TMI Blog2023 (9) TMI 552X X X X Extracts X X X X X X X X Extracts X X X X ..... 22, on which respondents have relied upon, has no applicability to the facts of this case. These instructions expressly provides that it applies only to the issue of reassessment notice issued by the Assessing Officer during the period beginning 1st April 2020 and ending with 30th June 2021 within the time extended under TOLA and various notifications issued thereunder. Since the impugned notice in this case is dated 31st July 2022, certainly the instructions no. 1 of 2022 dated 11th May 2022 shall have no applicability at all. This court in Godrej Industries Limited [ 2015 (8) TMI 668 - BOMBAY HIGH COURT] has held that an assessment can be reopened under section 147 and 148 of the Act only on the jurisdictional preconditions being satisfied strictly. This Court held that sanction of a superior officer to the reasons recorded in terms of section 151 should be obtained before issuing the notice under section 148 of the Act and all jurisdictional requirements are required to be satisfied cumulatively and even if one of the numerous jurisdictional requirements necessary for issuing the notice under section 148 of the Act are not satisfied, the reopening of an assessment would fail ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted as an in-built test to check abuse of power by the Assessing Officer/ We allow the petition for the following reasons: (a) that approval for issuance of notice under Section 148A(d) of the Act has not been properly obtained and hence the order passed thereunder and consequent notice issued under Section 148 of the Act have to be quashed and set aside. The sanction ought to have been granted under Section 151(ii) and not under Section 151(i) of the Act. (b) The notice to reopen has also been issued on the basis of change of opinion which is not permissible Assessee appeal allowed. - K.R. SHRIRAM DR. N.K. GOKHALE, JJ For the Petitioner : Mr. P. J. Pardiwalla, Senior Advocate a/w Mr. Jeet Kamdar i/b Mr. Atul K Jasani. For the Respondents : Mr. Suresh Kumar a/w Ms Mohinee Chougule. (ORAL JUDGMENT PER K. R. SHRIRAM J.) 1 Rule. Rule made returnable forthwith as pleadings are completed. Petitioner is registered with the Reserve Bank of India (RBI) as Non-Banking Finance Company and is classified as an Asset Finance Company. On 28th November 2016, petitioner filed its return of income for A.Y.-2016-2017 declaring a total income of Rs. 44,9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to the order of the Apex Court in Union of India Vs. Ashish Agarwal (2022) 138 taxmann.com 64(SC) and stated that the notice under Section 148 of the Act shall be deemed to be issued under Section 148A of the Act as substituted by the Finance Act 2021 and shall be treated as show cause notice in terms of Section 148A(b) of the Act. Respondent no. 1, therefore, treated the notice issued under Section 148 of the Act as show cause notice in terms of Section 148A(b) of the Act. Respondent no. 1 also relied on information and material annexed to the show cause notice suggesting that the income chargeable to tax has escaped assessment within the meaning of Section 147 of the Act and also relied on the approval of the competent authority annexed to the impugned show cause notice. 6. The annexure to the impugned show cause notice mentioned the following: a) On perusal of the records, it is noticed that the Petitioner has debited an amount of Rs. 6,41,87,931/- on account of software consumables as other expenses to the profit and loss account and as per the information gathered Respondent No. 1 alleged that the said expense is a capital expenditure which is not allowable ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in the said notice have been ticked and respondent no. 1 has not provided what information is available with him for issuing the impugned notice. At this stage, petitioner filed this petition impugning the show cause notice dated 31st May 2022, the order dated 31st July 2022 passed under Section 148A(d) of the Act and the notice dated 31st July 2022 under Section 148 of the Act. 9. Mr. Pardiwalla appearing for petitioner submitted that the impugned notice dated 31st May 2022, order dated 31st July 2022 and intimation letter dated 31st July 2022 are: a) beyond limitation, b) signed by the wrong specified authority, c) lack information as required under Section 148, d) results from change of opinion and e) is in violation of Section 151A of the Act. 10. Mr. Pardiwalla on the suggestions made by the court confined his submissions primarily to signed by the wrong specified authority and change of opinion . The court felt, if petitioner succeeds on these two points and primarily on the point of wrong specified authority , the court need not go into the other grounds raised. 11. On the wrong specified authority , Mr. Pardiwalla submitted as under: a) The provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ashed and set aside. g) The approval given by respondent no. 3 is without any application of mind and is mechanical approval as respondent no. 3, if properly instructed, could never have granted such approval on the facts and circumstances of the case of petitioner. h) In any event, deduction of expenditure on computer software as revenue expenditure was correct and query had been raised during the assessment proceedings by the Assessing Officer. Petitioner has provided all the details in addition to the documents which were filed alongwith return of income and the Assessing Officer has accepted the explanation given by petitioner. Relying on the judgment of Aroni Commercials Ltd. Vs. Deputy Commissioner of Income Tax-2(1) (2014) 44 taxmann.com 304(Bombay), Mr. Pardiwalla submitted that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose his satisfaction in respect of the query raised. i) The change i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses. with the approval of the specified authority, under clause (a) of sub-section (1) of new section 149 of the Act, since they are within the period of three years from the end of the relevant assessment year. Specified authority under section 151 of the new law in this case shall be the authority prescribed under clause (i) of that section. 13 Mr. Suresh Kumar also submitted as under: a) That in the instance case, the period that has elapsed is three years or less than three years because the assessment year is of AY-2016-2017, as provided under Section 3 of TOLA and extended by Notification dated 31st March 2020 and subsequently until 31st March 2021, the three years would have expired on 31st March 2020 and has got extended till 30th June 2021. The provisions of TOLA read with judgment of the Apex Court in Ashish Agarwal (Supra), the sanction has been rightly granted by the Principal Commissioner and there is no violation of Section 151 of the Act as alleged or at all. b) The contention of petitioner that TOLA only seeks to extend the period of limitation and does not affect the scope of section 151 is misplaced because Section 151 is time dependent and that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2021 and in any event, even assuming if what Mr. Suresh Kumar argues that it would travel back in time to their original date is accepted, will not be applicable to the case at hand because: a) The instructions itself restricted it to notice issued during the period between 1st April 2021 and 30th June 2021, where paragraph no. 1 reads as under: 1. Hon'ble Supreme Court, vide its judgment dated 04.05.2022 (2022 SCC Online SC 543), in the case of Union of India v. Ashish Agarwal has adjudicated on the validity of the issue of reassessment notices issued by the Assessing Officers during the period beginning on 1st April, 2021 and ending with 30th June 2021, within the time extended by the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act. 2020 [hereinafter referred to as TOLA ] and various notifications issued thereunder (these reassessment notices hereinafter referred to as extended reassessment notices ). b) In any case in Tata Communications Transformation Services Ltd. Vs. Assistant Commissioner of Income Tax (2022) 443 ITR 49 (Bombay) this court held that only the time for issuance of notice was extended and the law has not b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court. OUR FINDINGS / CONCLUSIONS:- 16. Before we proceed further, it would be useful to reproduce Sections 147, 148, 148A, 149 and 151 of the Act as it was then applicable: 147. Income escaping assessment If any income chargeable to tax, in the case of an assessee, has escaped assessment for any assessment year, the Assessing Officer may, subject to the provisions of sections 148 to 153, assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for such assessment year (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year). Explanation . For the purposes of assessment or reassessment or recomputation under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, irrespective of the fact that the provisions of section 148A have not been complied with. 148. Issue of notice where income has escaped assessment. Before making the assessment, reassessment or recomputatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90A of the Act; or (iv) any information made available to the Assessing Officer under the scheme notified under section 135A; or (v) any information which requires action in consequence of the order of a Tribunal or a Court. Explanation 2. For the purposes of this section, where, (i) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A, on or after the 1st day of April, 2021, in the case of the assessee; or (ii) a survey is conducted under section 133A, other than under subsection(2A) of that section, on or after the 1st day of April, 2021, in the case of the assessee; or (iii) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner, that any money, bullion, jewellery or other valuable article or thing, seized or requisitioned under section 132 or under section 132A in case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (iv) the Assessing Officer is satisfied, with the prior approval of Principal Commissioner or Commissioner, that any books of account or documents, seized or req ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded time allowed to furnish a reply as per clause (b) expires: Provided that the provisions of this section shall not apply in a case where, (a) a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A in the case of the assessee on or after the 1st day of April, 2021; or (b) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any money, bullion, jewellery or other valuable article or thing, seized in a search under section 132 or requisitioned under section 132A, in the case of any other person on or after the 1st day of April, 2021, belongs to the assessee; or (c) the Assessing Officer is satisfied, with the prior approval of the Principal Commissioner or Commissioner that any books of account or documents, seized in a search under section 132 or requisitioned under section 132A, in case of any other person on or after the 1st day of April, 2021, pertains or pertain to, or any information contained therein, relate to, the assessee. Explanation . For the purposes of this section, specified authority means the specified autho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ay of March of such financial year: Provided also that where the information as referred to in Explanation 1 to section 148 emanates from a statement recorded or documents impounded under section 131 or section 133A, as the case may be, on or before the 31st day of March of a financial year, in consequence of, (a) a search under section 132 which is initiated; or (b) a search under section 132 for which the last of authorisations is executed; or (c) a requisition made under section 132A, after the 15th day of March of such financial year, a period of fifteen days shall be excluded for the purpose of computing the period of limitation as per this section and the notice issued under clause (b) of section 148A in such case shall be deemed to have been issued on the 31st day of March of such financial year: Provided also that for the purposes of computing the period of limitation as per this section, the time or extended time allowed to the assessee, as per show-cause notice issued under clause (b) of section 148A or the period during which the proceeding under section 148A is stayed by an order or injunction of any court, shall be excluded: Pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee a notice alongwith a copy of the order passed, if required under clause (d) of Section 148A. It also says no notice under Section 148 shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. No such approval shall be required where the Assessing Officer, with the prior of the approval of the specified authority, has passed an order under clause (d) of Section 148A to the effect that it is a fit case to issue a notice under Section 148 of the Act. 18. Section 148A provides that the Assessing Officer shall, before issuing any notice under Section 148 .. (d)- decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under Section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month . The explanation below Section 148A says - for the purposes of this Section, specified authority me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act also requires the Assessing Officer to pass an order after considering the reply of the assessee as to whether or not it is a fit case to issue a notice under section 148 of the Act and such an order under section 148A(d) of the Act has to be passed with the prior approval of the specified authority. The Explanation to section 148A of the Act also incorporates the meaning of specified authority as provided for in section 151 of the Act. 24. As per section 151 of the Act, the specified authority who has to grant his sanction for the purposes of section 148 and section 148A is the Principal Chief Commissioner or Principal Director General or where there is no Principal Chief Commissioner or Principal Director General, the Chief Commissioner or Director General if more than three years have elapsed from the end of the relevant assessment year. The present petition relates to the AY 2016-17, and as the impugned order and impugned notice are issued beyond the period of three years which elapsed on 31st March, 2020 the approval as contemplated in section 151(ii) of the Act would have to be obtained which has not been done by the Assessing Officer. The impugned notice ment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (b) .. (c) In any case, Relaxation Act is not applicable for Assessment Years 2015-2016 or any subsequent year and, hence, the question of applicability of the Notification Nos. 20 and 38 of 2021 does not arise. The time limit to issue notice under section 148 of the Act for the Assessment Years 2015- 2016 onwards was not expiring within the period for which section 3(1) of Relaxation Act was applicable and, hence, Relaxation Act could never apply for these assessment years. As a consequence, there can be no question of extending the period of limitation for such assessment years. (b) Judgment in Tata Communications (Supra) has been affirmed by the Supreme Court in Ashish Agarwal (supra) in paragraph 7, where, the Supreme Court states that it is in complete agreement with the view of the High Courts. It reads as under: 7. Thus, the new provisions substituted by the Finance Act, 2021 being remedial and benevolent in nature and substituted with a specific aim and object to protect the rights and interest of the assessee as well as and the same being in public interest, the respective High Courts have rightly held that the benefit of new provisions shall be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . (d) MA Multi-Infra Development Pvt Ltd v. ACIT (WP No. 1650 of 2022 dated 9-1-2023) paragraph 7 reads as under: 7. Be that as it may, in our view, the present case is squarely covered by the view taken by this Court in J.M. Financial Investment Consultancy Services (P) Ltd. (Supra). We accordingly hold that the approval for issuance of notice u/s. 148 ought not have been obtained from the Additional Commissioner of Income Tax but from the authority specifically mentioned u/s. 151(ii) of the Act. (e) DCW Limited v. ACIT [WP No. (L) 6546 of 2022 dated 4-7-2022] paragraphs 5,6, 7 8 read as under: 5. In the aforementioned case, which also pertained to assessment year 2015-16 and in which approval was granted on 26 th March 2021 by the Additional Commissioner of Income Tax , was held to be bad inasmuch as it was held that having been issued beyond the period of four years from the relevant assessment year, the approval ought to have been accorded by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax and not by the Additional Commissioner of Income Tax. The Court also held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been granted by either the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner and not by the Additional Commissioner of Income tax. 8. Since the notice was being issued beyond the four years period prescribed under the un-amended provisions of section 151(1) of the Act, it ought to have the satisfaction accorded by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner of Income Tax which is not so in the present case. (f) Soumya Girdhari Agarwal v. ITO (WP No. 3354 of 2022 dated 25-7-2022) paragraph 4 read as under: 4. On a reading of Section 151 it is clear that a notice under Section 148 of the Act, 1961 cannot be issued after the expiry of period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner was satisfied, on the reasons recorded by the A.O., that it was a ft case for the issue of such a notice. In the present case, it is clear that assessment year under consideration was 2015-16 and, therefore, the notice impugned dated 29th March, 2021 was admittedly beyond ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is satisfied, on the reasons recorded by the Assessing Officer, that it is a ft case for the issue of such notice. (21) Admittedly in this case, four years from the end of the relevant assessment year A.Y. 2015-16 has expired before the issuance of notice and the approval also has been obtained from the Additional Commissioner of Income Tax and not Principal Commissioner of Income Tax. In the affidavit-in-reply fled through Yashraj Nain, affirmed on 25.03.2022, these facts have not been disputed but according to respondents, the approval granted by the Additional Commissioner of Income Tax was a valid approval. (22) Respondents have relied upon Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 (Relaxation Act), limitation to submit, inter alia, under provisions of Section 151(1) and Section 151(2), which were originally expiring on 31st March 2020 stand extended to 31st March 2021. According to the Income Tax Officer, the statutory approval for issuance of notice under Section 148 of the Act for the Assessment Year 2015-2016 may be given by the Range Head as per the said provisions. (23) Even for a moment, we agree with the view expressed by resp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d, on that basis, has wrongly mentioned that the approval of the specified authority under section 151(i) should be taken. This conclusion is premised on the basis that these notices travel back to 31 March 2020 which premise is completely erroneous as explained hereinbefore. The notice under section 148 of the Act is issued on 31 July 2022 and, hence, is issued beyond period of three years from the end of the relevant assessment year and, accordingly, the approval of the specified authority under section 151(ii) of the Act should be taken. 30. This court in Tata Communications (Supra), has rejected that argument of the Revenue on the issue of travel back. This court in paragraph 37 of Tata Communications (Supra) has held that Section 3(1) of TOLA does not provide that any notice issued under Section 148 of the Act, after 31st March 2021 will relate back to the original date or that the clock is stopped on 31st March, 2021 such that the provision as existing on such date will be applicable to notices issued relying on the provision of TOLA. The court held that Section 3(1) of TOLA merely extends the limitation provided in the specified Acts including Income-tax Act for doing cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Delhi High Court and the Allahabad High Court. 35. We have to also note the well settled proposition that when the Act specifies that something is to be done in a particular manner, then, that thing must be done in that specified manner alone, and any other method/(s) of performance cannot be upheld. Hence, notices issued under Section 148 of the Act after 1st April, 2021 must comply with the amended provisions of law and cannot be sustained on the basis of the erstwhile provision. 36. In order to uphold the arguments of the Revenue in this regard, either a savings clause, or a specific legislative enactment deferring applicability of the amended provisions and the repeal of the old provisions of the Act, would be required. Plainly no such savings clause or enactment is available. 37. Section 3(1) of Relaxation Act does not provide that any notice issued under Section 148 of the Act, after 31st March 2021 will relate back to the original date or that the clock is stopped on 31st March, 2021 such that the provision as existing on such date will be applicable to notices issued relying on the provision of Relaxation Act. A plain reading of Relaxation Act, as Mr. Mi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es issued after 1st April, 2021 are unsustainable and bad in law even if one was to apply the Explanations to the Notification Nos. 20 of 2021 and 38 of 2021. The Explanation seeks to extend the applicability of erstwhile Sections 148, 149 and 151. The impugned Explanation does not cover Section 147, which (as amended) empowers the revenue to reopen an assessment subject to Sections 148 to 153, which includes Section 148A. Thus, even if Explanations are valid, the mandatory procedure laid down by Section 148A has not been followed and hence, without anything further, the notices under Section 148 of the Act are invalid and must be struck down for this reason as well. This proposition has also been upheld by the Delhi High Court. 42. As regards Revenue s arguments that Relaxation Act being a beneficial legislation must be given purposive interpretation , the purpose of Section 3(1) of Relaxation Act is to extend limitation periods as provided in a specified Act (including the Income-tax Act). The purpose of Section 3(1) of Relaxation Act is not to postpone the applicability of amended provisions of a Specified Act. Though Relaxation Act was in existence when the Finance Act, 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t July, 2021, a similar savings clause could have been inserted, which has not been done. We agree with Mr. Pardiwalla because as per Section 1(2)(a) of the Finance Act, 2021, the amendments to Sections 147 to 153 of the Act shall come into force on 1st April, 2021. Similarly, the Memorandum explaining the provisions of the Finance Bill, 2021 clarifies that these amendments will take effect from 1st April, 2021. Section 12 of the Finance Act inserted a proviso in Section 43CA which inter alia provides that the words one hundred and ten percent in the first proviso will be substituted by the words one hundred and twenty percent if the transfer of residential units takes place during the period beginning from 12th day of November, 2020 and ending on the 30th day of June, 2021. Therefore, had the intention of the legislature, while amending Sections 147 to 153, was to give it effect from 1 st July, 2021, a similar savings clause could have been inserted, which has not been done. 46. Mr. Pardiwalla submitted that only Section 4 of Relaxation Act which amended the Act and no such amendments to the substantive provisions of the Act were envisaged under Section 3 of Relaxation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed. Therefore, the impugned notices do not even comply with the relevant statutory provisions, even if we do not find fault with the Explanations in the two notifications. Infact the Delhi High Court in paragraph 84 of Mon Mohan Kohli (Supra) has also considered and accepted this aspect of the matter. 49. Some more reasons why the reopening notices must go are : (a) Section 297 of the Act provides a saving clause for applicability of various provisions of the 1922 Act, even though the Act itself had been repealed. In the absence of such a saving clause for applicability of erstwhile Sections 147 to 151 of the Act, the amended provision of the Act would apply from 1st April, 2021. (b) Moreover, the reopening notices issued after 1st April, 2021 are bad in law even if one was to apply the Explanations to the Notification Nos. 20 and 38. The Explanations seek to extend the applicability of erstwhile Sections 148, 149 and 151. They do not cover Section 147, which empowers revenue to reopen subject to Section 148 to 153, which includes Section 148A. Thus, even if Explanation are valid, procedure of Section 148A is not followed and hence, notices are invalid. (c) In a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indicate the notices that could be issued for eternity like in this case, on 31st July 2022, would be sanctioned by the authority other than sanctioning authority defined under the Act. 32. We have to also note that the instructions dated 11th May 2022, on which respondents have relied upon, has no applicability to the facts of this case. These instructions expressly provides that it applies only to the issue of reassessment notice issued by the Assessing Officer during the period beginning 1st April 2020 and ending with 30th June 2021 within the time extended under TOLA and various notifications issued thereunder. Since the impugned notice in this case is dated 31st July 2022, certainly the instructions no. 1 of 2022 dated 11th May 2022 shall have no applicability at all. Even for a moment, if we accept Mr. Suresh Kumar s arguments that Apex Court s findings in Ashish Agarwal (Supra) read with time extension provided by TOLA will allow extended reassessment notices to travel back to their original date when such notices were issued and then new Section 149 of the Act is to be applied at that time, the extended reassessment notices are defined under the instructions to be notic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 31/- on account of Software consumables. As the said expenses is a capital expenditure. This attract depreciation at the rate of 60%. Remaining 40% of software consumable, which comes at Rs. 2,56,75,172/- should have been disallowed and added back to the business income of the assessee. This has resulted in underassessment of income of Rs. 2,56,75,172/-. 4. Enquiry made by the AO: The assessment records of assessee foryear under consideration has been analysed and as per the information gathered from case record the assessee company has debited an amount of Rs. 35,90,19,339/- as other expenses. On perusal of details of other expenses, it is noticed that the assessee has claimed the software consumable of Rs. 6,41,87,931/-on account of Software consumable. Expenses on acquiring software consumable is a capital expenditure. Section 37(1) provide for deduction for any expenditure (not being expenditure of the nature described in sections 30 to 36 and not being in the nature of capital expenditure or personal expenses of the assessee), laid out or expended wholly and exclusively for the purposes of the business or profession under the head Profit and gain of business or professio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is an in-built test to check abuse of power by the Assessing Officer. As held in Dr. Mathew Cherian (Supra), whether under old or new regime of reassessment, it is settled position that the issues decided categorically should not be revisited in the guise of reassessment. That would include issues where query have been raised during the assessment and query have been answered and accepted by the Assessing Officer while passing the assessment order. As held in Aroni Commercials (supra) even if assessment order has not specifically dealt with that issue, once the query is raised it is deemed to have been considered and the explanation accepted by the Assessing officer. It is not necessary that an assessment order should contain reference and/or discussion to disclose his satisfaction in respect of the query raised. The Division Bench of this court in Aroni Commercials Ltd. (supra) held it is not necessary that the assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Paragraph 14 of Aroni Commercials Ltd. (supra) read as under: 14. We are of the view that once a query is raised during the assessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore the Assessing Officer during the course of assessment proceedings vide a letter dated 6th December 2018. It is settled law that proceedings under section 148 cannot be initiated to review the earlier stand adopted by the Assessing Officer. The Assessing Officer cannot initiate reassessment proceedings to have a relook at the documents that were filed and considered by him in the original assessment proceedings as the power to reassess cannot be exercised to review an assessment. In petitioner s case the Assessing Officer having allowed the amount of software consumables as a revenue expenditure now seeks to treat the same as capital expenditure which is a clear change of opinion. Various judicial precedents have held that reassessment proceedings initiated on the basis of a mere change of opinion are invalid and without jurisdiction. 38. The Apex Court in Kelvinator of India Ltd.(Supra) emphasised on the difference between a power to review and the power to reassess. The Apex Court held that the Assessing Officer has no power to review but has only the power to reassess. The concept of change of opinion must be treated as an in-built test to check abuse of power by the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... place in taxation. Nor while interpreting taxing statute intendment would have any place. (b) There is nothing unjust in the tax payer escaping if the letter of the law fails to catch him on account of the legislature s failure to express itself clearly. (c) It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. (d) In the matter of interpretation of charging section of a taxation statute, strict Rule of interpretation is mandatory and if there are two views possible in the matter of interpretation of a charging section, the one favourable to the assessee need to be applied. Paragraph 31(i) of Sudesh Taneja (supra) reads as under: 31. We may now attempt to answer these questions ourselves with the aid of statutory provisions and law laid down in various decisions cited before us we may summarise certain principles applicable in the field of taxation and which principles would be invoked in the course of the judgment:- (i) A taxing statute must be interpreted strictly. Equity has no place in taxation nor while interpreting taxing statute intendme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In construing penal statutes and taxation statutes, the Court has to apply strict Rule of interpretation. The penal statute which tends to deprive a person of right to life and liberty has to be given strict interpretation or else many innocent might become victims of discretionary decision making. Insofar as taxation statutes are concerned, Article 265 of the Constitution prohibits the State from extracting tax from the citizens without authority of law. It is axiomatic that taxation statute has to be interpreted strictly because the State cannot at their whims and fancies burden the citizens without authority of law. In other words, when the competent Legislature mandates taxing certain persons/certain objects in certain circumstances, it cannot be expanded/interpreted to include those, which were not intended by the legislature. 41. In the circumstances, we make the Rule absolute and allow the petition for the following reasons: (a) that approval for issuance of notice under Section 148A(d) of the Act has not been properly obtained and hence the order passed thereunder and consequent notice issued under Section 148 of the Act have to be quashed and set aside. The sancti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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