Itxa/806/2017 Of Pr. Commissioner Of Income Tax 10 v. M/S Hexaware Technologies Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO. 806 OF 2017 Pr. Commissioner of Income Tax-10 .. Appellant v/s. M/s. Hexaware Technologies Ltd. .. Respondent Mr. Suresh Kumar for the appellant Mr. Jas Sanghvi i/b PDS Legal for the respondent CORAM : M.S. SANKLECHA & NITIN JAMDAR, J.J. DATED : 30[th] SEPTEMBER, 2019 P.C. 1.This appeal under Section 260A of the Income Tax Act, 1961(Act) challenges the order dated 21[st] July, 2016 passed by the IncomeTax Appellate Tribunal (Tribunal). This appeal relates to AssessmentYear 2006-07. 2.The Revenue has urged the following questions of law for ourconsideration :- “(a) Whether on the facts and in the circumstances of thecase and in law, the Tribunal erred in holding that theproceedings u/s 147 was bad in law as there was no failure on part of the assessee to fully and truly disclose the fact ? (b)Whether on the facts and in the circumstances of thecase and in law, the Tribunal erred in holding that theproceedings u/s 147 are bad in law due to non-issue of noticeu/s 143(2) irrespective of the fact that assessee had notcontended the same during the reassessment proceedings asenvisaged u/s 292BB of the Income Tax Act 1961?” 3.Regarding Question (a) :- (a)The respondent assessee is engaged in the business of designdevelopment and export of software. For the subject assessment year,the respondent assessee filed a return of income declaring total incomeat Nil after set off of unabsorbed depreciation of Rs.9.95 crores. On23[rd] December, 2009 the assessment was completed in scrutinyassessment proceedings under Section 143(3) of the Act. (b)Thereafter, on 23[rd] March, 2013 reopening notice was issuedunder Section 148 of the Act seeking to reopen of the assessment forA.Y. 2006-07. The reasons in support of the reopening notice dated22[nd] March, 2013 records the fact that the respondent in its return ofincome had considered the written down value of the depreciated assetson gross basis. However, during the scrutiny assessment proceedings,the respondent assessee was directed by the Assessing Officer to reducethe current years depreciation by Rs. 2.60 crores (approximately) for arriving at written down value of its assets. It is on the basis of havingincorrectly taken depreciation, the short term capital gain on slump salehave been determined. This should have been without taking intoaccount current years depreciation of Rs.2.60 crores (approximately).Thus, the reason to believe that income chargeable to tax has escapedassessment. (c) The Assessing Officer by his order dated 15[th] January, 2014 underSection 143(3) r/w Section 147 of the Act confirmed the reopeningnotice and taxed the income. In appeal, the Commissioner of IncomeTax (Appeals) [CIT(A)] by order dated 21[st] July,l 2016 rendered afinding of fact that there was no failure on the part of the respondentassessee to disclose truly and fully all facts necessary for theassessment. It held that as the reopening notice was beyond a period offour years from the end of the relevant assessment year, as the regularassessment was done under section 143(3) of the Act, the reopeningdated 22[nd] February, 2013 was without jurisdiction. This as it is hit bythe first proviso to Section 147 of the Act. (d)Being aggrieved, the Revenue carried the issue in appeal to theTribunal. On facts, the Tribunal upheld the view of the CIT(A) and found that there was no failure on the part of the respondent to disclosetruly and fully all facts necessary for the assessment. The regularassessment being under Section 143(3) of the Act, the notice beingbeyond the period of four years from the end of the relevant assessmentyear is hit by the first proviso to Section 147 of the Act. Thus,dismissed the Revenue’s appeal. (d)Being aggrieved, the Revenue carried the issue in appeal to theTribunal. On facts, the Tribunal upheld the view of the CIT(A) and found that there was no failure on the part of the respondent to disclosetruly and fully all facts necessary for the assessment. The regularassessment being under Section 143(3) of the Act, the notice beingbeyond the period of four years from the end of the relevant assessmentyear is hit by the first proviso to Section 147 of the Act. Thus,dismissed the Revenue’s appeal. (e)We find that the impugned order of the Tribunal as well as theCIT(A) have found on facts that there was no failure on the part of therespondent assessee to disclose all facts truly and fully as necessary forthe assessment. In fact, that is evident from the reasons recorded inthe reopening notice dated 22[nd] March, 2013. In fact, the reasonsrecorded in support of the reopening notice dated 23[rd] March, 2013even does not allege that there is any failure on the part of therespondent to disclose truly and fully all material particulars necessaryfor assessment. Nor does the reading of the reasons as a wholeindicate the same. Therefore, on the basis of the above facts, it wasfound that the reopening notice is without jurisdiction and hit by thefirst proviso to Section 147 of the Act. The CIT(A) as well as theTribunal in support of the impugned order correctly placed relianceupon the decision of this Court in the case of Nirmal Bang Securities Vs. Asstt. Commissioner of Income Tax, 382 ITR 93. (f)In the above view, the question (a) as proposed does not give rise to any substantial question of law. Thus, not entertained. 4.Regarding question (b) :- In view of answer to question (a), this question is renderedacademic. Thus, not entertained. 5.The appeal is dismissed. No order as to cost. (NITIN JAMDAR, J.) (M.S. SANKLECHA, J.)