M/S.abab Offshore Ltd.,Rep., By Its Vice President-Finance,Mr.vijay Saheta,Son Of Udhawdas Saheta v. The Deputy Commissioner Of Income Tax,Corporate Circle I (1),Vi Floor, New Block

Date of Reserving the OrderDate of Pronouncing the Order 01.11.2016 08.11.2016 CORAM THE HON'BLE MR.JUSTICE T.S. SIVAGNANAM W.P.No.29643 of 2015 &M.P.No.1 of 2015 & WMP.No.2477 of 2016 M/s.Abab Offshore Ltd.,Rep., by its Vice President-Finance,Mr.Vijay Saheta,Son of Udhawdas Saheta,113, Janpriya Crest,Pantheon Road, Egmore,Chennai – 600 008. ...Petitioner Vs The Deputy Commissioner of Income Tax,Corporate Circle I (1),VI Floor, New Block,No.121, Mahatma Gandhi Road,Nungambakkam,Chennai – 600 034. ...Respondent Prayer : This Writ Petition is filed under Article 226 of theConstitution of India, seeking for a Writ of Certiorari to callfor the records in PAN: /DC-Co.C-I (1), dated09.09.2015, relating to the Assessment Year 2008-09, read withnotice under Section 148 of the Income Tax Act inPAN:AAACA3012H, dated 31.03.2015, relating to the assessmentyear 2008-09 both on the file of the respondent above, and quashthe same. ORDER The petitioner is a company incorporated under the IndianCompanies Act, engaged in the business of providing oil fieldservices to various offshore exploration and productioncompanies in India and abroad. 2. In this Writ Petition, the petitioner seeks forissuance of a Writ of Certiorari, to quash the notice issued bythe respondent under Section 148 of the Income Tax Act, 1961,(Act), dated 31.03.2015, relating to the assessment year 2008-09. 3. Mr.G.Baskar learned counsel for Ms.S.Sriniranjani,learned counsel appearing for the petitioner challenges theimpugned proceedings on two grounds, firstly on the ground thatthe impugned proceedings is beyond the period of limitation andtherefore, is without jurisdiction. Secondly, it is contendedthat in the absence of any allegation of suppression, thequestion of reopening the assessment does not arise, nor theextended period of limitation could be invoked. In thisregard, the learned counsel referred to the first proviso underSection 147 of the Act. It was further submitted that therespondent, while communicating the reasons for reopening videcommunication dated 09.09.2015, has simultaneously issuednotice under Section 143(2) of the Act and the same is illegal. 4. With regard to the plea of limitation, it is submittedthat though the impugned notice under Section 148 is dated31.03.2015, the postal franking has been done on 01.04.2015 andit was booked on 02.04.2015, and received by the petitioner on06.04.2015. On receipt of the notice, the petitioner submittedan objection on 06.05.2015, stating that the period of six yearshaving lapsed on 31.03.2015, the impugned notice is notsustainable and therefore, requested the respondent to withdrawthe reassessment proceedings. Without prejudice to the said 4. With regard to the plea of limitation, it is submittedthat though the impugned notice under Section 148 is dated31.03.2015, the postal franking has been done on 01.04.2015 andit was booked on 02.04.2015, and received by the petitioner on06.04.2015. On receipt of the notice, the petitioner submittedan objection on 06.05.2015, stating that the period of six yearshaving lapsed on 31.03.2015, the impugned notice is notsustainable and therefore, requested the respondent to withdrawthe reassessment proceedings. Without prejudice to the said submission, the petitioner sought for furnishing the reasons forreopening. The learned counsel for the petitioner submittedthat in the counter affidavit filed by the respondent inparagraph 6, the respondent refers to a letter from theDepartment of Posts dated 25.09.2015, which is much after theimpugned order and relying on it, the earlier proceedings cannotbe validated. With regard to the issue pertaining to limitation,the learned counsel placed reliance on the decision of the HighCourt of Gujarat in the case of Kanubhai M.Patel (HUF) vs. HirenBhatt or His Successors to Office & Ors., reported in (2011)334 ITR 0025, more particularly, the observations contained inthe findings rendered by the Division Bench in paragraphs 14 to16 of the judgment. It is submitted that in the case ofKanubhai M.Patel (HUF) (supra), the Division Bench held thattill the point of time, the envelopes are properly stamped withadequate postal stamps, it cannot be stated that the process ofissue is complete. Referring to the facts of the present case,it is submitted that though the notice is dated 31.03.2015, thepostal franking endorsement shows that it was made on01.04.2015, and the tracking information available in the postaldepartment's website shows that the cover was booked on02.04.2015 and received by the petitioner on 06.04.2015.Therefore, the entire proceedings are wholly barred bylimitation. 5. On the other aspect with regard to reopening of theassessment, reference was made to the order of assessment dated30.12.2011, (2008-09), and in particular to paragraph 16 of theorder, which dealt with dis-allowance under Section 40(a)(i) ofthe Act, on payments of amounts to non-residents. It issubmitted that this contention was considered by the AssessingOfficer and the assessment has been completed by order dated30.12.2011 and this is sought to be reopened based upon certainstatements recorded in 2011, which were admittedly prior to thefinalisation of the assessment by the Assessing Officer andtherefore, there is no ground for reopening the assessment.Further, it is submitted that Section 90(4) of the Act, wasintroduced only on 01.04.2013 and in the instant case, theassessment pertains to 2008-09 and the said provision has noapplication. Further, it is submitted that on a bare reading ofthe impugned order shows that there is no allegation ofsuppression and therefore, it is a case of change of opinionwithout valid material and the proceedings for reopening is notsustainable. The assessment could be reopened under Section147, only if, the assessee had failed to make full and true disclosure and in this regard, reference was made to the firstproviso to Section 147, and it is submitted that in the instantcase, there is no allegation that the petitioner had suppressedinformation or that there was no full and true disclosure.Further, it is submitted that while communicating the reasons tothe petitioner, time was granted till 21.09.2015 for submittingthe objections, but simultaneously, the respondent has issuednotice under Section 143(2) of the Act, dated 09.09.2015 and thesame is illegal. In support of his contentions, learned counselplaced reliance on the decision in the case of Fenner (India)Ltd., vs. DCIT reported in 241 ITR 672; Commissioner of IncomeTax vs. Kelvinator of India Ltd reported in [2010] 320 ITR 561(SC); ACIT vs. ICICI Securities Primary Dealership Ltd.,reported in [2012] 348 ITR 299 (SC). 6. Mrs. Hema Muralikrishnan, learned Senior Panel counselappearing for the respondent referring to the counter affidavitfiled by the respondent, submitted that the impugned noticedated 31.03.2015, was despatched from the office of therespondent on the same day to the Department of Posts, asevidenced by the Despatch Register maintained by the departmentand also duly confirmed by the Department of Posts vide letterdated 25.09.2015. This fact would go to prove that the noticeunder Section 148 was despatched on 31.03.2015, well within theprescribed statutory period. In this regard, photostat copiesof pages 165 to 172 of a Register were produced which containthe seal of the Despatcher in the office of the AdditionalCommissioner of Income-tax Corporate Range-1 as well as a letterreceived from the Department of Posts, dated 25.09.2015. It isfurther submitted that as per the “business post arrangement”,designated personnel of the Department of Posts collects inperson, physically, the documents/communications to be mailedfrom each of the designated Ranges/Commissionerates andacknowledged in the despatch register maintained in theRanges/Commissionerates, after which the said personnel carrythe documents to the Post Office for onward transmission.Therefore, the procedure of physical handing over of thedocument by the office of the respondent in the Post Office asgiven in the “Speed Post Operation Manual” does not arise.Therefore, it is submitted that issuance of notice is within thetime period prescribed under Section 149 of the Act. Further,it is submitted that the decision of the Gujarat High Court inthe case of Kanubhai M.Patel (HUF) (supra), is not applicable tothe facts of the present case and it is clearly distinguishable.Therefore, it is submitted that the plea of limitation is wholly misplaced and not borne out by facts on record. Further, it issubmitted that in the light of the decision of the Hon'bleSupreme Court in the case of GKN Driveshafts (India) Ltd., vs.Income tax Officer & Ors., reported in (259 ITR 19), the WritPetition is premature and the petitioner has to follow theprocedure as mandated by the Hon'ble Supreme Court. misplaced and not borne out by facts on record. Further, it issubmitted that in the light of the decision of the Hon'bleSupreme Court in the case of GKN Driveshafts (India) Ltd., vs.Income tax Officer & Ors., reported in (259 ITR 19), the WritPetition is premature and the petitioner has to follow theprocedure as mandated by the Hon'ble Supreme Court. 7. It is submitted that the assessment is reopened not onthe ground of dis-allowance under Section 40(a)(1), but it ispursuant to an enquiry under Section 131 of the Act, conductedby the DDIT Investigation Unit on 05.07.2011. The materialscollected from the assessee and the copies of the statements andenquiry report was received by the respondent during 2013 and itis on that basis, the notice for reopening has been issued. Inthis regard, the learned counsel elaborately referred to thereasons assigned in the impugned order dated 09.09.2015 and alsopointed out as to the answers given by the persons, from whomstatements have been recorded and submitted that the assesseefailed to prove the genuinety of the transaction and therefore,there was full justification for issuance of notice forreopening the assessment. It is submitted that the reasons forreopening is not change of opinion, but for not providingdetails, as could be seen from the impugned order and it isevident from the admission of the officers of the petitioner,who have given evasive replies. Furthermore, it is submittedthat this Court, exercising writ jurisdiction, cannot examinethe sufficiency of reasons for reopening. Therefore, it issubmitted that the petitioner may be directed to follow theprocedure laid down in the case of GKN Driveshafts (India) Ltd.,vs. Income tax Officer & Ors., (supra). 8. Heard Mr.G.Baskar learned counsel for Ms.S.Sriniranjanilearned counsel for the petitioner and Mrs.Hema Muralikrishnan,learned Senior Panel counsel for the respondent and perused thematerials placed on record. 9. The decision of the Hon'ble Supreme Court in the caseof the GKN Driveshafts (India) Ltd., vs. Income tax Officer &Ors., (supra), has spelt out the procedure to be adopted whilechallenging the jurisdiction for reassessment. The reasons arerequired to be recorded by the Assessing Officer and he isobliged to furnish the copies of the reasons recorded, ifrequired by the assessee. Thereafter, the Assessing Officer hasto hear the objections of the assessee, if any, to thejurisdictional issue raised by the assessee and pass a speaking order. In the instant case, the respondent issued the noticeunder Section 148 of the Act, dated 31.03.2015, stating that hehas reasons to believe that the petitioner's income chargeableto tax for the assessment year 2008-09 has escaped assessmentwithin the meaning of Section 147 of the Income Tax Act, 1961.Therefore, the respondent proposed to assess/reassess the incomefor the said assessment year and directed the petitioner to filereturns in the prescribed form. 10. The contentions raised by the petitioner in this WritPetition are broadly two fold, firstly on the ground that theentire proceedings are barred by limitation as the period of sixyears for reopening the assessment came to an end on 31.03.2015,and hence the impugned notice is barred by limitation. Thesecond point is on the ground that there is no allegation ofsuppression and the reopening itself is on account of change ofopinion. 10. The contentions raised by the petitioner in this WritPetition are broadly two fold, firstly on the ground that theentire proceedings are barred by limitation as the period of sixyears for reopening the assessment came to an end on 31.03.2015,and hence the impugned notice is barred by limitation. Thesecond point is on the ground that there is no allegation ofsuppression and the reopening itself is on account of change ofopinion. 11. The impugned proceedings is sought to be questioned onthe ground of “has been hit by limitation” by referring to thepostal cover in which the impugned notice dated 31.03.2015, wassent. The postal cover shows the franking endorsement was madeon 01.04.2015. Therefore, the petitioner's contention is thatthough notice was dated 31.03.2015, the same was franked only on01.04.2015, which is beyond the time limit. Secondly, bydownloading the “article tracking information” from the officialwebsite of the Postal Department, it is stated that the letterwas booked/despatched only on 02.04.2015, and received by thepetitioner on 06.04.2015 and therefore, it is barred bylimitation. To buttress the submission, strong reliance hasbeen placed on the decision in the case of Kanubhai M.Patel(HUF) (supra). The stand of the department is that there is anarrangement called “business post arrangement” by which adesignated authority of the Postal Department comes to thedepartment and collects the documents/communications to bemailed to each person physically and the same is acknowledged inthe Despatch Register maintained by the designatedranger/commissionerate. In this regard, reference was made tothe register to show that despatch was effected on 31.03.2015and to further confirm the same, reference is made to a lettergiven by the Department of Posts dated 25.09.2015. 12. On a careful reading of the decision in the case ofKanubhai M.Patel (HUF) (supra), it is clear that the same wouldnot apply to the facts of the present case. In the said case,the undisputed fact was that the notices in question were sentfor booking to the Speed Post centre only on 07.04.2010 and thiswas confirmed by the Department of Posts by their report, whichwas taken on record by the Court. Therefore, the decision inthe case of Kanubhai M.Patel (HUF) (supra), is factuallydistinguishable and does not in any manner advance the case ofthe petitioner. 13. Coming back to the facts of the present case, there isnothing on record to dispute the “business post arrangement”between the Income Tax Department and the Department of Posts toshow that the cover was despatched on 31.03.2015 and the copy ofthe Despatch Register signed by the Despatching Officer has beenproduced and there is nothing to discredit this document. Apartfrom that, the Department of Posts, Business Post Centre,Chennai has given a letter on 25.09.2015, stating that itemNo.73 addressed to the petitioner was received by theirdesignated personnel from the office of the respondent on31.03.2015. This communication, which has come from theDepartment of Posts cannot be discredited nor disbelieved. Thecommunication dated 25.09.2015, is a confirmation to the effectthat the postal cover was received by the designated personnelof the Department of Posts on 31.03.2015. 14. Thus, in the light of the arrangement between therespondent Department and Department of Posts, it is held thatthe despatch having been done in terms of “business postarrangement” is sufficient to hold that the notice wasdespatched well within the period of limitation. Accordinglythe first contention raised by the petitioner is rejected. 14. Thus, in the light of the arrangement between therespondent Department and Department of Posts, it is held thatthe despatch having been done in terms of “business postarrangement” is sufficient to hold that the notice wasdespatched well within the period of limitation. Accordinglythe first contention raised by the petitioner is rejected. 15. The second contention is on the ground that theimpugned proceedings is a clear change of opinion. There maynot be a necessity to examine this issue as the same is pre-mature. In terms of the directive issued in GKN Driveshafts(India) Ltd., (supra), as soon as the reasons for reopening aresought for and furnished by the officer, the assessee has tosubmit his objection. Without doing so, the petitioner hasapproached this Court. 16. Nevertheless to examine as to whether there is anyprima facie case made out by the petitioner on this ground, theCourt examined the submissions. On a perusal of the reasonsrecorded, it is evident that it is not restricted to dis-allowance under Section 40(a)(i) of the Act, alone. Thestatements recorded from their Vice President (Finance), DeputyManaging Director and Secretary of the petitioner have beenreferred to and the reasons for reopening have been set out.The statements have been recorded during the course of enquiryunder Section 131 of the Act, and the assessee's contention isthat the enquiry was completed in 2011, the statements very muchavailable on the date of assessment was finalised by theAssessing Officer and therefore, there is no cause for reopeningand the respondent has taken a stand that the enquiry report wasreceived only during 2013. There would be no necessity to gointo these aspects of the matter, and if done, it would amountto prejudging the issue and giving a go-by to the directivesissued by the Hon'ble Apex Court in the case of GKN Driveshafts(India) Ltd., (supra). Thus, this Court having come to theconclusion that the impugned notice is not barred by limitation,is not inclined to examine the adequacy of the reasons assignedby the respondent for reopening, as the petitioner has to complywith the directives issued in GKN Driveshafts (India) Ltd.,(supra). 17. Accordingly, the Writ Petition fails and is dismissedand the petitioner is granted 15 days time from the date ofreceipt of a copy of this order to submit their objections tothe reasons for reopening as communicated vide order dated09.09.2015 and thereafter, the respondent shall pass a speakingorder on merits and in accordance with law. No costs.Consequently, connected Miscellaneous Petitions are closed. pbn To The Deputy Commissioner of Income Tax,Corporate Circle I (1),VI Floor, New Block,No.121, Mahatma Gandhi Road,Nungambakkam,Chennai – 600 034. +1cc to Ms.S.Sriniranjani, Advocate, S.R.No. 63676+1cc to M/s. T.Ravikumar, Advocate, S.R.No. 64273 W.P.No.29643 of 2015 &M.P.No.1 of 2015 & WMP.No.2477 of 2016CNR (CO)PSI (02/12/2016)