TMI Blog2015 (8) TMI 570X X X X Extracts X X X X X X X X Extracts X X X X ..... d (2013 (10) TMI 101 - GUJARAT HIGH COURT), to the facts of the case on hand and as observed hereinabove, there does not appear to be any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the initiation of the impugned reassessment proceedings which are initiated beyond the period of four years, are not permissible and the same cannot be sustained and on that ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. 6.00. In view of the above and for the reasons stated above, present petition succeeds. The impugned notice under section 148 of the Income Tax Act for A.Y. 2008-2009 is hereby quashed and set aside and the impugned reassessment proceedings of reopening assessment for the A.Y. 2008-2009 are hereby terminated on the aforesaid ground alone.- Decided in favour of assessee. - Special Civil Application No. 3485 of 2015 - - - Dated:- 8-4-2015 - M. R. Shah And S. H. Vora,JJ. For the Petitioner : Mr Hardik V Vora, Adv. For the Respondent : Mr Sudhir M Mehta, Adv. JUDGMENT (Per : Honourable Mr. Justice M. R. Shah) 1.00. By way of this petition under Article 226 of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sued and served upon the petitioner notice under section 148 of the Act to reopen assessment for A.Y.2008-2009. 2.07. That on the request made by the petitioner assessee, the respondent has served upon the petitioner reasons recorded for reopening of the assessment vide communication dated 10/10/2014. 2.08. That the petitioner submitted objection to the reassessment proceedings submitting that as such there was on failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment and therefore, the assumption of jurisdiction for reopening of the assessment is absolutely illegal and invalid. It was further submitted that in fact the adjustment under section 145A of the Act was specifically dealt with by the A.O. while passing original assessment order and in fact the A.O. made addition of ₹ 28,94,837/- on account of adjustment under section 145A of the Act, which came to be deleted by learned CIT(A) and therefore, on the aforesaid ground/reasons, reopening of the assessment is not permissible, as the same can be said to be mere change of opinion. That the A.O. has disposed off / over ruled the objections raised by the petitioner - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case was selected for scrutiny. That the assessee was specifically asked to explain as to why the adjustment as required under section 145A of the Act should not be made and added to the total income. It is submitted that in response to the same, the assessee submitted its explanation which was not accepted by the A.O. Thereafter the A.O. made additions of ₹ 28,94,837/- on account of adjustment under section 145A of the Act. It is submitted that therefore, as such it cannot be said that there was any failure on the part of the petitioner - assessee to disclose truly and fully all relevant material for assessment. It is submitted that even the addition made by the A.O. on account of adjustment us 145A of the Act, while finalizing the original assessment came to be challenged by the assessee before the learned CIT(A) and the learned CIT(A) vide order dated 28/6/2011 allowed the appeal preferred by the petitioner assessee and deleted even the additions made by the A.O. on account of adjustment under section 145A of the Act. It is submitted that thereafter it is not open for the A.O. to reopen the assessment on the grounds which in fact were dealt with by the A.O. as well as l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suppressed the income under consideration, and therefore, the initiation of reassessment is absolutely just and proper. It is submitted that the original assessment made under section 143(3) of the Act wherein addition was made in respect of excise duty, however, CENVAT credit was not taken into consideration while finalizing the original assessment. It is submitted that therefore, the assessment has been reopened, which cannot be said to be mere change of opinion. Submitting accordingly, it is requested to dismiss the present petition. 5.00. Heard the learned advocates appearing on behalf of the respective parties at length. 5.01. At the outset, it is required to be noted that what is challenged in the present Special Civil Application by the petitioner - assessee is the reopening of the assessment for the A.Y. 2008-2009 and initiation of the reassessment proceedings for the A.Y. 2008-2009, in exercise of the powers under section 147 read with section 148 of the Income Tax Act. It is required to be noted that in the present case initiation of reassessment proceedings is beyond 4 years from the assessment year. Therefore, unless and until it is observed and found that the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... difference on inclusion of Excise duty. However, it was observed that the CENVAT credit accrued to the assessee was not considered for determining the income under the head profit and gains of business of business or profession. Thus, the total income was determined without the statutory adjustment of the cost of raw materials by unutilized CENVAT credits at the beginning and end of previous year 2007-08 as stipulated in section 145A of the Act. In view of the provisions of Section 145A of the Act, the cost of raw materials required adjustment (reduction) by an amount of ₹ 97,83,767/- i.e. net of opening and closing balance of unutilized CENVAT credits of ₹ 43,26,420/- and ₹ 1,41,10,187/-, respectively. Not following the provisions of Sec.145A of the Act resulted in underassessment of income of ₹ 97,83,767/-. 3. In view of the above, I have reason to believe that there is escapement of income of more than ₹ 1 Lac in the hands of assessee which is required to be taxed by re-opening the assessment u/s.147 of the I.T. Act. Thus, it is a fit case for issuing notice u/s 148 of the I.T. Act. 5.04. However, from the original Assessment Order it appear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvoking powers under section 147 of the Income Tax Act to initiate reassessment proceedings beyond the period of 4 years are not at all satisfied. 6.00. Identical question came to be considered by the Division Bench of this Court in the case of Niko Resources Ltd. (supra) and while considering the scope and ambit of powers to be exercised under section 147 of the Income Tax Act by the Assessing Officer, while reopening the assessment beyond the period of 4 years, the Division Bench of this Court while considering its decisions in the case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under :- 16. The Assessing Officer is authorized to make reassessment in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. As per the 1st proviso to section 147 of the Act, assessment can be reopened under section I47 of the Act after expiry of 4 years only if (1) the assessee failed to make a return under section I39 of the Act or in response to notice issued under section 142(1) or under section 148 of the Act, he failed to disclose truly and fully all material facts nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l and complete facts and on scrutiny, at the time of original assessment all these details are examined, no change of opinion is permissible merely because there was some error earlier on the part of the Assessing Officer himself or because he choose not to opine on the issue or even when he changes his mind and interprets the material or law otherwise than what was done by him. 6.01. Applying the decision of the Division Bench of this Court in the case of Niko Resources Ltd. (supra) as well as Gujarat Lease Financing Limited (supra), to the facts of the case on hand and as observed hereinabove, there does not appear to be any failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the initiation of the impugned reassessment proceedings which are initiated beyond the period of four years, are not permissible and the same cannot be sustained and on that ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. 6.00. In view of the above and for the reasons stated above, present petition succeeds. The impugned notice under section 148 of the Income Tax Act for A.Y. 2008-2009 is hereby quashed and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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