TMI Blog2017 (9) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... ind to the facts of the case. In any event, if such a note had been put up to the Addl. DIT and thereafter to the DIT, either of those officers could have applied their minds and ascertained if indeed the return was processed under Section 143 (1) of the Act or picked up for scrutiny. The explanation now offered in the counter affidavit only underscores the non-application of mind at all three levels in the Department. - W.P.(C) 614/2014 - - - Dated:- 31-8-2017 - S. MURALIDHAR PRATHIBA M. SINGH JJ. Petitioner Through: Mr. Salil Kapoor, Advocate with Ms. Ananya Kapoor, Mr. Sumit Lalchandani, Mr. Sanat Kapoor, Advocates. Respondent Through: Mr. Rahul Chaudhary, Sr.Standing Counsel. O R D E R Dr. S. Muralidhar, J.: 1. This writ petition by the Yum Restaurants Asia PTE Ltd. seeks the quashing of a notice dated 28th March, 2013 issued by the Deputy Director of Income Tax (Assessing Officer - AO ) under Section 148 of the Income Tax Act, 1961 ( the Act ) for the Assessment Year ( AY ) 2006-07. It also challenges the order dated 26th December, 2013 passed by the AO rejecting the objection filed by the Assessee to the reopening of the assessment. 2. One ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not in dispute that in the present case, the return originally filed by the Assessee for AY 2006-07 was processed under Section 143 (1) of the Act and not under Section 143 (3) of the Act. Therefore, as far as the Petitioner is concerned, the Department ought to have proceeded in terms of Section 151 (2) of the Act. Since the re-opening of the assessment was after the expiry of 4 years from the end of the relevant AY, the proposal of the AO to reopen the assessment should have had the approval of an officer of the rank of Joint Commissioner which in this case was the Additional DIT. 5. The factual scenario, however, is that the note put up by the AO to the DIT read as under: Form of recording the reasons for initiating proceedings under Section 148 and for obtaining the approval of the Director of Income-tax/Central Board of Direct Taxes 1 Name and Address of the assessee : M/s. Yum! Restaurants (Asia) PTE Limited 99, Bukit Timah Road # 04-01 02, Singapore - 999999 2 Permanent Account No. : AAACY2204M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Dated: 26.03.2013 (Mazhar Akram) Deputy Director of Income Tax Circ 2 (2), Intl. Taxation, New Delhi 12. Comments of the Addl. DIT, R-2, Intl. Tax., Delhi, if any o On persual of the reasons I have reasons to believe that income of more than one lakh has escaped assessment. o The proposal is approved. Sd/- (Manish Mishra) Addl. Director of Income Tax Range-2, Intl. Tax., New Delhi 13. Whether the Director of Income I have perused the reason Tax : (Intl. Tax.)-II, New Delhi is recorded and find there is satisfied on the reasons recorded income escaping assessment by the ITO/ADIT/DDIT) that it is making this a fit case for action a fit case for issue a notice u/S 148 U/S 147/148 of the IT Act, 1961. (Poonam K. Sidhu) Director of Income Tax Intl. Taxation-II, New Delhi 6. Two of the columns in the above note are of immediate relevance. Column 8 poses a question whether the assessment is proposed to be made for the first time. This question is directly relatable to Section 151 (2) of the Act since it seeks to ascertain whether the return filed for the AY in question has on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt only after due application of mind. If for some reason, there is an error that creeps into this exercise by the AO, then the law expects the superior officer to be able to correct that error. This explains why Section 151 (1) requires an officer of the rank of the Joint Commissioner to oversee the decision of the AO where the return originally filed was assessed under Section 143 (3) of the Act. Further, where the reopening of an assessment is sought to be made after the expiry of four years from the end of the relevant AY, a further check by the further superior officer is contemplated. 12. In the present case, having started off on a wrong note that the original assessment was scrutinized and an order was passed under Section 143(3) of the Act, the AO proceeded to put up the note to the DIT as is evident from the title of the note but, through the Additional DIT. Both the Additional DIT and the DIT appear to have concurred with the reasons for reopening the assessment but without applying their minds to the fact that the return originally filed was only processed under Section 143(1) of the Act and not under Section 143(3) of the Act. Had the Additional DIT realised this mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gs. 16. It is not understood how from the records available for AY 2006-07 it was not clear whether a scrutiny assessment was made. The records obviously would have contained the order of the AO under Section 143 (3) of the Act. If, as is the case, there was no such order then clearly the only conclusion to be drawn was that the return was processed under Section 143 (1) of the Act. Since it is not the case of the Department that the file for AY 2006-07 went missing, as was the case for AY 2005-06, the above statement in the counter affidavit filed on 9th September 2014, more than a year after the reopening, is inexplicable. 17. At the highest, the note prepared by the AO should have been candid in Column 8 that it was not clear whether the assessment was being made for the first time or not. That, at least, would have told the Court that the AO had applied his mind to the facts of the case. In any event, if such a note had been put up to the Addl. DIT and thereafter to the DIT, either of those officers could have applied their minds and ascertained if indeed the return was processed under Section 143 (1) of the Act or picked up for scrutiny. The explanation now offered in ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
