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The Peerless General Finance & Investment Versus Commissioner of Income Tax-I, Kolkata & Others

2017 (9) TMI 669 - CALCUTTA HIGH COURT

Reopening of assessment - without prior approval of the higher authority - return to certificate holders - Held that:- Such ground was considered by the assessing officer in his order of assessment. In fact, he had required further evidence and documents from the assessee prior to the order of assessment to which the petitioner had replied furnishing the same. The assessing officer had taken a particular view on the subject. Although no appeal is pending against the portion of the order with reg .....

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n that ground. - Reopening the assessment is commission, incentive and other payment made to the field officers. The petitioner had claimed the same as an expenditure in its return. Such claim was disallowed by the assessing officer in the order of assessment. An appeal is pending against such portion of the order of assessment. The appeal is yet to be disposed of. Therefore, on the parity of reasoning for the first ground as noted above, and in addition thereto, in view of the fact that, if .....

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e assessing officer before passing the order of assessment had called upon the petitioner to furnish information with regard thereto. The petitioner had furnished such information in its reply. In addition, the petitioner had written a letter dated January 17, 2002 to the assessing officer. In such factual matrix it cannot be said that, the department has any new tangible material to hold that the petitioner did not make a true and faithful disclosure in its account before the assessing officer. .....

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tory alternative remedy available, the writ petition should be dismissed. This is the view expressed in Chhabil Dass Agarwal (2013 (8) TMI 458 - SUPREME COURT). However the fact scenario in the present case is different than that in obtaining Chhabil Dass Agarwal (supra). In that case, the Supreme Court notices that two notices under Section 148 of the Act of 1961 for two different assessment years went unrepresented and unreplied to by the assessee. Notices under Section 143(2) in respect of th .....

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d that, there is a breach of fundamental right of the petitioner or that authorities have acted wholly without jurisdiction. - In the present case, the writ petitioner approached the Writ Court immediately upon receipt of the order dated September 22, 2006. The order of assessment is much later. It is dated December 29, 2006. The department claims that, the interim order passed in the writ petition permitted the department to pass an order of assessment and so it has done so. The writ petiti .....

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P No. 1952 of 2006 - Dated:- 6-9-2017 - Debangsu Basak, J. Mr. Abhijit Chatterjee, Sr. Adv. Mr. Somak Basu, Adv. For the petitioner Md. Nizamuddin, Adv. Mr. Siddhartha Lahiri, Adv. For the respondents ORDER The Court :- The petitioner assails a notice under Section 148 of the Income Tax Act, 1961 proposing to reopen the assessment year 1999-2000. The reasons for such reopening is also under challenge. The final order dated September 22, 2009 negating the objections raised by the petitioner to su .....

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ocation of the provision of Section 148 of the Act of 1961, as supplied by the department, he submits that, none of the reasons given by the department would withstand judicial scrutiny. The first ground is with regard to the return to certificate holders and the treatment of the account in relation thereto. He submits that, the detail with regard to return to certificate holders were disclosed in the annual balance sheet of the petitioner. He draws the attention of the Court to the balance shee .....

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ment proceeding. The petitioner replied thereto. He draws the attention of the Court to the notice under Section 148(1) of the Act, 1961 issued by the department in this regard and the reply thereof given by the petitioner. He also refers to the order of assessment for the relevant assessment year. He submits that, return to certificate holders and the treatment with regard thereto was considered by the assessing officer in his order dated March 26, 2002. Therefore, it cannot be said that the pe .....

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ard to commission was made for the relevant assessment year. The assessing officer disallowed such claim for commission. He refers to the order of assessment in this regard. He submits that, the appeal is pending against the decision of the assessing officer in disallowing the commission claimed in its entirety. Since the appeal is pending, it would not be prudent on the part of the department to have such issue revisited under the provisions of Section 148 of the Act of 1961. In such a method, .....

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s that, the suspense account of ₹ 103.81 lacs emanating out of deferred obligation charge to the return to certificate holders fund was also placed before the assessing officer. The claim on account of suspense account was considered by the assessing officer. The assessing officer disallowed 50% in the order of assessment. Again it cannot be said that, the petitioner is guilty of suppression of any material fact or not making a true and honest disclosure of its income and not pointing out .....

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gation which was disallowed in its entirety by the assessing officer in his order of assessment. Therefore, the authorities are guilty of non-application of mind in putting in such ground in the reasons for invoking Section 148 of the Act of 1961. Learned senior advocate for the petitioner refers to AIR 1961 SC 372 (Calcutta Discount Co. Ltd. vs. Income-tax Officer, Companies District I, Calcutta & Anr.), 320 ITR 561 (SC) (Commissioner of Income-tax vs. Kelvinator of India Ltd.) and an unrep .....

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issues, an appeal is pending. Essentially, the department is trying to undertake a review of the order of assessment, on the basis of a different opinion on the same facts. Neither the impugned notice nor the reasons given in support thereof shows that, the department has come across any new tangible material to suggest that, the petitioner is guilty of failing to disclose fully and truly all material fact necessary for the purpose of assessment and that, an income as escaped assessment by reaso .....

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e Court in W.P. No. 1280 of 2001 (Tinplate Company of India Ltd. vs. Joint Commissioner of Income Tax) dated May 5, 2016 and W.P. No. 1158 of 2000 (Tinplate Co. of India Ltd. vs. Joint Commissioner of Income Tax, Special Range 7, Calcutta) dated July 20, 2016 in support of the proposition that, the Court after noticing the various authorities on the subject had quashed the notice under Section 148 of the Act of 1961. Referring to the impugned order, learned senior advocate for the petitioner sub .....

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n 147 of the Income Tax Act, 1961. In the present case, the department has not served any notice under Section 143(2) of the Income Tax Act, 1961 upon the petitioner. The petitioner is not aware of an order of reassessment. In such circumstances, he submits that the impugned notice under Section 148, and the reasons given in respect thereof along with the disposal of the objection raised dated September 29, 2006 be quashed. Learned advocate for the department submits that, notice under Section 1 .....

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ted September 22, 2006 is well reasoned. It does not require any interference by the Writ Court. He contends that, it cannot be said or alleged that, the assessing officer had acted with an inherent lack of jurisdiction in an invocation of Section 148 of the Act of 1961 or in passing the impugned order dated June 22, 2006. He submits that, the final order of assessment was passed under Section 143(2) after due issuance of notice with regard thereto. He further submits that, the petitioner had re .....

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the rival contentions of the parties and the materials made available on record. As noted above, a notice under Section 148 of the Act of 1961, the reasons for invocation of such provisions of the Act of 1961 and the ultimate decision of the assessing officer on the objection raised thereto found in the decision dated September 22, 2006 are under challenge in the present writ petition. So far as the question with regard to the notice under Section 148 of the Act of 1961 not being issued after o .....

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is without any basis. The other contention that, the assessing officer in fact is having a change in the opinion in respect of matters placed before him and considered by him in the order of assessment, is required to be considered. Calcutta Discount Co. Ltd. (supra) is of the view that, two conditions have to be satisfied in its entirety, for the Income Tax Officer to reopen an order of assessment after four years under Section 148 of the Act of 1961. The first condition is that, the officer mu .....

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not suffice. The assessee owes the duty to bring to the attention of the assessing authorities the requisite particulars in the books of account or the particular portions of the document which are relevant. Failure to discharge such duty would amount to omission to disclose fully and truly all material facts necessary for the assessment. Jeans Knit Pvt. Ltd. (supra) notices Calcutta Discount Pvt. Ltd. (supra) and is of the view that, the rigors laid down in Calcutta Discount (supra) were not a .....

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f change of opinion is removed, then in the garb of reopening the assessment, review would take place. This view is followed in Hindustan Lever Ltd. (supra) as well as Garden Silk Mills Pvt. Ltd. (supra). In the two Tinplate Company of India Ltd. (supra) notices under Section 148 were set aside on the ground of non-adherence to the jurisdictional requirement to invoke such provision. Applying the ratio of the decisions noted above, it is necessary to evaluate the jurisdictional facts put forth a .....

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ing officer in his order of assessment. In fact, he had required further evidence and documents from the assessee prior to the order of assessment to which the petitioner had replied furnishing the same. The assessing officer had taken a particular view on the subject. Although no appeal is pending against the portion of the order with regard to return to certificate holders, in my view, the reasons, not specifying the tangible new materials available with the department to allege that the petit .....

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e in its return. Such claim was disallowed by the assessing officer in the order of assessment. An appeal is pending against such portion of the order of assessment. The appeal is yet to be disposed of. Therefore, on the parity of reasoning for the first ground as noted above, and in addition thereto, in view of the fact that, if Section 148 is allowed to continue, it may result in conflict in decision between the assessing officer and the appellate authority on the same head, it would be approp .....

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such information in its reply. In addition, the petitioner had written a letter dated January 17, 2002 to the assessing officer. In such factual matrix it cannot be said that, the department has any new tangible material to hold that the petitioner did not make a true and faithful disclosure in its account before the assessing officer. The fourth ground for reopening as given in the reasons is deferred obligation. Claim as an expenditure made on this account before the assessing officer was dis .....

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nario in the present case is different than that in obtaining Chhabil Dass Agarwal (supra). In that case, the Supreme Court notices that two notices under Section 148 of the Act of 1961 for two different assessment years went unrepresented and unreplied to by the assessee. Notices under Section 143(2) in respect of those assessment years were also not attended to by the assessee. It is after receipt of the orders of assessment that, the assessee sought to approach the Writ Court under Article 22 .....

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