Https://Hcservices.ecourts.gov.in/Hcservices v. Ito, 259 Itr19 (Sc

CORAM B.Sharada Reddy ... Petitioner Income Tax Officer,Non Corporate Ward 20(5),Room No.315, Wanaparthy Block,III Floor, 121 MG Road,Nungambakkam, Chennai – 600 034.... Respondent Prayer: Petition filed under Article 226 of the Constitution ofIndia to issue a Writ of Certiorarified Mandamus, calling forthe records of the Respondent contained in its Proceedings dated25.11.2016 in PAN No. dismissing the Petitioner'sobjections to the reopening of income tax assessment for theassessment year 2009-10, and to quash the same as arbitrary,unjust and illegal, and to consequently forbear the Respondentfrom re-assessing the Petitioner's income for the assessmentyear 2009-10 pursuant to the notice issued under Section 148 ofthe Income Tax Act, 1961 dated 30.03.2016. The petitioner has challenged the impugned communicationdated 25.11.2016 overruling the objections of the petitioneragainst the reopening of the income tax assessment for theAssessment Year 2009-2010. https://hcservices.ecourts.gov.in/hcservices/ 2. The petitioner was issued with a notice dated 30.03.2016under Section 148 of the Income Tax Act, 1961 for the purpose ofproviso to Section 147 of the Income Tax Act, 1961 for theAssessment Year 2009-2010. The petitioner called for the reasonsfor reopening the assessment as per the decision of the Hon'bleSupreme Court in G.K.N.Driveshafts (India) Ltd. v. ITO, 259 ITR19 (SC). 3.Byacommunicationdated27.05.2016,therespondent/Income Tax Officer has furnished the following reasonsfor reopening of the income tax assessment:- “The assessee has purchased movie rights forRs.15,68,00,000/- (Theatre & Negative Rights), whichis a capital expenditure and depreciation to beclaimed. The assessee has purchased movie rights(Theatrical & negative rights) for Rs.15,68,00,000/-and sold only satellite rights. So purchase of movieright is different issue and needs to be capitalisedand 25% of depreciation only can be claimed. The assessee is selling only satellite rightsretaining theatre rights. The purchase of movierights for Rs.15,68,00,000/- is a capital expenditureand is to be shown in Balance Sheet as Assets forwhich only depreciation @ 25% can be claimed.Whereas, the assessee has claimed the entire amountof Rs.15,68,00,000/- as expenses and debited in theprofit & loss a/c. The closing stock ofRs.1,02,26,000/- shown after selling of all moviesand satellite rights. Since the income chargeable totax has escaped assessment for such assessment yearand the same is to be investigated and brought totax.” 4. The petitioner replied to the said notice by a replydated 12.07.2016, wherein, it has been stated that the noticeunder Section 148 of the Income Tax Act, 1961 has been issuedbeyond a normal period of limitation of four years and thereforeit was imperative on the part of the respondent to state howthere was a reason to believe that there was a failure of trueand full disclosure of materials that were required forassessment under Section 139 of the Income Tax Act, 1961. Itwas further submitted that reopening of the assessment was notbased on any new facts, but rather is based on a supposed changeof opinion of facts previously submitted by the petitioner tothe respondent/predecessor and therefore merely because there isa change of opinion under Sections 147 & 148 of the Income Tax Act, 1961 cannot be exercised by the officer to succeed theofficer who passed the original order of assessment. It isfurther submitted that the impugned communication dated25.11.2016 merely reiterates the reasons given by the impugnedcommunication dated 23.05.2016 and is therefore liable to bequashed. 5. The learned counsel the petitioner referred to thefollowing decisions:- Act, 1961 cannot be exercised by the officer to succeed theofficer who passed the original order of assessment. It isfurther submitted that the impugned communication dated25.11.2016 merely reiterates the reasons given by the impugnedcommunication dated 23.05.2016 and is therefore liable to bequashed. 5. The learned counsel the petitioner referred to thefollowing decisions:- 1. Narayanappa Vs CIT, 63 ITR 219 (SC)2. Modi Vs ITO, 75 ITR 3673. CIT Vs Hemachandra, 77 ITR 14. Gangasaran Vs ITO, 130 ITR 15. CIT Vs Kelvinator, 256 ITR 16. IPCA Laboratories Vs Gajanand, 251 ITR 4167. Foramer Vs CIT, 247 ITR 4368. Garden Silk VS DCIT, 237 ITR 6689. CIT Vs Eicher Ltd., 294 ITR 31010. CIT Vs Shree Rajasthan Syntex Ltd., 3113 ITR 23111. Hynoup Food and Oil Industries Ltd., Vs ACIT, 307 ITR 11512. Techspan India P. Ltd., Vs ITO, 283 ITR 21213. Calcutta Discount Co. Ltd., Vs ITO, 41 ITR 19114. G.K.N.Driveshafts (India) Ltd. v. ITO, 259 ITR 1915. Garden Finance Ltd., Vs Assistant Commissioner of Income Tax, 268 ITR 48. 6. On the other hand, defending the impugned order, thelearned senior standing counsel for the Revenue/Income TaxDepartment submits that the petitioner has not truly and fullydisclose all materials that were required for assessment by theAssessing Officer. She submits that as against Col.No.8(a) ofForm-3CD, the petitioner's auditor has stated “not applicable”.It is submitted that Col.No.8(a) of Form-3CD deals with “natureof business”. Similarly, it is submitted that as against theCol.No.28(a) Form-3CD, the petitioner has not furnished thequantitative details of trading time also and therefore there ispurely failure on the part of the petitioner in not truly andfully disclosing all material facts, the information requiredfor passing the assessment order. 7. The learned senior standing counsel for the respondentdraws my attention to the decision of the Hon'ble Supreme Courtin Raymond Woollen Mills Ltd., Vs Income-tax Officer, [1999] 236ITR 34 (SC). https://hcservices.ecourts.gov.in/hcservices/ 8. Heard the learned counsel for the petitioner and thelearned senior standing counsel for the respondent. 9. I have also perused the documents filed by the petitionerand the reasonings given by the respondent. The assessment wascompleted for the Assessment Year 2009-2010 on 19.12.2011. Itpreceded a notice from the respondent/ predecessor. Thepetitioner was represented by her Chartered Accountant. By acommunication dated 24.11.2011, the Chartered Accountant hasgiven the details of income offered by the petitioner from thesale of film rights. The letter also encloses a ledger extractof income offered and requested the respondent to let theChartered Accountant to know as to which of the transactions andwhich of the agreements were required. The subsequentcommunication also indicates that the petitioner had sold rightsin various films in favour of 15 different buyers for acumulative value of Rs.1,15,18,360/-. By another communicationdated 17.12.2011, which is 2 days preceding to the originalorder of assessment, the Chartered Accountant of the petitionerhas given a break up of the amounts received from variouspersons to whom rights were sold. 10. The Assessment Order that has been passed based on theabove communication is bereft of the details. It reads asunder:- 10. The Assessment Order that has been passed based on theabove communication is bereft of the details. It reads asunder:- “The assessee filed the return of income for theAssessment Year 2009-2010 on 29.09.2009 admitting atotal income of Rs.60,12,850/-. The return wasprocessed u/s 143(1) of the Income-tax Act, 1961(hereinafter referred to as the Act). Subsequently,the case was selected for scrutiny through CASS andnotice issued u/s.143(2) of the Act dated 23.08.2010was issued and duly served on the assessee, postingthe case for hearing on 15.09.2010. Notice u/s 142(1) of the Act dated 11.07.2011 along withquestionnaire was issued posting the case for thehearing on 04.08.2011. In response to the abovenotices, Shri R.Mohan, CA appeared from time to timeand filed the details called for. 2. After discussion with the authorizedrepresentative and after perusal of the documentsfiled by the assessee the assessment is completedaccepting the income returned. 3.Totalincomereturnedandaccepted Rs.60,12,850/- ------------------- Tax thereonRs.28,660/-This should be paid as per demand noticeenclosed.” 11. Therefore, the question that arises for consideration inthis writ petition is whether there was true and full disclosureby the petitioner at the time of assessment or whether thepetitioner is entitled to state that the impugned proceedingswere on account of change of opinion. 12. I have perused the records. I have also considered thesubmissions of the learned counsel for the petitioner andlearned senior standing counsel for the respondent. Before theassessment was completed, the petitioner’s auditor vide letterdated 24.11.2011 has clearly stated that the petitioner wastrader of rights in films and that the petitioner has notclaimed any appreciation and consequently there is no schedulefor the same. 13. In the said communication, the auditor has also calledupon the respondent to inform as to which of the transactionsand which of the agreements were required. It is thereafter theassessment was completed under section 143 (3) on 19.12.2011. 14. Before the assessment order was passed, a personalhearing was also held on 04.08.2011. Though the assessment orderhas been passed by the predecessor of the respondent, it doesnot reveal any proper reasonings. Nevertheless, it cannot besaid that the petitioner was guilty of failure to disclose trulyand fully all material facts necessary for completing assessmentfor the assessment year 2009-2010. 15. Therefore, the impugned exercise of the respondentinvoking section 148 of the Income Tax Act, 1961 for the purposeof first proviso to section 147 of the Income Tax Act, 1961 hasto be held on account of change of opinion by the respondent. 16. Under these circumstances, I am of the view the impugnedcommunication overruling the objection of the petitioner against https://hcservices.ecourts.gov.in/hcservices/ reopening of the assessment is liable to be quashed.Accordingly, it is quashed. This Writ petition stands allowed.No costs. Consequently, connected Writ Miscellaneous Petitionis closed. Sd/- Assistant Registrar(CCC) //True Copy// arb Sub Assistant Registrar To: The Income Tax Officer,Non Corporate Ward 20(5),Room No.315, Wanaparthy Block,III Floor, 121 MG Road,Nungambakkam, Chennai – 600 034. +1cc to Mrs.Hema Muralikrishnan, Advocate, S.R.No.27316 W.P.No.43525 of 2016 JP-II(CO)CS/12/08/2021