Michelin India Tyres Pvt. Ltd v. Deputy Commissioner Ofincome Tax & Anr

$~12 *IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P. (C) No. 2584/2016 MICHELIN INDIA TYRES PVT. LTD...... PetitionerThrough:Mr. Nageswar Rao and Mr. SandeepS. Karhail, Advocates. versus DEPUTY COMMISSIONER OFINCOME TAX & ANR. ..... RespondentsThrough:Mr.RahulChaudhary,SeniorStanding Counsel. CORAM:JUSTICE S. MURALIDHARJUSTICE PRATHIBA M. SINGH O R D E R06.09.2017 % 1. The challenge in this Petition is to the notices dated 18[th]March 2015, 24[th]March 2015 and 18[th]January 2016 issued by the Deputy Commissioner ofIncome Tax (‘DCIT’) (hereafter Assessing Officer- AO) under Section 148of the Income Tax Act, 1961 (‘Act’) seeking to reopen the assessment forthe Assessment Year (‘AY’) 2008-09. Challenge is also laid to the orderdated 8[th]March 2016 passed by the DCIT disposing of the Assessee’sobjectionagainsttheissueoftheaforementionednoticedated18[th]March 2015. 2. It is not disputed that the assessment for AY 2008-09 was completedunder Section 143(3) of the Act on 16[th]December, 2011. It is also not W.P.(C) 2584/2016 disputed that the notices by which assessment is sought to be reopened havebeen issued more than four years after the AY in question. Consequently,the first proviso of Section 147 of the Act requires to be complied with. Inother words the AO was mandatorily required to record in the reasons forreopening the assessment that there was a failure by the Assessee to make afull and true disclosure of material facts relating to the assessment for theAY in question. 3. In the reasons for reopening of the assessment in the present case, the AOrecorded that the Assessee was allowed to set off brought forward losses ofRs. 5,32,18,761/- whereas, according to the AO, as per the assessmentrecords of the AY 2007-08, “no loss was available for set off in subsequentyear”astheAssessee-companywasassessedatanincomeofRs. 19,73,01,700/- in AY 2007-08. Without indicating the manner in whichthere was failure on the part of the Assessee to disclose fully and truly,material facts necessary for the assessment, the AO has simply reproducedthe words to that effect as occurring in the first proviso to Section 147 (1) ofthe Act. This, therefore, does not fulfil the mandatory requirement of thelaw. 4. The fact of the matter is that for three AYs earlier to the AY in question,the assessments, after scrutiny under Section 143 (3) of the Act, werecompleted at a loss, although at a figure lower than that claimed by theAssessee. The assessment for AY 2005-06 was completed only on 25[th]November, 2008 whereas the Assessee filed its return for the AY in questionon 30[th]September, 2008 and a revised return on 14[th]October, 2008. W.P.(C) 2584/2016 Page 2 of 3 Consequently, the Assessee did not have benefit of the assessment orderpassed for AY 2005-06 at the time of filing its return for the AY in question.There was therefore no failure by the Assessee to make a full and truedisclosure of the material facts relevant for the assessment. 5. Since the threshold requirement for the re-opening of the assessment interms of the proviso to Section 147 (1) of the Act is not fulfilled, the threeimpugned notices under Section 148 of the Act for reopening of theassessment for AY 2008-09 are hereby set aside. The Court accordingly alsosets aside the order dated 18[th]January, 2016 passed by the DCIT rejectingthe Petitioner’s objections. 6. The writ petition is allowed in the above terms. S. MURALIDHAR, J. SEPTEMBER 06, 2017dk PRATHIBA M. SINGH, J.