Cooper Corporation Pvt. Ltd. Satara v. Deputy Commissioner Of Income Tax, Satara Circle & Ors

VBC 1 wp10840.11-22.12 IN THE HIGH COURT OF JUDICATURE AT BOMBAYAPPELLATE SIDE WRIT PETITION NO.10840 OF 2011 Cooper Corporation Pvt. Ltd. Satara.versus Deputy Commissioner of Income Tax, Satara Circle & Ors. ..... Mr.Mihir C.Naniwadekar for the Petitioner.Mr.Tejveer Singh for the Respondents. ..... ..Petitioner. ..Respondents. CORAM : DR.D.Y.CHANDRACHUD &A. A. SAYED, JJ. P.C. : December 22, 2011. The Petitioner seeks to question the reopening of an assessment for Assessment Year 2004-05. By a notice dated 30 March 2011, the Assessing Officer stated that there was reason to believe that income chargeable to tax for the Assessment Year has escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. 2.The reopening of the assessment is sought to be effected on two grounds. The first ground pertains to commission paid to various parties. The second relates to the payment covered under VBC 2 wp10840.11-22.12 Section 40A(2)(b) to various persons. 3.In so far as the first ground is concerned, Counsel appearing on behalf of the Revenue states that the first ground for reopening is not pressed. Hence, the validity of the order of reopening would have to be tested on the anvil of the second reason mentioned by the Assessing Officer. 4.The second ground for reopening is that the assessee has made payment to persons covered by Section 40A(2)(b), namely (i) Cooper Metals Private Ltd. and (ii) Z.S. Engineers. On verification, according to the Assessing Officer, both these concerns were running into losses for several years. All the orders of Z.S. Engineers were furnished only by the assessee. When the statement of the representative was recorded on 11 March 2011 during the course of the survey action, he stated that the entity was running into losses due to recession. According to the Assessing Officer, this reason is vague and baseless since the sole customer of Z.S. Engineers is the assessee. The business and turn over of the assessee has increased substantially every year, and consistently VBC 3 wp10840.11-22.12 over several years. The Assessing Officer, has stated that there is a diversion of the funds by the assessee to Z.S. Engineers with a view to evade the liability to pay tax. 5.The reopening of the assessment in the present case is undoubtedly beyond a period of four years. However, Counsel appearing on behalf of the Petitioner concedes that in the original order of assessment under Section 143(3), the Assessing Officer had not verified the genuineness of the expenditure pertaining to Section 40A. Moreover, a statement of the Director of the assessee was recorded in the survey action under Section 133A of the Income Tax Act, 1961 on 11 March 2011. In paragraph 3 of the reasons disclosed to the assessee, the Assessing Officer specifically adverted to Query No.15 and the answer of the Director, who is also stated to be the sole proprietor of M/s.Z.S.Engineers. Fresh material, therefore, emerged on the basis of which the Assessing Officer has sought to reopen the assessment. That apart, it is evident that during the course of the original assessment proceedings, the assessee had not placed all the true and material facts necessary for the assessment for that assessment year. The VBC 4 wp10840.11-22.12 jurisdictional condition for the reopening of the assessment has, therefore, been duly fulfilled. No case for interference is made out. The Petition is dismissed. ( Dr.D.Y.Chandrachud, J.) ( A. A. Sayed, J.)