Ifs Solutions India Private Limited v. Assistant Commissioner Ofincome Tax, Circle 12(1

$~10 *IN THE HIGH COURT OF DELHI AT NEW DELHI +W.P. (C) No. 11262/2016 IFS SOLUTIONS INDIA PRIVATE LIMITED..... PetitionerThrough :Mr. Gagan Kumar, Mr.Amit Kaushik,Advocates. versus ASSISTANT COMMISSIONER OFINCOME TAX, CIRCLE 12(1) ..... RespondentThrough :Mr. Asheesh Jain, Senior StandingCounsel for Income Tax DepartmentwithMr.VikrantA.Maheshwari,Advocate. CORAM:JUSTICE S. MURALIDHARJUSTICE PRATHIBA M. SINGH O R D E R%11.09.2017 1.Thisisawritpetitionseekingquashingofthenoticedated30[th]March 2016 issued to the Petitioner under Section 148 of the IncomeTax Act, 1961 (‘Act’) by the Deputy Commissioner of Income Tax, Circle12 (1), New Delhi (hereafter Assessing Officer -‘AO’) for the AssessmentYear (‘AY’) 2009-10. 2. The facts, which are not in dispute, are that the original assessment wascompleted after scrutiny of the return under Section 143 (3) of the Act on23[rd]December, 2011. Further, the reopening of the assessment is sought tobe made after the expiry of four years from the end of the relevant AY. W.P.(C) 11262/2016Page 1 of 4 Consequently, the first proviso to Section 147 of the Act applied. In otherwords, in order to justify the reopening of the assessment, the AO had toshow that there was a failure on the part of the Assessee ‘to disclose fullyand truly all material facts necessary for the assessment, for that assessmentyear’. 3. The reasons recorded by the AO for reopening of the assessment havebeen perused. The AO has noted therein that on examining the records itwas found that the Assessee had debited an amount of Rs. 1,08,67,187/- inits P&L account towards interest as against Rs. 11,582/- claimed in theimmediately preceding AY i.e. AY 2008-09. The AO noted that neither hadthe Assessee furnished any details nor had the AO any occasion to verify thesaid amount of interest debited in the P&L account. The AO further notedthat information had been received from the Investigation Wing of theIncome Tax Department, New Delhi on the basis of a Tax Evasion Petition(‘TEP’) received against the Assessee. The report of the Investigation Wingstated that a huge amount of interest was paid to various foreign companiesin the FY 2008-09. The AO extracted a portion of the report of theInvestigation Wing which doubted the genuineness of the interest paymentsmade by the Assessee. The exact words in the report reads, “Hence, theclaim of interest expense of Rs. 1,08,67,187/- in the FY 2008-09 appears to”be suspicious and correlates with the facts of the complaint. 4. The Court is unable to find any reference in the reasons to any tangiblematerial which, was failed to be disclosed by the Assessee, and which couldform the basis of the AO’s ‘reasons to believe’ that income had escaped W.P.(C) 11262/2016 assessment. There is no mention of which material facts were failed to bedisclosed by the Assessee. 5. Although there is an assertion in the reasons that the Assessee had notfurnished the relevant details regarding the payment of interest, the Courtfinds that the said assertion is factually incorrect. In the course of theoriginal assessment proceedings, a questionnaire was issued by the AO tothe Assessee, in which a specific question was raised as regards the paymentof interest. In reply thereto, the Assessee, by a letter dated 12[th]October 2011, addressed to the AO furnished details of the creditors andtheir addresses. 6. Mr. Asheesh Jain, learned Senior Standing Counsel for the Revenue,submitted that the break-up of the payments made to the creditors was notfurnished by the Assessee and therefore could not be verified by the AO. 7. The Court is unable to agree with the above submission. Nothingprevented the AO from undertaking a detailed inquiry into the list ofcreditors provided by the Assessee in response to the questionnaire. It is notfor the Assessee to suggest to the AO how he should conduct the inquiry.There was no failure by the Assessee to fully and truly disclose all materialfacts necessary for the assessment. 6. Mr. Asheesh Jain, learned Senior Standing Counsel for the Revenue,submitted that the break-up of the payments made to the creditors was notfurnished by the Assessee and therefore could not be verified by the AO. 7. The Court is unable to agree with the above submission. Nothingprevented the AO from undertaking a detailed inquiry into the list ofcreditors provided by the Assessee in response to the questionnaire. It is notfor the Assessee to suggest to the AO how he should conduct the inquiry.There was no failure by the Assessee to fully and truly disclose all materialfacts necessary for the assessment. 8. In that view of the matter, since the pre-requisites for assumption ofjurisdiction under Section 147 of the Act were not fulfilled, the Court has nohesitation in quashing the impugned notice dated 30[th]March 2016 issued tothe Petitioner by the AO under Section 148 (1) of the Act and all W.P.(C) 11262/2016 proceedings consequent thereto. 9. The writ petition is allowed in the above terms with no order as to costs. S. MURALIDHAR, J. SEPTEMBER 11, 2017j PRATHIBA M. SINGH, J. W.P.(C) 11262/2016