TMI Blog2023 (10) TMI 304X X X X Extracts X X X X X X X X Extracts X X X X ..... ng beyond the period of four years is bad in law. - Therefore what is evident is that the notice dated 6.3.2020 and the order disposing off objections dated 31.08.2021 are bad in law and deserve to be quashed and set aside. - HONOURABLE MR. JUSTICE BIREN VAISHNAV And HONOURABLE MR. JUSTICE BHARGAV D. KARIA MS NUPUR D SHAH(10233) FOR THE PETITIONER (S) MR. KARAN SANGHANI, STANDING COUNSEL FOR MRS KALPANA K RAVAL(1046) FOR THE RESPONDENT(S) NO. 1 JUDGMENT ( PER : HONOURABLE MR. JUSTICE BIREN VAISHNAV ) 1 Rule returnable forthwith. Mr.Karan Sanghani, learned Standing Counsel, waives service of rule on behalf of the respondent. With consent of the learned advocates appearing for the respective parties, the matter is taken up for final hearing today. 2 By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice dated 06.03.2020 under Sec.148 of the Income Tax Act, 1961, ( the Act for short) along with the orders dated 31.08.2021 disposing off the objections and also set aside the impugned Assessment Order dated 19.09.2021 and the subsequent Demand Notice u/s 156 of Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... requisite time frame vide letter dated 16.07.2020. 3.8 The respondent did not dispose off the objections dated 16.07.2020 and rather proceeded to issue notice dated 05.02.2021 u/s. 142(1) of the Act. 3.9 The petitioner challenged the issuance of the notice u/s. 142(1) of the Act without the issuance of the speaking order disposing off the objections against reasons recorded dated 16.07.2021 by the respondent vide letter dated 12.02.2021 and duly complied with the factual details sought in said notice without prejudice to the legal contentions highlighting the blatant irregularities in the present case at hand. 3.10 The petitioner, thereafter filed objections on July 16, 2020, against the reopening of the assessment contending inter alia that the petitioner submitted all the factual information at the time of original assessment proceedings by filing exhaustive submissions before the Assessing Officer and he has formed his opinion on the basis of the facts so provided. It was also contended that the specific issue was raised in the Order Sheet Entry 23.07.2015 and the assessee submitted the reply on 03.11.2015, which was again annexed with the objections filed by the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a notice u/s. 142(1) was issued on 05.02.2021. The objections were disposed off on 31.08.2021 after a delay of over a year. There was a violation of the guidelines laid down in the decision in the case of GKN Driveshafts (India) Ltd vs. ITO, reported in (2003) 259 ITR 19 (SC). (3) That there was no tangible material for reopening the issue. Reading the reasons, she would submit that the case was reopened on the basis of the assessment record . The recording of reasons was on the basis of details already supplied. She would rely on a decision in the case of C.I.T Delhi vs. M/s. Kelvinator of India Ltd., reported in 320 ITR 561 (SC). (4) That the reopening of the assessment proceedings sought is for A.Y. 2013-14, was beyond a period of four years. It was evident that unless it is found that there was no fully and truly disclosure of material facts on the part of the petitioner, it would not be open to reopen the assessment proceedings. What is evident here is that there was a full and true disclosure as the reopening was not based on any fresh tangible material. (5) The order of assessment dated 19.09.2021 was passed in violation of principles of natural justice. (5) M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on-residents. The assessee was given time till 17.09.2021 to furnish any objection to the proposed addition. However, no objection was filed within the given time. Finally, the assessment was completed on 19.09.2021 with the addition as per show cause notice. 5.4 It is further submitted by Mr.Sanghani, learned counsel, that from the reasons recorded by the Assessing Officer, it is clear that assessee has not made requisite full and true disclosure of all material facts necessary for assessment. As per reasons recorded by Assessing Officer, it is clear that the requisite material facts as noted above in the reasons for reopening were embedded in such a manner that material evidence could not be discovered by the Assessing Officer and could have been discovered with due diligence, accordingly attracting provisions of Explanation 1 of section 147 of the Act. 5.5 Mr.Sanghani, learned counsel, would further submit that the expenses of Rs.63,74,736/- was not allowable for the reason of non-deduction of TDS on legal and professional fee paid to nonresidents. However, the same was neither disallowed by the assessee suo-moto in the return, nor the same was offered for disallowance dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ided to the reply dated 3.11.2015 containing a breakup of all foreign remittances made during the year along with the details of the TDS deducted or if not deducted the reasons for not doing so. 4) After considering the submissions and on the basis of the verification of records the Assessing Officer passed the assessment order under Section 143(3) of the Act. The notice under Section 148 of the Act and the reasons for reopening the case on the assumption or reason to believe that the income of Rs.63,74,736/ has escaped assessment and same be disallowed is based on the very same records which were placed at the time of the original assessment. The details regarding the issue under consideration was already examined by the then Assessing Officer for which a specific query was raised and therefore it was not open for the Assessing Officer to reopen the same or revisit his opinion because of a change of opinion . 7. The Supreme Court in the case of Principal Commissioner of Income Tax vs Fibres and Fabrics International (P) Ltd reported in 139 taxmann.com 592 has held as under: 2. Facts leading to filing of this appeal briefly stated are that assessee is a company whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were huge in the opinion of the Assessing Officer cannot be a ground for reopening the assessment and necessity of incurring expenditure cannot be gone into by the Assessing Officer. 11. It is pertinent to mention that no material was gathered in the survey proceeding to suggest that expenditure incurred towards sales commission is not an allowable expenditure and disallowance made in respect of the expenditure for the subsequent Assessment Year 2006-07 cannot be a ground for reopening the assessment. The tribunal has therefore, rightly recorded the findings of fact that there is no tangible material on the basis of which assessment for Assessment Year 2005-06 was reopened and the assessment of the subsequent Assessment Year is based on the inferences drawn from certain facts which cannot be construed as tangible material. The reasons mentioned in the notice for reassessment are based on mere change of opinion and therefore, the reopening of the assessment proceeding is not permissible in the facts and circumstances of the case. The aforesaid finding cannot be said to be perverse. For the aforementioned reasons, the substantial questions of law involved in this appeal are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has observed in clear terms that full separate accounts of both the divisions were maintained and also presented before the Assessing Officer during the course of assessment. This Court recorded a clear finding that there was no failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. In such circumstances, the Coordinate Bench, ultimately, held that the notice for reopening which was issued beyond a period four years should fail. 11. The writ applicant pointed out while raising his objections that there was no failure on his part to disclose truly and fully any material fact. He pointed out that his assessments were being examined by the Assessing Officer for the original assessment. The reopening on the basis of re-analysis of the existing material was nothing, but a change of opinion and the same is not permissible. He pointed out that no specific information has been received by the Assessing Officer to firmly believe that the income chargeable is escaped the assessment and as noted above, at the cost of repetition, he pointed out that reassessment was sought for in the assessee's own case for A.Y. 2008-09 which cam ..... X X X X Extracts X X X X X X X X Extracts X X X X
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