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TMI Blog2023 (4) TMI 958X X X X Extracts X X X X X X X X Extracts X X X X ..... original return of income for Assessment Year 2015-16 on 24.11.2015 and later on a revised return of income was also submitted on 30.03.2017 inter alia declaring the total income of Rs.112,53,09,30,950/-. This return of income was processed by the respondent authority and the case of the petitioner was selected for limited scrutiny. It is the case of the petitioner that thereafter the assessing officer informed the petitioner Bank vide communication dated 22.09.2017 that the case of the petitioner has been converted from limited scrutiny into complete scrutiny whereby the assessing officer has assumed unrestricted power to verify or deal with any issue for Assessment Year 2015-16 and later on, the notice came to be issued under Section 142 (1) of the Income Tax Act (hereinafter referred to as the "Act") on 22.09.2017 calling upon the petitioner to tender specific details relating to the issue of bad debt and NPA in view of Section 36(1) (vii) and Section 36(1) (viia) of the Act. In response to the said notice, detailed reply was forwarded by the petitioner on 16.10.2017 and thereafter as per the say of the petitioner, after having been satisfied, the assessing officer has not made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on by detailed order dated 20.12.2021 is entertained wherein while issuing notice, the authorities were directed not to issue any final order without the leave of the Court. Since the said decision is after recording the submissions of learned advocates, the Court deems it proper to reproduce the same hereunder :- "1. The petitioner under Article 226 of the Constitution of India seeks to challenge the notice issued by the respondent under section 148 of the Income Tax Act, 1961 directing the petitioner to furnish the return of income for the assessment year 2015-16. The petitioner also challenges the order of disposing the objections passed by the respondent on 09.11.2021 by urging that the same is contrary to law and without jurisdiction. 2. The issue is pertinently raised and after scrutiny assessment the order has been passed on 12.12.2017 determining the total income of the petitioner. 3. The petitioner was selected for revision under section 263 of the Income Tax Act and then the Assessing Officer under section 143 r/w section 263 passed the order revising the assessment order. Petitioner is therefore aggrieved and before this Court with the following prayers: "7.The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rently the impugned action is unsustainable in the eye of law since there is no fresh tangible material distinct from what was made part of the assessment proceedings which was available with the authority and since issuance of impugned notice is beyond the period of four (4) years, in the absence of fresh tangible material, the action is impermissible. Learned advocate appearing for the petitioner has submitted that re-opening which is sought to be done by the authority on the basis of the material which was already examined, scrutinized in assessment proceedings and as such, in view of the proposition laid down in the case of Shanti Enterprise v. I.T.O., reported in (2016) 76 Taxmann.com 184, the action is impermissible. It has further been contended that here is a case where re-opening is sought to be made beyond the period of four (4) years from the end of assessment order and despite the fact that there is no failure on the part of the assessee in truly and fully disclosing the material as sought for and as such, in the absence of allegation of failure on the part of the assessee, this re-opening beyond the period of four (4) years is impermissible and for this submission, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -D and by referring to column 8 of the said reply on the said page 22, this very issue relating to bad and doubtful debt and write off of bad debt in view of RBI directives is specifically explained and further a reference is made to paragraph 25 on page 31 at Annexure-H wherein also, this very figure of Rs.24.63 crores on account of NPA sell down is pointed out and despite the aforesaid material being supplied, after proper scrutiny the assessment order is passed by the authority on 12.12.2017 wherein no addition is made of any nature and that being the situation, there is hardly any justifiable reason for the authority to re-open once the issue has been dealt with and considered. 6. As against this, Mr. Dev D. Patel, learned advocate appearing for Mr. Varun K. Patel, learned advocate for respondent authority has submitted that that scope of scrutiny is very very limited and it is always open for the authority to re- open the assessment and as such there is no illegality in the impugned order nor in issuance of notice under Section 148 of the Act. It has been submitted that simply because during the assessment proceeding, the issue might have gone into and no addition might have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not made. Hence, that being the situation, there is hardly justifiable reason for authority to re-open. 7.1. At this stage, Mr. Soparkar, learned advocate has made a reference to explanation 1 of Section 147 of the Act as analyzed by the Bombay High Court in the case of Vodafone Idea Ltd. versus Assistant Commissioner of Income Tax, Mumbai reported in (2022) 135 taxmann.com 169 (Bombay) (Paragraph No.3) and yet another judgment is also relied upon is of Gujarat High Court in the case of Anupam Rasayan India Ltd. versus Income-tax Officer reported in (2016) 76 taxmann.com 39 (Gujarat) (Paragraphs 9, 13 and 20 and a further decision which is in the case of Gujarat Power Corporation Ltd. versus Assistant Commissioner of Income Tax reported in 2013 350 ITR 266 (Paragraph 30) and has submitted that the case is made out by the petitioner to call for interference. Hence, has requested that if interference is not made, the same would result in grave injustice to the petitioner. 7.2. In respect of the decision which has been cited by Mr. Dev Patel, learned advocate for revenue authority, Mr. Soparkar, learned advocate has submitted that if the facts are seen in detail, the said judgment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er account showing the amount has been actually written-off. " 10. Further, in paragraph 7, again the information was sought for specifically to justify the claim of deduction being amount equivalent to NPA provision under Section 36(1)(viia) of the Act and the petitioner was called upon to justify and explain with regard to the claim. In paragraph 13 of the said notice i.e. dated 22.09.2017, reflecting on page 18 of the petition compilation, it was also indicated to furnish the copy of ledger account in respect of provision related to bad debts. By this detailed notice, the petitioner was called upon to furnish the particulars and attend the Office on 04.10.2017. 11. In response to this notice under Section 142(1) of the Act, a reply is given by the petitioner on 16.10.2017 indicating the particulars in addition to what has been submitted for Assessment Year 2015 - 2016 and in tabular form in Item No.8 the particulars have been provided vide Annexure-H to the said explanation dated 16.10.2017. Annexure-H on page 24 is a further detailed particulars provided to the authority wherein since the petitioner was asked to reconcile the figures of bad debts claimed in the revised income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rity found that aforesaid figure of Rs. 24.63 crores is required to be added with bad debt written off, as it is not added with bad debt written off while calculating the provision of bad debt. Hence, on perusal of assessment record, the authority found that case is required to be re-opened with respect to aforesaid amount for the relevant year. In fact, while recording of reasons, it was observed in paragraph 6 that during the course of assessment proceeding the figure of 24.63 crores bad debt as written off was not verified. This it was failure on the part of assessee to disclose fully and truly all necessary facts during the assessment proceedings and as such it cannot be termed as a mere change of opinion. Hence, after necessary sanctioned being obtained Section 148 notice came to be issued which is made the subject matter of present petition. 15. On the teeth of aforesaid background of facts which are very much prevailing on record, it seems that the reason which has been recorded to re-open that there is a failure on the part of assessee to disclose fully and truly all necessary fact during the assessment proceedings is not possible to be accepted. The reason is that in resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 of the Act especially when the particulars were very much on record in assessment. While examining this, since in that case, it was found by the Court that in response to a query, the assessee had already submitted a ledger extract of legal and license fees which contained the details of payment of Rs. 1.10 lakhs towards penalty for the license and it was observed that since the assessee had pointed out along with the return of income, the assessee did produce a debit note, there was no failure on the part of the assessee to disclose true and full facts and thereby did not permit the re-opening assessment and notice impugned is set aside. Now here also, as indicated above, that in the notice under Section 142(1) of the Act specifically informations were sought for, which was undisputedly provided in a detailed explanation in a tabular form with relevant annexures at Annexure-H as indicating from page 22, a communication dated 16.10.2017 and in the said annexure, attached to the said explanation in paragraphs 24 and 25, as stated above, the said aspect of loss of Rs. 24.63 crores on account of NPA sell down was provided and as such it is not possible to construe that there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpermissible in view of aforesaid set of circumstance. The observations made by the Apex Court in case of Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 at page 195 head-note SB (v) are worth to be reproduced hereafter:- "That though the writ of prohibition or certiorari would not issue against an executive authority, the High Courts had power to issue in a fit case an order prohibiting an executive authority from acting without jurisdiction. Where such action of an executive authority, acting without jurisdiction subjected, or was likely to subject, a person to lengthy proceedings and unnecessary harassment, the High Courts would issue appropriate orders or directions to prevent such consequences. The existence of such alternative remedies as appeals and reference to the High Court was not, however, always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action. When the constitution conferred on the High Courts the power to give relief it becomes the duty of the Courts to give such relief in fit cases and the courts would be failing to perform their duty if relief were refused ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egorically stated by the deponent on additional affidavit that on account of workload and pressure of various files getting time barred assessment of various assessees and on account of corporate assessees being under jurisdiction of that Assessing Officer he had categorically deposed that he could not incorporate the details of bad debts written off furnished by the petitioner assessee. This would clearly indicate that the details have already disclosed before the Assessing Officer and while framing the assessment, the Assessing Officer has considered the same. It is only because of pressure of work he could not incorporate the details in an order under Section 143(3) of the Act and therefore, considering this overall view of the matter we are of the opinion that if the records speak like this it would not be permissible for respondent-authority to reopen the assessment otherwise the same would be based on change of opinion and since the change of opinion is already spelt out by this Hon'ble Court and the decision which has been referred to above. In the background of these facts and circumstances we are of the opinion that the case is squarely covered by the ratio laid down b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cision of his predecessor Assessing Officer, who has examined the claim and allowed the claim of deduction of Rs.81,00,000/- under section 54EC of the Act, on the ground that the assessee was eligible for deduction only to the extent of Rs.50,00,000/- for the year under consideration. Thus, the reopening of assessment is not sustainable on either of the two grounds. The assumption of jurisdiction on the part of the Assessing Officer by issuance of the impugned notice under section 148 of the Act is, therefore, without authority of law and consequently, the impugned notice cannot be sustained." 16. Considering this overall set of circumstances coupled with the fact that there is no other tangible material available to justify the reopening more particularly when the issue has been gone into in detail during the course of regular scrutiny assessment, it is hardly justify for the revenue to reopen the issue which has relied upon, examined and even if it is within a period of four years. The ratio laid down by the aforesaid decision referred to above would clearly clinch the issue and therefore, the action of revenue in reopening the assessment is not justified as it would tantamount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e discovered, the Legislature has put in Explanation to section 147. The duty, however, does not extend beyond the full and truthful disclosure of all primary facts. Once all the primary facts are before the assessing authority, he requires no further assistance by way of disclosure. It is for him to decide what inferences of facts can be reasonably drawn and what legal inferences have ultimately to be drawn. It is not for somebody else-far less the assessee to tell the assessing authority what inferences, whether of facts or law, should be drawn. Indeed, when it is remembered that people often differ as regards what inferences should be drawn from given facts, it will be meaningless to demand that the assessee must disclose what inferences - whether of facts or law - he would draw from the primary facts. If from primary facts more inferences than one could be drawn, it would not be possible to say that the assessee should have drawn any particular inference and communicated it to the assessing authority. How could an assessee be charged with failure to communicate an inference, which he might or might not have drawn? It maybe pointed out that the Explanation to the sub-section has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts are required to be added back in profit and loss account and certain amounts should not have been disallowed. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. We are satisfied that petitioner had truly and fully disclosed all material facts necessary for the purpose of assessment. Not only material facts were disclosed by petitioner truly and fully but they were carefully scrutinized and figures of income as well as deduction were reworked carefully by the Assessing Officer. In the reasons for reopening, there is not even a whisper as to what was not disclosed. In our view, this is not a case where the assessment is sought to be reopened on the reasonable belief that income had escaped assessment on account of failure of the assessee to disclose truly and fully all material facts that were necessary for computation of income but this is a case wherein the assessment is sought to be reopened on account of change of opinion of the Assessing Officer. In a similar case where the notice to reopen the assessment was foun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case of Gruh Finance Ltd. (supra) wherein the said judgment is ex facie not applicable in view of the fact that it was a case in which the assessee for the Assessment Year 1996 - 1997 had claimed depreciation as deduction on non-existent machinery and the same was allowed under Section 32, read with Section 43(6) of the Act and later on it was found that a bogus claim was generated and the mistake was discovered and thereby Section 148 proceedings were initiated and closely on perusal of paragraph 10 of the said judgment, it was found that it was upon information, the department noticed that such depreciation was claimed which was not available to the assessee whereas here there was no fresh information, there was no tangible material and the re-opening is sought on the basis of assessment record itself and as such ex facie this judgment is not of any assistance to the revenue and as such we are of the opinion that case is made out by the petitioner to extend the relief as sought for. Accordingly, we allow this petition.
26. The impugned notice dated 26.03.2021 as well as impugned order dated 09.11.2021 are hereby quashed and set aside and petition is allowed. X X X X Extracts X X X X X X X X Extracts X X X X
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