹ 6.22 crores as against the gross interest of ₹ 34.29 crores. The allegation is that no separate cash flow has been provided and there is failure on the part of the assessee to furnish fully and truly all material facts. He invited our attention to page 451 of the paper-book in that regard. However, Mr.Irani submits that the assessee raised specific objections at page 454 and 456 of the paper-book by pointing out that in the original assessment proceedings, this very issue was raised by the assessing officer and the Commissioner of Income Tax (Appeals). He invites our ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2006-07 but no addition/disallowance was made on this ground. In that regard, it is pointed out with some vehemence that the order dated 29th March, 2014 which was passed in the reassessment proceedings for immediate preceding assessment year 2006-07 is after the date on which the impugned notice has been issued. It cannot be that the assessing officer and who has passed an order of reassessment and for the preceding assessment year 2006-07 was unmindful of this fact of issuance of notice. It is the same assessing officer who has issued both these namely, the reassessment order and the impugned notice. 22. With regard to the issue of reconsideration of TDS, Mr.Irani sought to read the reasons and as recorded. He submits that if the petitioner-assessee had received ₹ 47.92 crores under various heads like rent, professional fees, contract payment, commission, etc., then, in the absence of any details, the assessing officer would not have been in a position to identify the payments from the parties. Even otherwise, specific query was raised during the original assessment and response was given to the queries duly reconciling the income and the tax deducted at source therein. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpugned notice and it states that respondent No.1 has reasons to believe that income chargeable to tax for the assessment year 2007-08 has escaped assessment within the meaning of section 147 of the I.T. Act. At annexure-B is a letter from the Additional Commissioner of Income Tax addressed to the petitioner on 29th July, 2009 which refers to certain points in connection with the return of income submitted by the petitioner on which he sought further information. 25. Then, notice dated 17th August, 2009 under section 143(2)/142(1) of the I.T. Act in connection with the assessment year 2007-08 was issued and the petitioner was called upon to produce the details and/or documents as per annexure attached to the notice. The annexure at page 41 are the details which are sought for and it pertains to unsecured loans including the fresh loans given, advances and working of gross profits for the last three years. There is a specific item in regard to computation of actual profit and loss, additions to fixed assets/sale thereof and item 36 pertains to statement of different head-wise income comprised in TDS credit claimed by the assessee and the break-up of the income actually credited i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the impugned notice is not the subject matter of the appellate or revision proceedings. This is a specific statement and stand taken at page 482 of the paper-book of the affidavit-in-reply. However, in the same breath at pages 483 and 484 this deponent exhibits knowledge of the appeal, revision and reassessment proceedings. It has been asserted that I make bold to say that the impugned notice has been issued only after I had reasons to believe that income has escaped assessment by reasons of the failure of the petitioner to truly and fully disclose all material facts pertaining to the assessment sought to be reopened. If this is a bold assertion, nothing further and more was required. Yet we find that at page 484 of the paper-book, reference is made to the additional details, submissions including the appeal and cross appeal and the grounds thereof which is the subject matter of the notice dated 28th March, 2014. It is thus surprising that though the assessing officer who issued the notice and who made earlier assessment and reassessment was available, this deponent who has taken charge as Assistant Commissioner has been chosen to file the affidavit. If she has been chosen, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... additional depreciation on plant and machinery used for one hundred and eighty two days or less was restricted to 50% of additional depreciation allowable. 31. With regard to disallowance under section 14A, we find at page 454, 455 456 of the paper-book that there is a specific reference made to the questionnaire which we had pointed out above, correspondence pursuant to the same and the discussion in details in the assessment order. The objection is that after complying with Rule 8D of the Income Tax Rules, there is disallowance of the amount under section 14A of the I.T. Act. There is an appeal preferred from the order of the assessing officer to the Commissioner of Income Tax (Appeals) against such disallowance. He has also looked into this aspect. There is a reference made to the memo of appeal before the first appellate authority and subsequently to the order of the Commissioner where disallowance has not been entirely set aside and to the satisfaction of the petitioner. There is reference to the cross appeals. 32. We do not find any application of mind by the Assistant Commissioner of Income Tax to these aspects at all. She rejected the objections on 26th Februa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as not been found tenable. The objection cannot be refuted or dealt with by reiterating or repeating the reasons which have been recorded. Once the reasons have been objected to, then the justification for the same ought to be spelt out and that is how a speaking order would meet the requirement of law. 35. We have found that on each of the factual materials and which have been tabulated before us, there is absolutely nothing in the order dated 26th February, 2015. We also find on reading of the notice that apart from it being vitiated by total non application of mind, it does not even make reference to the proviso and the satisfaction in terms of the contents of the same. Once the assessment is sought to be reopened after a period of four years, then, the proviso mandates recording that the assessee has failed to fully and truly disclose all materials facts necessary for the assessment for the relevant assessment year. There is absolutely nothing which would enable us to conclude that the assessee had failed to make such disclosure even prima facie. If the issue which has been raised and regarding which the assessment is proposed to be reopened has been dealt with, then, had th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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