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TMI Blog2017 (1) TMI 1201X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of Section 147 of the Income Act, 1961, (hereinafter referred to as 'Act'). Therefore, the first respondent proposed to assess/reassess the income/recompute loss/depreciation allowance for the said assessment year and called upon the petitioner to file a return in the prescribed form. 3. The petitioner filed their return of income for the assessment year 2005-06 on 28.10.2005, claiming exemption under Section 10A/10B of the Act, by virtue of which 90% of the profits earned from the export business is fully exempted. It is not in dispute that the first respondent did not initiate any proceedings under Section 143 of the Act, but has now resorted to issue the impugned notice under Section 148 of the Act. Parallely, the first respondent issued notice by initiating penalty proceedings under Section 271BA of the Act vide notice dated 19.07.2002, with respect to non-filing of the audit report along with return of income for the assessment year 2005-06, to substantiate the claim of exemption under Section 10A/10B of the Act and proceeded to levy penalty vide order dated 25.06.2007. It is the contention of the petitioner that they have furnished all the material particula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the first respondent having issued the impugned notice for reassessment on recording a different reason, has proceeded to refer the matter to the second respondent under Section 92CA of the Act, which is impermissible and thereby trying to improve upon the available materials to justify the reason for reopening. It is submitted that during the pendency of this Writ Petition, the petitioner filed an additional affidavit, as certain facts were not elaborated in the main affidavit. By referring to the said affidavit, it is contended that the petitioner company is engaged in providing services related to development of computer software and 100% of such income is eligible for deduction from tax under Section 10A of the Act and for the relevant assessment year 2005-06, the petitioner filed 'NIL' return of income and did not claim any deductions under Section 10A, since they had suffered loss from business of Rs. 36,03,553/-, computed in accordance with the provisions of the Act. It is submitted that the respondent has sought to reopen the assessment on the ground that the income has escaped assessment, since sum of Rs. 69,243/- related to loss of sale of asset has been c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hand. With regard to the contention raised by the petitioner in the additional affidavit, it is submitted that even if the return is loss, then subject to certain other conditions penalty under Section 271(1)(c) can be levied and therefore, the contention that there is no revenue loss, is not warranted and such factor is not relevant in the matter of re-assessment proceedings. With regard to the contention that the impugned proceedings are based on a change of opinion, it is submitted that no assessment was made under Section 143(3) of the Act and therefore, no opinion was formed on the issue sought to be raised in the reassessment proceedings and therefore, the ground of change of opinion is liable to be rejected. Referring to Explanation 2(b) to Section 147, it is submitted that if no assessment had been made and it is noticed that the assessee had understated the income or claimed excessive deduction, allowance, any relief, then it is deemed that the income chargeable to tax had escaped assessment. It is submitted that the proceedings initiated under Section 92CA seeking information under Section 92D/Section 92E for determination of Arms Length Price for international transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... el relied on the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd vs. ITO, (supra), and in the case of Thambbi Modern Spinning Mills Ltd., vs. CIT & Ors., [W.P.No.31294 of 2014, dated 01.12.2014]. 6. I have heard the learned counsels appearing for the parties and perused the materials placed on record. 7. As noticed above, the prayer sought for in the Writ Petition is for issuance of a Writ of Certiorari, to quash the notice dated 28.05.2007, which is a notice issued under Section 148 of the Act. However, even at the time of filing the Writ Petition, the petitioner's request to communicate the reasons for reopening was acceded to and reasons had been furnished vide proceedings dated 03.10.2007. Though the petitioner did not specifically seek for quashing the said communication by suitably amending the prayer in the Writ Petition, they chose to file an additional affidavit elaborating certain facts, which according to the petitioner would cover their challenge to the reasons assigned in the communication dated 03.10.2007, which were recorded by the respondent before issuance of the impugned notice under Section 148 of the Act. Nevertheless, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the adjustment is made to the total income of the petitioner by disallowing the loss on sale of assets amounting to Rs. 69,243/- for which impugned notice under Section 148 of the Act has been issued. 10. The revenue resists the prayer made in the Writ Petition firstly on the ground that it is premature. Apart from that the Revenue would state that even if the return is loss then subject to certain other conditions penalty under Section 271(1)(c), can be levied and therefore, the contention that there is no revenue loss is not relevant in the matter of reassessment proceedings. Thirdly, the revenue would justify their action in initiating proceedings under Section 271BA for non-submission of necessary records and proceedings under Section 92CA seeking information under Section 92D/92E for determination of Arms Length price. 11. Undoubtedly, the contentions raised by the petitioner is on facts. The sheet anchor of the submission on behalf of the petitioner is that, even accepting for sake of argument that the stand of the Revenue is correct, it is a case of no loss of revenue to the Department and hence, does not justify reopening. 12. Before going into the issue as to whether i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shafts (India) Ltd vs. ITO, (supra), held that the Assessing Officer is bound to furnish reasons within a reasonable time and on receipt of the reasons, the noticee is entitled to file objections and the Assessing Officer is bound to dispose of the same by passing a speaking order. Accordingly, the Writ Petition was held to be premature and while declining to quash the notice, the Assessing Officer was directed to consider the objections. 14. The question would be whether the petitioner herein should be permitted to depart from the procedure to be followed as pointed out by the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd vs. ITO, (supra). The learned counsel for the petitioner referred to the decision of the Calcutta High Court in the case of Baijnath Saboo & Ors vs. ITO, J Ward & Ors., (supra) to buttress his argument that on facts when there was no loss of revenue, the petitioner is justified in approaching this Court. In the said case, the challenge was to a notice under Section 148 of the Act for the assessment year 1968-69. The assessment was in respect of a trust and as it was a public charitable trust, the income was entirely exempt. The trust claim ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charitable trust was exempt, the Court had granted the relief and the said judgment revolved around the facts of the case and cannot be ipso facto made applicable to the case on hand. 16. As already pointed out the petitioner while filing the return of income on 28.10.2005, declared business loss and income from other sources and while computing business income, the assessee had claimed the loss on sale of assets, as a capital loss. This according to the first respondent, the assessee is not entitled to do and he is of the opinion that it ought to have disallowed the same while computing the business income and such amount claimed as loss on sale of asset is chargeable to tax under escapement assessment. 17. If such is the reason, this Court cannot interfere with the impugned notice on the ground that there is no loss of revenue and that the petitioner did not carry forward the loss related to the assessment year 2005-06 or set off against the income of the petitioner in the subsequent years. These issues are factual issues, which the assessee has to raise before the first respondent. More particularly, this Court will not go into the aspect as to what is the effect of not carryi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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