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2023 (6) TMI 286

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....ok profit of Rs. 0/-. The return of the petitioner was processed and the case of the petitioner was selected for scrutiny under CASS. On furnishing information, detailed scrutiny was undertaken and later on, on 22.12.2018, the assessment order under Section 143 (3) of the Income Tax Act, (hereinafter referred to as the "Act") came to be passed assessing total loss of the petitioner at Rs. 1181,07,09,327/- for Assessment Year 2016-17. 2.1. It is the case of the petitioner that the respondent issued notice upon the petitioner under Section 148 of the Act on 21.03.2021 calling upon the petitioner to submit return of income for Assessment Year 2016-17 without prejudice, & in due compliance of the said notice and consequently, for reopening has also sought approval obtained under Section 151 of the Act. The said reasons and the approval came to be supplied to the petitioner on 17.05.2021. 2.2. In response to the said reasons, the petitioner filed detailed objections on 16.08.2021 and questioned the validity of the notice issued under Section 148 of the Act. However, according to the petitioner, by brief satisfaction, objections raised by the petitioner came to be turned down on 25.10.....

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.... and as such, the petitioner was not under an obligation to spend any amount towards the corporate social responsibility by virtue of Section 135 of the Companies Act and as such, the expenditure incurred by the petitioner is not one which requires disallowance under explanation 2 to Section 37(1) of the Act and as such, the plea which has been expressed by the respondent authority is basically erroneous. Hence, notice as well as order impugned deserve to be quashed and set aside. 4.2. Additionally, learned advocate Mr. Soparkar has submitted that the petitioner has incurred expenditure of Rs. 4,05,629/- voluntarily, wholly and exclusively for the purposes of business only and no claim of the petitioner was wrongly allowed or no income has escaped assessment and therefore, it is impermissible for the authority to issue notice under Section 148 of the Act. It has further been submitted that sanctioned as required under Section 151 of the Act is also without application of mind, which is reflecting mechanical exercise of power. It has been submitted that no notice under Section 148 of the Act shall be issued unless the higher authority is satisfied on the reasons recorded by the ass....

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....from the assessment, it is always open for the respondent authority to re-open the assessment after of course, following appropriate statutory requirement, which has been undertaken here. It has been submitted that the action which is sought to be initiated is not solely based upon the audit objections, in fact, the information of the relevant circumstances which are to be provided by the audit party can always be considered by the authority and if the authority is satisfied that there is an escapement of income, it is always open to initiate appropriate steps, which has rightly been observed here. Hence, there is no merit in the petition and the same deserves to be dismissed in the respectful submission of learned advocate Ms. Mehta. No further submissions have been made. 6. Having heard the learned advocates appearing for the respective parties and having gone through the material on record, few circumstances deserve consideration before arriving at an ultimate conclusion. 6.1. On the basis of the assertion which has been made by the petitioner at the relevant point of time while issuing notice, the co-ordinate Bench was pleased to grant ad-interim relief in terms of paragraph ....

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.... escaped the assessment must fail and such issue is no longer res integra and requires no further elaboration except by reproducing relevant findings of this Court, in the case of Cadila Health Care Ltd Vs Assistant Commissioner of Income Tax & Anr reported in (2012) 65 DRT (Guj ) 385, wherein it is held that any such initiation of reassessment proceedings solely at the instance of the audit objection would not be maintainable "(i) CIT Vs Lucas T V S Ltd (2001) 168 CTR (SC) 311 : (2001) 249 ITR 306 (SC) in which the apex Court upheld the decision of the High Court in which the High Court had quashed the reopening proceedings wherein apart from the information furnished by the audit party, the ITO had no other information for reopening the assessment. (ii) Agricultural Produce Market Committee vs ITO (2011) 63 DTR (Guj ) 7: (2011) 15 Taxmann com 170 (Guj ) wherein Division Bench of this Court was pleased to quash the notice for reopening where the only basis was the revenue audit objection as regards the eligibility of the assessee for exemption. (iii) Adani Exports Vs Dy CIT (1999) 153 CTR (Guj ) 308: (1999) 240 ITR 224 (Guj ) wherein Division Bench of this Court held as un....

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....n to believe is a mere pretense to give validity to the exercise of power In other words, it was a colourable exercise of jurisdiction by the AO by recording reasons for holding a belief which in fact demonstrably he did not held that income of assessee has escaped assessment due to erroneous computation of deduction under Section 80HHC, for the reasons stated by the audit. The reason is not far to seek." 12. Under the circumstances, it clearly emerges from the record that the AO was of the opinion that no part of the income of the assessee has escaped assessment In fact, after the audit party brought the relevant aspects to the notice of the AO, she held correspondence with the assessee. Taking into account the assessee's explanation regarding non requirement of TDS collection and ultimately accepted the explanation concluding that in view of the Board's circular, tax was not required to be deducted at source. No income had therefore escaped assessment. Despite such opinion of the AO, when ultimately the impugned notice came to be issued the only conclusion we can reach is that the AO had acted at the behest of and on the insistence of the audit party. It is well-settled tha....

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.... and this has been specifically pointed out which has not been controverted that on the very same issue, claim of CSR expenses/objections so raised for both the years by the very same person who hold the office of JCIT (Audit) for both assessment yeara 2016-17 and 2017-18 and the very same officer has recorded reasons for re-opening of both assessment years on 16.03.2021 and later on, the very same authority issued notice under Section 148 of the Act for both years on 21.02.2021. These circumstances have revealed from the information which has been provided to the petitioner under the Right to Information Act and from the details which are provided it has been emerged that the assessing officer (ACIT) circle 1(1) (1) has objected to the audit objections raised by the JCIT (Audit) on the issue of claim of CSR expenses for Assessment Year 2017-18 recording of reasons for Assessment Year 2016-17 for the same issue does not amount to application of an independent mind and therefore, also it cannot be said that any independent application of mind reflects in recording of reasons for Assessment Year 2016-17 when reasons for Assessment Year 2017-18 are held to be invalid by order of this ....