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TMI Blog2023 (12) TMI 770X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 148 of the Income Tax Act, 1961. 3. The petitioner had failed to secure an interim order from this Court after the above Writ Petition was listed for admission. By an order dated 22.03.2022, this Court had directed the respondents to proceed with the assessment. Meanwhile, the Writ Petition was directed to be listed along with WP.No.3166 of 2021. 4. Since the respondents were directed to proceed further with the assessment, the impugned revised assessment order dated 30.03.2022 came to be passed by the 1st respondent. This has been challenged by the petitioner in WP.No.27432 of 2022. 5. In WP.No.27428 of 2022, the petitioner has challenged the impugned notice dated 30.03.2022 issued under Section 274 read with Section 271(1)(c) of the Income Tax Act, 1961 (hereinafter referred to as "the Act") seeking to impose penalty on the petitioner. 6. The case was heard at length and the submissions advanced on behalf of the petitioner and on behalf of the respondents were made by the respective counsels for the petitioner and the respondents. 7. It was agreed by the counsels that the fate of the WP.Nos.27432 & 27428 of 2022 will hinge on the decision to be taken by this Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt were also furnished to the Income Tax Department along with their covering letter dated 14.10.2015. 13. It is submitted that the statement of computation of taxable income was filed as Annexure - 3. The copy of the audited Profit and Loss Account, Balance Sheet and the Auditor's report for the Financial Year (FY - 2013-2014) was also filed as Annexure-4. 14. It is submitted that the petitioner was also called for a hearing on 22.09.2016. Thereafter, a draft assessment order was passed by the Deputy Commissioner of Income Tax, which was disputed by the petitioner before the Dispute Resolution Panel, pursuant to which the assessment was completed on 28.09.2018 and Assessment Order came to be passed on 28.09.2018 under Section 143(3) read with section 92CA(3) and Section 144C(8) of the Act. 15. It is further submitted that the invocation of power under Section 148 of the Act on 25.03.2021 was without merits as the reason that was given for re-opening of the assessment in the notice issued under Section 143(2) read with Section 147 of the Act on 05.05.2021, clearly states that the reason for re-opening the assessment was "on perusal of the profit and loss account, wherein it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mmissioner of Income-tax, [2015] 370 ITR 107 (Gujarat); (xii) Asian Paints Ltd., Vs. Deputy Commissioner of Income-tax, [2008] 296 ITR 90 (Bombay) and (xiii) Aroni Commercials Ltd., Vs. Deputy Commissioner of Income-tax-2, [2014] 362 ITR 403 (Bombay). 19. Even otherwise on merits, it is the submission of the petitioner that the petitioner was following a mercantile system of accounting and the assets / liabilities on revenue account denominated in foreign currency and outstanding at the year end were revalued taking into account the rate of exchange prevailing on closing date. 20. Any increase / decrease in the asset / liability was thus revalued and was accounted as loss / gain. The loss arising on account of fluctuation in foreign currency with respect to outstanding liabilities on revenue account, was allowable as a revenue expenditure under Section 37 of the Act, notwithstanding that liability is to be discharged at a later date. 21. It is submitted that the issue is covered by the decision of the Hon'ble Supreme Court in CIT Vs. Woodward Governor (P.) Ltd,. [2009] 312 ITR 254 (SC), wherein it was held that for a taxpayer following mercantile method of accounting, ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p; B C 2 Other income i ii iii iv v vi vii Viii Profit on account of currency fluctuation 28. Thus, it cannot be said that the Return that was uploaded by the petitioner on 28.11.2014 contained all the information that was required for the Assessing Authority to pass an appropriate Assessment Order. However, the petitioner has subsequently furnished all the information in the form of a hard copy together with computation of taxable income consisting of the copy of the Audited Profit and Loss Account, Balance Sheet together with Auditor's Report for Financial Year (FY) 2013-2014 as Annexure 4 to letter dated 14.10.2015. 29. Although a copy of the Statement of Computation of Income has not been filed before this Court to ascertain whether the aforesaid amount of Rs. 3,80,17,011/- was income from net foreign exchange after deduction of Rs. 1,43,82,361/- as loss incurred from the foreign exchange from the total foreign exchange earned for a sum of Rs. 5,23,99,372/-, it is evident the petitioner has given all the deta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bsp; Depreciation and amortisation 211,567,765 162,356,032 Employee stock compensation expenses 2,535,223 864,326 Unrealised foreign exchanges loss, net 14,382,361 1,457,999 Interest income on deposits (1,268,326) (7,890) Dividend income received (313,867,651) (272,266,934) Operating profit before working capital changes 1,003,137,613 768,408,737 33. Thus, there is disclosure in the Statement, Profit and Loss Account for the year ended 31.03.2014. The report of the Independent Auditor under Section 227(3) of the Companies Act, 1956, states that the petitioner company does not have any accumulated losses at the end of the financial year and also has not incurred any cash losses in the financial year and in the immediately preceding financial year. 34. Thus, it is evident that there is a disclosure in the Audited balance sheet that was filed after it was called for under a notice issued under Section 143(2) of the Act, vide reply dated 14.10.2015. A Cash flow from Year ended Year ended operating activities March 31,2014 March 31, 2013 Profit before taxation 1,089,788,241 876, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -whether of facts or law-he would draw from the primary facts. It may be pointed out that the Explanation to the sub- section has nothing to do with " inferences " and deals only with the question whether primary material facts not disclosed could still be said to be constructively disclosed on the ground that with due diligence the Income-tax Officer could have discovered them from the facts actually disclosed. The Explanation has not the effect of enlarging the section, by casting a duty on the assessee to disclose " inferences" - to draw the proper inferences being the duty imposed on the Income-fax Officer." 38. The reasons given for re-opening of the Assessment along with a notice issued under Section 143(2) read with Section 147 of the Income Tax Act, 1961 on 05.05.2021 is also based on the Profit and Loss Account. 39. Thus, there is no scope for re-opening of the assessment which was completed on 28.09.2018 under Section 143(3) read with section 92CA(3) and Section 144C(8) of the Act. Clearly, the reasons given for re-opening of the assessment is inspired from change of opinion. 40. Therefore, the impugned order dated 01.03.2022 disposing of the petitioner's objecti ..... X X X X Extracts X X X X X X X X Extracts X X X X
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