Asm Industries Pvt. Ltd v. The Assistant Commissioner Of Income Tax-9(1)(2)And Ors

rsk 1 918-WP-3460-19.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3460 OF 2019 ASM Industries Pvt. Ltd. ...Petitioner Vs. The Assistant Commissioner of Income Tax-9(1)(2)and Ors. ...Respondents ------- Mr. Mandar M. Vaidya for Petitioner.Mr. Suresh Kumar for Respondents. ------- CORAM :K. R. SHRIRAM &AMIT B. BORKAR, JJ. DATED : 23 DECEMBER 2021. P. C.: Petition is impugning notice issued under Section 148 of the Income Tax Act, 1961 (said Act) for Assessment Year 2012-2013. It isalleged in the reasons that on perusal of profit and loss account it is noticedthat the assessee has paid overseas commission of Rs.44,28,158/- to nonresident agents against exports sales. But since assessee has not deductedTDS under Section 195 on the said commission, the amount ofRs.44,28,158/- cannot be claimed as deduction and hence should be rsk disallowed. 2.In this case assessment under Section 143(3) of the said Actwas completed on 9/3/2015 and since reopening is proposed beyond 4years of the relevant Assessment Year, the onus is on respondent to showthat the assessee had failed to disclose truly and fully material factsnecessary for assessment. Having considered reasons recorded forreopening, we are of the view that respondents have failed to even showthat there was failure on the part of assessee to truly and fully disclosematerial facts. It is quite clear that the reasons for reopening is nothing butchange of opinion which is not permissible in law. The reasons itself showthat on perusal of profit and loss account it is noticed that the assessee hadclaimed overseas commission of Rs.44,28,158/- to non resident agentsagainst exports sales. The Assessing Officer has considered the profit andloss account and in his notice dated 12/8/2014 issued under Section 142(1) of the Act has raised following query: "11. As per your profit and loss account, it is seen that you havedebited commission at Rs.1,07,21,555/-. In this regard, kindlyfurnish the following details as below:-debited commission at Rs.1,07,21,555/-. In this regard, kindlyfurnish the following details as below:- a) Furnish name, address and amount to whomcommission is paid.commission is paid. b) Kindly explain whether the transaction was forpurchase or sale for which commission was paid.c) In case of purchase or sale, furnish name and addressof the party who has enter into transaction of purchasepurchase or sale for which commission was paid.c) In case of purchase or sale, furnish name and addressof the party who has enter into transaction of purchase rsk 3 918-WP-3460-19.doc and sale and also furnish the name of the broker/agentwho has introduced the said party of purchase or salefor which commission is paid. d) What was the total amount of transaction ofpurchase/sale for which commission was paid ?e) What was the percentage of the commissioncharged ?" 3.Petitioner vide letter dated 2/9/2014 has replied and alsoprovided details and explanation why Section 195 was not applicable.Thereafter the assessment order has been passed on 9/3/2015 under Section143(3) of the said Act. 4.Mr. Suresh Kumar submitted that the assessment order is silenton query raised and therefore, the Assessing Officer has not considered thesame or applied his mind to that issue. 5.As held in Aroni Commercials Ltd. vs. Deputy Commissioner of Income-Tax-2(1)[1]once query is raised during assessment proceedingsand assessee had replied to it, it follows that query raised was subject ofconsideration of the Assessing Officer while completing the assessment. Itis not necessary that the assessment order should contain reference and/ordiscussion to disclose its satisfaction in respect of query raised. There canbe no doubt in the present facts that the very issue of payment of 4.Mr. Suresh Kumar submitted that the assessment order is silenton query raised and therefore, the Assessing Officer has not considered thesame or applied his mind to that issue. 5.As held in Aroni Commercials Ltd. vs. Deputy Commissioner of Income-Tax-2(1)[1]once query is raised during assessment proceedingsand assessee had replied to it, it follows that query raised was subject ofconsideration of the Assessing Officer while completing the assessment. Itis not necessary that the assessment order should contain reference and/ordiscussion to disclose its satisfaction in respect of query raised. There canbe no doubt in the present facts that the very issue of payment of Digitallysigned byRAJESHWARIRAJESHWARISUBODHSUBODHKARVEKARVEDate:2022.01.0311:15:26+0530 rsk 4 918-WP-3460-19.doc commission overseas to non resident agents against exports sales was thesubject matter of consideration by the Assessing Officer during originalassessment proceedings leading to assessment order dated 9/3/2015. It wastherefore followed that reopening of the assessment by the impugned noticedated 30/3/2019 is merely on the basis of change of opinion of theAssessing Officer from that held earlier during the course of assessmentproceedings. This change of opinion does not construe justification and/orreasons to believe that income chargeable to tax has escaped assessment. 6.Therefore notice dated 30/3/2019 and order dated4/11/2019 rejecting the objections to reopening are hereby quashedand set aside. Petition disposed accordingly. (AMIT B. BORKAR, J.) ( K. R. SHRIRAM, J.)