TMI Blog2017 (8) TMI 1299X X X X Extracts X X X X X X X X Extracts X X X X ..... en is in good faith or not. What is important is that the Assessing Officer has exceeded its jurisdiction erroneously. Which, in our considered view, he has so done, rendering the action to be absolutely illegal and unsustainable in law. - Decided in favour of assessee. - CWPs No. 1576, 1577 & 1831 of 2015 - - - Dated:- 13-7-2017 - Sanjay Karol, ACJ And Sandeep Sharma, JJ. For the Petitioner : Mr. Vishal Mohan, Advocate For the Respondent : Mr. Vinay Kuthiala, Senior Advocate, with Ms Vandana Kuthiala, Advocate. ORDER Sanjay Karol, Acting Chief Justice Since the issue involved in these petitions is purely legal, they are being heard and disposed of by a common judgment. 2. Factual matrix is not in dispute, which we shall refer to herein later. The issue involved is only with respect to interpretation of Part-C of the Fourteenth Schedule, so prescribed under Section 80-IC of the Income Tax Act, 1961 (hereinafter referred to as the Act). 3. That the petitioner (in all the writ petitions)(hereinafter referred to as the Assessee) is assessed to income tax is not in dispute. It is neither disputed nor can it be disputed that Assessee is engaged in the bus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g of the said orders, that the Assessing Officer issued notices under Section 148 of the Act, disclosing that he had reasons to believe that with respect to previous Assessment Years 2007-2008, 2008-2009 2009-2010, income had escaped assessment, within the meaning of provisions of Section 147 of the Act, which stand assailed by the Assessee in the present petitions. 9. At this juncture, we deem it appropriate to reproduce the reasons so assigned by the Assessing Officer, of forming his opinion of the income having escaped assessment, in the following terms: It is observed that the business activities as claimed by assessee do not fall under either under the 4/6 digit excise classification at tariff 84.71 or NIC classification on 1998 at Sub-class 30006/7. However the assessee s claim of deduction u/s 80-IC, under the head Information and Communication Technology Industry, Computer hardware, Call Centres , is not tenable as the sub-classifications of schedule 14 are qualifying in nature. Only if the business activity of an enterprise passes the test of classification then only the benefits of the same are available. The assessee company s claim of deduction u/s 80- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ure Development Centre or Industrial Growth Centre or Industrial Estate or Industrial Park or Software Technology Park or Industrial Area or Theme Park, as notified by the Board in accordance with the scheme framed and notified by the Central Government in this regard, in the State of Himachal Pradesh or the State of Uttaranchal; (b) which has begun or begins to manufacture or produce any article or thing, specified in the Fourteenth Schedule or commences any operation specified in that Schedule, or which manufactures or produces any article or thing, specified in the Fourteenth Schedule or commences any operation specified in the Schedule and undertakes substantial expansion during the period beginning- (i) . (ii) on the 7th day of January, 2003 and ending before the 1st day of April, 2012, in the State of Himachal Pradesh or the State of Uttaranchal; 13. Relevant portion of the Schedule is extracted as under: [THE FOURTEENTH SCHEDULE [See section 80-IC(2)] LIST OF ARTICLES OR THINGS OR OPERATIONS PART C FOR THE STATE OF HIMACHAL PRADESH AND THE STATE OF UTTARANCHAL S. No. Activi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cations, circulars, under the said provisions, and when it does not relate to the activity of operations, so carried out by him, that of running a Call Centre, for which, in any event, the aforesaid provisions are not applicable, then obviously it would be incorrect and illegal to read the provisions relating to the code into the expression Call Centre , which is an activity, totally distinct and separate from manufacture or production of information and communication technology . It is in this backdrop, we find the Assessing Officer to have erred in forming its opinion/reason to believe that the Assessee, was not entitled to statutory deductions. The interpretation is perverse, resulting into travesty of justice. 16. There is yet another reason for us to interfere with the orders passed by the Assessing Officer. Proviso to Section 147 of the Act prescribes that where an assessment under sub-section (3) of Section 143 of the Act has been carried out, no action after expiry of four years from the end of the relevant Assessment Year shall be initiated under Section 147 of the Act, save and except where income chargeable to tax has escaped assessment for such Assessment Year, b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment. Therefore, post-1st April, 1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words reason to believe failing which, we are afraid, Section 147 would give arbitrary powers to the Assessing Officer to re-open assessments on the basis of mere change of opinion , which cannot be per se reason to re-open. We must also keep in mind the conceptual difference between power to review and power to reassess. The Assessing Officer has no power to review; he has the power to re-assess. But reassessment has to be based on fulfillment of certain pre-condition and if the concept of change of opinion is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would take place. One must treat the concept of change of opinion as an in-built test to check abuse of power by the Assessing Officer. Hence, after 1st April, 1989, Assessing Officer has power to re-open, provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief. Our view gets support from the changes made to Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch action. To take benefit of a power, which essentially is very wide power of virtually reopening the assessment, the Revenue must act within the time prescribed by the Act. 11. It is clear that: (a) when there is full, complete and true disclosure of all material facts, the limitation is only four years from the end of the assessment year concerned; (b) when there is non disclosure of facts the limitation is four years in case the income escaping assessment is less than ₹ 1,00,000/-; and (c) in case there is non-disclosure of facts and the income escaping g assessment is more than ₹ 1,00,000/- the limitation is six years. This is the only interpretation which can be given to Sections 147 to 149. 22. With vehemence, Revenue has raised the jurisdictional issue of interfering with the orders passed by the Assessing Officer, more so in view of availability of alternate statutory remedy. Well, we are not inclined to agree with the submission so made by Mr. Vinay Kuthiala, learned Senior Advocate. 23. While examining the scope of jurisdiction of this Court to interfere with the orders of similar nature, passed by the authority, this Court in CWP No.3072 of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atute, party must exhaust the statutory remedies before invoking the writ jurisdiction. The right or liability created by a statute giving a special remedy for enforcing it must be availed of. The Court reiterated the principle laid down in Union of India Versus Guwahati Carbon Ltd., (2012) 11 SCC 651 and in Munshi Ram Versus Municipal Committee, Chheharta, (1979) 3 SCC 83, that when a statute provides for a person aggrieved, a particular remedy to be sought in a particular Forum and in a particular way, it must be sought in that manner, to the exclusion of all other modes and Forums. But it did recognize certain exceptions to this rule and that, inter alia being, where the action of the statutory authority is not in accordance with the statutory provisions; in defiance of fundamental principles of judicial procedure; and in total violation of principle of natural justice. 27. Justifying the action of the petitioner in bypassing the statutory remedy and directly assailing the notice for reassessment, Mr. Vishal Mohan, learned counsel, seeks reliance on the decision rendered by the Bombay High Court, in Ajanta Pharma Ltd. (supra). The decision came to be rendered in the given ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, as the reasons have been disclosed in these proceedings, the assessing officer has to dispose of the objections, if filed, by passing a speaking order, before proceeding with the assessment in respect of the above said five assessment years. 32. Since then, the practice has been in vogue. The mechanism evolved is only a safeguard, a protection from harassment of the assessee, for avoiding unwarranted harassment, from undesirable adjudicatory process, so initiated, perhaps on jurisdictional error or such material which ex-facie may be false or reason(s) which prima facie appears to be baseless or without any cause or justification. The object being, affording an opportunity to an assessee of putting across its case, by placing authentic and undisputed material, satisfying no escapement of income from assessment, e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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