M/S.dalmia Cement (Bharat) Limited v. The Assistant Commissioner Of Income Tax, Circle 1, Trichy

BEFORE THE MADURAI BENCH OF MADRAS HIGH COURTDATED : 30.10.2019CORAM: THE HONOURABLE MR.JUSTICE M.GOVINDARAJ W.P.(MD)Nos.19202, 19825 and 19826 of 2018 and W.M.P.(MD)Nos.17030, 17605 and 17606 of 2018 W.P.(MD)No.19202 of 2018: M/s.Dalmia Cement (Bharat) Limited,Represented by its Deputy Executive Director (Finance)and Authorized Signatory Shri.R.Gururajan,Dalmiapuram,Tiruchirapalli - 621 651.: Petitioner Vs. 1.The Assistant Commissioner of Income Tax, Circle 1, Trichy, No.44, Williams Road, Cantonment, Tiruchirapalli-620 001. 2.The Deputy Commissioner of Income Tax, Central Circle -2, New Delhi. 3.The Principal Commissioner of Income Tax 1 - Trichy, No.44, Williams Road, Cantonment, Tiruchirappalli-620 001.: Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitutionof India praying for issuance of a Writ of Certiorari, to call forthe records on the file of the first respondent and quash theimpugned order in PAN: /ACIT/TRY/2011-12, dated 26.07.2018along with notice in PAN: , dated 31.03.2018 issued underSection 148 of the Income Tax Act for the Assessment Year 2011-12. W.P.(MD)No.19825 of 2018: M/s.Dalmia Bharat Limited,(Formerly Known as Dalmia Bharat Enterprises Limited),Dalmiapuram,Tiruchirapalli,Tamil Nadu - 621 651.: Petitioner 1.The Assistant Commissioner of Income Tax, Circle 1, Trichy, No.44, Williams Road, Cantonment, Tiruchirapalli-620 001.https://hcservices.ecourts.gov.in/hcservices/ W.P.(MD)Nos.19202, 19825 and 19826 of 2018 2.The Deputy Commissioner of Income Tax, Central Circle -2, New Delhi. 3.The Principal Commissioner of Income Tax 1 - Trichy, No.44, Williams Road, Cantonment, Tiruchirappalli-620 001.: Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitutionof India praying for issuance of a Writ of Certiorari, to call forthe records on the file of the first respondent and quash theimpugned notice in PAN: , dated 31.03.2018 issued underSection 148 of the Income Tax Act for the Assessment Year 2011-12,along with the impugned order in PAN: /ACIT/TRY 2011-12,dated 30.07.2018. W.P.(MD)No.19826 of 2018: M/s.Dalmia Power Limited,(Amalgamated Company of DCB Power Ventures Limited),Dalmiapuram,Tiruchirapalli,Tamil Nadu - 621 651.: Petitioner Vs. 1.The Assistant Commissioner of Income Tax, Circle 1, Trichy, No.44, Williams Road, Cantonment, Tiruchirapalli-620 001. 2.The Principal Commissioner of Income Tax 1 - Trichy, No.44, Williams Road, Cantonment, Tiruchirappalli-620 001. : Respondents PRAYER: Writ Petition is filed under Article 226 of the Constitutionof India praying for issuance of a Writ of Certiorari, to call forthe records on the file of the first respondent and quash theimpugned notice in PAN: , dated 31.03.2018 in noticenumber ITBA/AST/148/2017-18/1009600073(1) issued under Section 148of the Income Tax Act for the Assessment Year 2011-12, along withthe impugned order in PAN: / /ACIT/TRY/2011-12,dated 31.07.2018.For Petitioner : Mr.N.Venkataraman,in all WPs.Senior Counsel, For Mr.N.V.Balaji https://hcservices.ecourts.gov.in/hcservices/ For Respondents: Mr.G.Rajagopalan,in all WPs.Additional Solicitor General of IndiaFor Mr.N.Dilip Kumar ****** COMMON ORDER Since the issue involved in all the three Writ Petitions is oneand the same, they were heard together and are being disposed of bymeans of this common order. 2. For the sake of convenience, the facts leading to the filingof the Writ Petition in W.P.(MD)No.19202 of 2018 are taken intoconsideration for deciding the issue at hand. 3. The Writ Petition in W.P.(MD)No.19202 of 2018 challenges theorderpassedbythefirstrespondentinPAN: /ACIT/TRY/2011-12, dated 26.07.2018 along with noticein PAN: , dated 31.03.2018, issued under Section 148 of theIncome Tax Act, 1961, for the assessment year 2011-2012. For Respondents: Mr.G.Rajagopalan,in all WPs.Additional Solicitor General of IndiaFor Mr.N.Dilip Kumar ****** COMMON ORDER Since the issue involved in all the three Writ Petitions is oneand the same, they were heard together and are being disposed of bymeans of this common order. 2. For the sake of convenience, the facts leading to the filingof the Writ Petition in W.P.(MD)No.19202 of 2018 are taken intoconsideration for deciding the issue at hand. 3. The Writ Petition in W.P.(MD)No.19202 of 2018 challenges theorderpassedbythefirstrespondentinPAN: /ACIT/TRY/2011-12, dated 26.07.2018 along with noticein PAN: , dated 31.03.2018, issued under Section 148 of theIncome Tax Act, 1961, for the assessment year 2011-2012. 4. The petitioner filed his original return on 29.09.2011.Thereafter, vide F.No.ACIT/CC-2/2013-14, dated 14.10.2013, furtherdetails were sought for by the second respondent, which, hesubmitted on 26.10.2013 and 09.11.2013. In that letter, it isdisclosed as to which are the companies holding shares above 10%.The petitioner has disclosed the allotment of shares, opening sharecapital, share capital raised during the year, closing sharecapital, total turnover, gross profit, net profit and all otherdetails as required by the second respondent. He filed Form 2 todisclose all the details showing the shares allotted to otherpersons above 10%. After considering all these details, the secondrespondent passed an assessment order on 31.03.2014, wherein, it wasfound that a sum of Rs.84 Crores was treated as unexplainedexpenditure under Section 69C of the Income Tax Act, 1961, andanother sum of Rs.55 Crores was treated as bribe on the basis of thedocuments seized by them, against which, the petitioner preferred anappeal, in which, Rs.84 Crores as well as Rs.55 Crores, totalling toRs.1,39,00,00,000/-, was reversed and for the rest of the amount,penalty was imposed. This was given effect to by an order underSection 250/154/153A/143(3) of the Income Tax Act, 1961, dated18.08.2015. Thereafter, on 31.03.2018, vide impugned proceedings inPAN:AADCA9414C, a notice under Section 148 of the Income Tax Act,1961, was issued, calling upon the petitioner to deliver the returnin the prescribed form for the assessment year 2011-2012, on thereason that the Assessing Officer had reason to believe that incomechargeable to tax has escaped assessment. In response to thisnotice, the petitioner submitted his xerox copy of the return forthe year 2011-2012 with acknowledgement due dated 13.04.2018, videhis letter dated 16.04.2018 and also sought for reasons to come to ahttps://hcservices.ecourts.gov.in/hcservices/ conclusion to initiate action under Section 148. The firstrespondent, by PAN: /ACIT/Circle-1/TRY/2011-12, dated11.05.2018, communicated the reasons. The allegation is that Rs.500Crores, which was invested by a Company called 'KKR' in the year2010-2011 and held 15% equity shares issued to the petitioner'scompany, is nothing but the black money of the petitioner's companyand it has been circulated through the said company called 'KKR' andit was brought back at a value of more than Rs.1200 Crores. Further,on the basis of information, vide a charge sheet issued to Y.S.JaganMohan Reddy, credible proof of criminal conspiracy was obtainedagainst Mr.Puneet Dalmia on account of a sum of Rs.95 Crores in thenature of illegal gratification paid for allotment of lime stonemining lease in favour of the petitioner company. Further reason isthat it was widely believed that the petitioner company has tacitunderstanding with its distributors of cement by giving overdiscount on sale of cement so as to receive kickbacks in personalnames and that it was widely believed that Dalmia Group has tacitunderstanding with its suppliers of coal, and other services to overinvoice that charges so as to receive kickbacks in personal namesand Dalmia Group is in the habit of booking bogus bills in theaccounts. All these reasons are culminated in the initiation ofproceedings under Section 148 and it is observed in closingparagraph as under: "8. It is surprising as to why the Dalmia Bharat Ltd., paid 2.4 times to KKR for the buyback of its investment ofRs.500 crores in 2010 amounting to approx. Rs.1218 crores. As the transaction mentioned above is important due tothe sensitivity it attracts and for the requirement ofdeep digging of data to retrieve the final informationthrough the means of exchange of information forum theissue needs to be relooked through reopening of the casefor reassessment of Dalmia Cement Bharat Ltd., DalmiaBharat Ltd., Dalmia Bharat Enterprises Ltd. and AvnijaProperties Ltd. 9. Another allegation pertains to the Dalmia Groupinvesting around Rs.5000 crores by way of capitalexpenditure on setting up cement manufacturing facilityand various part of the country in "last 4 years". As theTEP was received in F.Y.2016-17 in the office of DGIT(Inv.), Mumbai therefore the aforementioned "last 4 years"may be considered as, from F.Y. 2012-13 to F.Y.2015-16.However as this is a generalized allegation therefore onlythe specific issue in this allegation may be looked into.The specific issue in this allegation is that "CalcomCement India Limited, one of the subsidiary of DCBLawarded a contract for mechanical erection and fabricationto Gannon Dunkerley & Co Limited at a rate almost doubleof market rate. Copy of contract awarded, copy ofhttps://hcservices.ecourts.gov.in/hcservices/ comparable contract and a comparison chart is attached asAnnexure - D where contract of Rs.21 Crores has been givenat Rs.43 Crores. On going through the Annexure - E, ofthis TEP name of other contractors were found, however asno specific or incriminating information or amount oftransaction is present against these parties, henceinformation in their case is generalized in nature hencedoes not invite any further action at this stage only incase of Gannon Dunkerley & Co Limited, the issue isspecific. Therefore, the contract awarded and paymentreceived by Gannon Dunkerley & Co Limited may be verifiedby passing on the information to its jurisdictionalassessing officer to take an appropriate action under therelevant section of I.T. Act, 1961. comparable contract and a comparison chart is attached asAnnexure - D where contract of Rs.21 Crores has been givenat Rs.43 Crores. On going through the Annexure - E, ofthis TEP name of other contractors were found, however asno specific or incriminating information or amount oftransaction is present against these parties, henceinformation in their case is generalized in nature hencedoes not invite any further action at this stage only incase of Gannon Dunkerley & Co Limited, the issue isspecific. Therefore, the contract awarded and paymentreceived by Gannon Dunkerley & Co Limited may be verifiedby passing on the information to its jurisdictionalassessing officer to take an appropriate action under therelevant section of I.T. Act, 1961. 10. There is another allegation that Subhshri RoadCarriers Pvt. Ltd., a known and related entity of DalmiaGroup has been given the contracts of major transportationwork by the Dalmia Group. The contracts are given at thehigher rates than the prevailing market rates andkickbacks are received in the personal name of thepromoters." 5. Against the reasons given by the first respondent, thepetitioner company filed his objections by communication dated19.06.2018, stating that the proceedings initiated is, (a) barred by limitation; (b) without jurisdiction; and (c) vague and bereft of specific details. 6. The first respondent, by his proceedings inPAN:AADCA9414C/ACIT/TRY/2011-12, dated 26.07.2018, rejected theobjections, against which, the present Writ Petition came to befiled. 7. The learned Senior Counsel appearing for the petitionerwould submit that the relevant assessment year is 2011-2012. Thepetitioner submitted all the books of accounts and all otherdetails, as sought for by the respondents even at the time ofprocessing the assessment. Once all the required documents aregiven, it is for the Assessing Authority with due diligence, tomention, what is not disclosed and the definite reason to arrive ata decision as to the escaped assessment. It cannot be based on theinformation generally known by believing or on wild belief. Insupport of his contention, he would rely on the following judgments:(1)Asianet Star Communications (P) Ltd. vs. ACIT(2019) 106 Taxmann.Com 293 (Mad-HC); (2)Sterlite Industries (India) Ltd. vs. ACIT (2008)305 ITC 339 (Mad HC); (3)Fenner (India) Ltd. vs. DCIT (2000)241 ITR 672https://hcservices.ecourts.gov.in/hcservices/ (Mad HC); (4) CIT vs. Schwing Stetter India P. Ltd. (2015) 378 ITR 380 (Mad HC); (5) NuPower Renewables (P.) Ltd. vs. ACIT (2019) 104Taxmann.com 307 (Bom HC); (6) CIT vs. S & S Power Switchgear Ltd. (2018) 92Taxmann.com 429(Mad); (7) PCIT v. Manzil Dineshkumar Shah (2018) 406 ITR 326 (Guj); (8) Krupesh Ghanshyambhai Thakkar vs. DCIT (2017)77Taxmann.com 293(Guj HC); (9) CIT vs. Kelvinator of India Limited (2010) 320 ITR561 (SC); (10) Rubix Trading vs. ITO [W.P.No.3130 of 2018, dated 20.12.2018] (Bom HC); (11) CIT vs. Usha International Ltd. (2012) 253 CTR 113 (Del-HC); (12) Ganga Saran & Sons (P) Ltd. vs. ITO [(1981) 130 ITR 1 (SC)]; (13) South Yarra Holdings vs. ITO (2019) 104Taxmann.com 216 (Bom HC); (14) PCIT vs. Meenakshi Overseas (P) Ltd. (2017) 395ITR 677 (Del-HC); (15) ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC); (16) SMCC Construction India Ltd. vs. ACIT (2014) 220Taxman 354 (Del.HC); (17) Novo Nordisk India (P) Ltd. (2018)95 Taxmann.com 225 (Kar-HC); (18) Mahesh Kumar Gupta vs. CIT (2014) 363 ITR 300 (All-HC); (19) Haryana Acrylic Manufacturing Co vs. CIT (2009)308 ITR 38 (Del); (20) CIT, Delhi vs. Kelvinator India Ltd. 256 ITR 1 (Del);(21) Calcutta Discount Co. Ltd. vs. ITO 41 ITR 191(SC); (22) Jindal Photo Films Ltd. vs. DCIT 234 ITR 170(Del); (23) Garden Silk Mills P. Ltd. vs DCIT 237 ITR 668 (Guj); (24) PCIT vs. Santech Solutions P Ltd 97 Taxmann. com179 (Mad); (13) South Yarra Holdings vs. ITO (2019) 104Taxmann.com 216 (Bom HC); (14) PCIT vs. Meenakshi Overseas (P) Ltd. (2017) 395ITR 677 (Del-HC); (15) ITO vs. Lakhmani Mewal Das (1976) 103 ITR 437 (SC); (16) SMCC Construction India Ltd. vs. ACIT (2014) 220Taxman 354 (Del.HC); (17) Novo Nordisk India (P) Ltd. (2018)95 Taxmann.com 225 (Kar-HC); (18) Mahesh Kumar Gupta vs. CIT (2014) 363 ITR 300 (All-HC); (19) Haryana Acrylic Manufacturing Co vs. CIT (2009)308 ITR 38 (Del); (20) CIT, Delhi vs. Kelvinator India Ltd. 256 ITR 1 (Del);(21) Calcutta Discount Co. Ltd. vs. ITO 41 ITR 191(SC); (22) Jindal Photo Films Ltd. vs. DCIT 234 ITR 170(Del); (23) Garden Silk Mills P. Ltd. vs DCIT 237 ITR 668 (Guj); (24) PCIT vs. Santech Solutions P Ltd 97 Taxmann. com179 (Mad); (25) Union of India vs. Ajit Jain 260 ITR 80(SC); (26) Ajit Jain vs. Union of India 242 ITR 302 (Del); (27) CIT vs. Indo Arab Air Services 283 CTR 92 (Del); (28) PCIT vs. Shodiman Investments (P) Ltd. 93 Taxmann. com 153 (Bom); https://hcservices.ecourts.gov.in/hcservices/(29) CIT vs. Sfil Stock Broking Ltd 325 ITR 285 (Del); (30) CIT vs. Batra Bhatta Company 321 ITR 526 (Del); (31) Vipan Khanna vs. CIT 255 ITR 220 (Pun & Har); (32) National Dairy Development Board vs. DCIT 356 ITR413 (Guj); (33) Ashkjyot Oxygen (P) Ltd. vs. H.N.Patel, ITO 346ITR 199 (Guj); (34) Madras Suspension Ltd. vs. DCIT 88 Taxmann.com 256 (Madurai); (35) Sri. C.M.Mahadeva S/o.Sri Manche Gowda vs. TheCIT, Mysore (2015) Taxcorp (DT) 62455 (KAR); (36) CIT vs. Elgi Tread (India) Ltd 96 Taxmann.com 254 (Mad); (37) JCIT vs. Kalanithi Maran 366 ITR 453 (Madras); (38) Jeans Knit P Ltd vs. DCIT Banglore 390 ITR 10 (SC);(39) CIT vs. M/s.Spice Enfotainment Ltd., Civil AppealNo.285 of 2014-SC; (40) Spice Infotainment Ltd. vs. CIT 65 DTR 391 (Delhi); (41) Jitendra Chandrala Navlani vs. Union of India 386ITR 288 (Bom); (42) PCIT New Delhi vs. Maruti Suzuki India Ltd. 397ITR 681 (Delhi); and (43) Indian & Eastern Newspaper Society vs. Commissioner of Income Tax [1979]2 Taxman 197(SC). 8. Secondly, on the point of limitation, the learned SeniorCounsel would draw the attention of this Court to proviso to Section147, which contemplates only three circumstances in which theassessment can be re-visited within four years i.e., (a) failure on the part of the assessee to make areturn under Section 139; or (b) in response to a notice issued under sub-section (1) of section 142 or section 148; or (c) to disclose fully and truly all material factsnecessary for his assessment, for that assessment year. 9. The learned Senior Counsel would further submit that inrespect of required things, namely (a) and (b), the assessee hasfiled his return under Section 139 and he has filed his reply inresponse to the notice issued under Section 142 as well as Section148. 10. The only issue, which is to be decided, is as to whetherthe assessee has disclosed fully and truly what material factshttps://hcservices.ecourts.gov.in/hcservices/necessary for his assessment, for that assessment year or not. (a) failure on the part of the assessee to make areturn under Section 139; or (b) in response to a notice issued under sub-section (1) of section 142 or section 148; or (c) to disclose fully and truly all material factsnecessary for his assessment, for that assessment year. 9. The learned Senior Counsel would further submit that inrespect of required things, namely (a) and (b), the assessee hasfiled his return under Section 139 and he has filed his reply inresponse to the notice issued under Section 142 as well as Section148. 10. The only issue, which is to be decided, is as to whetherthe assessee has disclosed fully and truly what material factshttps://hcservices.ecourts.gov.in/hcservices/necessary for his assessment, for that assessment year or not. 11. In that aspect, the petitioner would submit that he hassubmitted all the necessary details in Form-2 with all otherattachments including the reply given to the notice issued underSection 142. Against the order passed by the Assessing Authority,the petitioner also filed an appeal to the Commissioner of IncomeTax, in which, all these points were elaborately discussed andthereafter, the order charging tax under Section 139 was set asideand the appeal was partly allowed and consequent upon the order, itwas given effect to by the other consequential order under Section250/154/153A/143(3) of the Income Tax Act, 1961. In thosecircumstances, it should be construed that the petitioner has givenall the materials fully and truly. As per the explanation to Section147, if at all the Assessing Officer with his due diligencediscovers that there is some escaped assessment, then, on the basisof that, he can initiate proceedings. But the impugned orders do notdisclose the main reasons given by the Assessing Authority and thesame also do not disclose any escaped assessment. Further, theassessment order for 2011-2012, ended with 31.03.2012. As perSection 147, proceedings, if any, should have been commenced withinfour years from the date of end of the assessment year. But, in theinstant case, the proceedings were initiated on 31.03.2018.Therefore, it is barred by limitation. 12. It is contended that the further reason given pertains tothe Calcom Cement India Limited, which is an independent legalentity and that does not have any connection with the return filedfor the assessment year 2011-2012. Even assuming that it is a sisterconcern, then, for the transaction done by the sister concern,proceedings should have been initiated against that independentlegal entity and it cannot be initiated against the petitionercompany. Therefore, the impugned orders are barred by limitation. 13. Further, in respect of the allegation given with respect tothe contracts, Paragraph 10 of the reasons that the contracts aregiven at the higher rates than the prevailing market rates andkickbacks are received in the personal name of the promoters, doesnot disclose any specific transaction which happened between thepetitioner and other company. The date of transaction, the amountwhich said to have been received higher than the market value, thequantum of kickbacks that was received in the personal name of thepromoters, the date and time when it was received and all otherspecific details, are missing. Therefore, he prays that the impugnedproceedings are likely to be quashed. 14. The learned Senior Counsel would also contend that once ina concluded assessment where the Assessing Authority discoversundisclosed material evidence and has a reason to believe that thereis an escaped assessment, then only, he can initiate proceedings.https://hcservices.ecourts.gov.in/hcservices/Whereas, in the cases at hand, the impugned proceedings are based on wild belief without any materials. 14. The learned Senior Counsel would also contend that once ina concluded assessment where the Assessing Authority discoversundisclosed material evidence and has a reason to believe that thereis an escaped assessment, then only, he can initiate proceedings.https://hcservices.ecourts.gov.in/hcservices/Whereas, in the cases at hand, the impugned proceedings are based on wild belief without any materials. 15. In response to the arguments, the learned AdditionalSolicitor General of India appearing for the respondents wouldcontend that after issuance of notice under Section 148, thepetitioner has not chosen to challenge the same in time. But,whereas, he has submitted himself to the proceedings and filedreturns, as directed by the authorities and also filed hisobjections. Once he submitted himself to the jurisdiction, he shallawait the orders of the Assessing Authority and he cannot rush tothe Court without awaiting the orders. Therefore, once the matter issubjudice before the fact finding authority, challenging the noticeissued under Section 148 is without cause of action and hence, theWrit Petitions are not maintainable. 16. In support of the contention, he would rely on the judgmentof the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd., vs.Income Tax Officer and others reported in 2003(1) SCC 72, whereinthe Hon'ble Supreme Court has held that the proper course of actionfor the noticee is to file return and if he so desires, to seekreasons for issuing notices and on receipt of notice, he can fileobjection and he cannot rush to the Court without awaiting for theorders to be passed in the matter. 17. He would further submit that against the order passed bythe authority, there is an appeal provision available to thepetitioner and without exhausting the alternative remedy, thepetitioner shall not rush to the Court. In this regard, he wouldrely on the judgment of the Hon'ble Supreme Court in CIT v. ChhabilDass Agarwal reported in 2014(1) SCC 603, wherein it is held thatwhen there is an efficacious alternative remedy available, the HighCourt should not interfere in the proceedings of Income TaxDepartment, pursuant to a notice issued under Sections 246, 246-A,143, 144, 147 and 148. Therefore, the Writ Petitions are notmaintainable. 18. Further, explanation to Section 147 would clarify theposition that there are material evidences, which were discovered bythe Assessing Authority, for which, action should be initiated.Paragraph 8 of the reasons adduced by the Assessing Authorityclearly shows that there is suppression of income to the tune ofRs.1218 crores for the investment of Rs.500 Crores, which definitelyis the re-circulation of black money. As there are materialevidences, it cannot be said that it is without reason. 19. Insofar as the issue at hand is concerned, it is a disputedquestion of fact and it can be decided only by the authority and theWrit Court cannot delve into the disputed questions of facts and,therefore, the Writ Petition shall not be entertained.https://hcservices.ecourts.gov.in/hcservices/ 20. I have considered the rival submissions made by bothparties. 21. This Court has dealt with the issue of change of opinionafter considering the various judgments of the Hon'ble Supreme Courtand the other Courts, in Asianet Star Communications (P) Ltd. vs.ACIT (2019) 106 Taxmann.Com 293 (Mad-HC). The relevant portion readsthus: "26. In similar circumstances, the Supreme Court, in the case of ACIT v. ICICI Securities Primary DealershipLtd. ([2012] 348 ITR 229) has held as follows: 19. Insofar as the issue at hand is concerned, it is a disputedquestion of fact and it can be decided only by the authority and theWrit Court cannot delve into the disputed questions of facts and,therefore, the Writ Petition shall not be entertained.https://hcservices.ecourts.gov.in/hcservices/ 20. I have considered the rival submissions made by bothparties. 21. This Court has dealt with the issue of change of opinionafter considering the various judgments of the Hon'ble Supreme Courtand the other Courts, in Asianet Star Communications (P) Ltd. vs.ACIT (2019) 106 Taxmann.Com 293 (Mad-HC). The relevant portion readsthus: "26. In similar circumstances, the Supreme Court, in the case of ACIT v. ICICI Securities Primary DealershipLtd. ([2012] 348 ITR 229) has held as follows: The assessee had disclosed full details in the Returnof Income in the matter of its dealing in stocks andshares. According to the assessee, the loss incurred was abusiness loss, whereas, according to the Revenue, the lossincurred was a speculative loss. Rejection of theobjections of the assessee to the re-opening of theassessment by the Assessing Officer vide his Order dated23rd June, 2006, is clearly a change of opinion. In thecircumstances, we are of the view that the order re-opening the assessment was not maintainable. 27. The Supreme Court, in Commissioner of Income Taxv. Corporation Bank [254 ITR 791] has had occasion toconsider a similar issue holding as follows: Turning attention to the first question as regardsthe provisions under Section 147(a) be it noted and as thefacts depict, there is no failure on the part of theassessee in furnishing the particulars pertaining to theabove noted sum as not recoverable for the relevantaccounting year and the statements filed along with theoriginal return disclosed the full details of theaforesaid account. There is, therefore, no failure on thepart of the assessee to disclose fully and truly thematerial facts necessary for the assessment years for therespective years and as such Section 147(a) has no mannerof application and is not attracted in the facts of thematter under consideration. The High Court onconsideration of the facts came to the conclusion that theTribunal was justified in coming to the said finding andwe also record our concurrence therewith. 28. The Supreme Court in the case of Commissioner ofIncome Tax v. Kelvinator of India Ltd., and another([2010) 320 ITR 561 (SC)] has held thus: However, one needs to give a schematic interpretationto the words "reason to believe" failing which, we areafraid, Section 147 would give arbitrary powers to theAssessing Officer to re-open assessments on the basis ofhttps://hcservices.ecourts.gov.in/hcservices/ "mere change of opinion", which cannot be per se reason tore-open. We must also keep in mind the conceptualdifference between power to review and power to re-assess.The Assessing Officer has no power to review; he has thepower to re-assess. But re-assessment has to be based onfulfilment of certain pre-condition and if the concept of"change of opinion" is removed, as contended on behalf ofthe Department, then, in the garb of re-opening theassessment, review would take place. One must treat theconcept of "change of opinion" as an in-built test tocheck abuse of power by the Assessing Officer. Hence,after 1st April, 1989, Assessing Officer has power to re-open, provided there is "tangible material" to come to theconclusion that there is escapement of income fromassessment. Reasons must have a live link with theformation of the belief. 29. I am thus of the view that, in the light of theproviso to section 147, the assessee having made acomplete disclosure of all relevant facts along with thereturn of income, the impugned proceedings are barred bylimitation and also constitute a review of the originalorder of assessment, impermissible in law. In fact, theAssessing Officer is seen to have applied his mind to theissue in question and the original order of assessmentconfirms the position that various materials have beencalled for, such as accounts, financials, tax auditreport, etc. and the assessee has also engaged indiscussions with the Assessing Officer in regard to theissues that arise therefrom. The full and true disclosureof the assessee is thus not in doubt. 35. The Full Bench has specifically gone into thequestion whether an order of assessment must containdetailed discussion in regard to a specific issue in orderthat the Assessing Authority may be said to have initially'considered the issue'. The Bench cites the provisions ofsection 114(e) of the Indian Evidence Act 1872 to bringhome the position that all acts performed by a JudicialOfficer in the discharge of his regular functions would belegally presumed to have been properly and regularlyperformed and executed. Thus, even in cases where there isno discussion in regard to specific issues, if it isestablished by the assessee that all material relevant andgermane to that issue were available before the AssessingOfficer, easily discernible and part of the record,reassessment is impermissible. Then again, it does notstand to reason that an officer, once convinced by thesubmissions of an assessee, will proceed to devote time tohttps://hcservices.ecourts.gov.in/hcservices/recording is agreement in a detailed and reasoned fashion. The legitimate and reasonable expectation is that adetailed and speaking order is passed in cases where hediffers and dissents from the stand of the assessee. Onthis score, the arguments of Mr.J.Narayanasamy in thisregard have no merit and are rejected. 41. In fine, all relevant, primary particulars havebeen produced/filed/furnished by the petitioner at thefirst instance before the authorities, in a transparentfashion. It is for the officer to have appreciated thesame and arrived at the necessary and appropriateinferences at that juncture. Having missed the bus at thatpoint, the Department cannot seek to re-assess the incomeas culled from material already on record, as thisconstitutes a review of the original assessment.Admittedly, and even as per the reasons stated, there isno new material that has come to the notice of theauthorities and the impugned exercise is undertaken solelyon the basis of the materials already supplied by thepetitioners and available on the records of thedepartment. This argument of the revenue is alsoconsequently rejected." 22. It is pertinent to note that insofar as the judgmentsrelied on by the respondents that the Writ Petitions are notmaintainable against the notices issued under Section 148 of theIncome Tax Act, 1961, are concerned, the Hon'ble Supreme Court inits judgment reported in [2017] 77 taxmann.com 176 (SC) [Jeans Knit(P.) Ltd. vs. Deputy Commissioner of Income-Tax, Bangalore], hasheld as under: "2. We find that the High Courts in all these caseshave dismissed the writ petitions preferred by theappellant/assessee herein challenging the issuance ofnotice under section 148 of the Income Tax Act, 1961 andthe reasons which were recorded by the Assessing Officerfor reopening the assessment. These writ petitions aredismissed by the High Courts as not maintainable. Theaforesaid view taken is contrary to the law laid down bythis Court in Calcutta Discount Ltd. Co. v. ITO [1961]41ITR 191 (SC). We, thus, set aside the impugned judgmentsand remit the cases to the respective High Courts todecide the writ petitions on merits. "2. We find that the High Courts in all these caseshave dismissed the writ petitions preferred by theappellant/assessee herein challenging the issuance ofnotice under section 148 of the Income Tax Act, 1961 andthe reasons which were recorded by the Assessing Officerfor reopening the assessment. These writ petitions aredismissed by the High Courts as not maintainable. Theaforesaid view taken is contrary to the law laid down bythis Court in Calcutta Discount Ltd. Co. v. ITO [1961]41ITR 191 (SC). We, thus, set aside the impugned judgmentsand remit the cases to the respective High Courts todecide the writ petitions on merits. 3. We may make it clear that this Court has not madeany observations on the merits of the cases, i.e. thecontentions which are raised by the appellant challengingthe move of the Income Tax Authorities to re-open theassessment. Each case shall be examined on its own meritskeeping in view the scope of judicial review whileentertaining such matters, as laid down by this Court inhttps://hcservices.ecourts.gov.in/hcservices/ various judgments." In the above referred judgment, it was observed that the judgmentreferred to by the High Court in CIT v. Chhabil Dass Agarwal [2013]357 ITR 357/217 Taxman 143/36 taxmann.com 36, does not apply to thecase. Therefore, a writ against the notice issued under Section 148is maintainable. 23. Insofar as the contention of the respondents that theassessee shall await for the orders to be passed by the AssessingOfficer, as held by the Hon'ble Supreme Court in GKN Driveshafts(India) Ltd., vs. Income Tax Officer and others reported in 2003(1)SCC 72, is concerned, Paragraph No.5 of the order, the Supreme Courthas observed as under: "5. We see no justifiable reason to interfere withthe order under challenge. However, we clarify that whena notice under Section 148 of the Income Tax Act isissued, the proper course of action for the noticee isto file return and if he so desires, to seek reasons forissuing notices. The assessing officer is bound tofurnish reasons within a reasonable time. On receipt ofreasons, the noticee is entitled to file objections toissuance of notice and the assessing officer is bound todispose of the same by passing a speaking order. In theinstant case, as the reasons have been disclosed inthese proceedings, the assessing officer has to disposeof the objections, if filed, by passing a speakingorder, before proceeding with the assessment in respectof the abovesaid five assessment years." 24.In the instant cases, notices under Section 148 are issued,against which, the petitioner filed the return of the particularassessment year and also filed his reply seeking reasons. The firstrespondent has given the reasons for the same, against which, thepetitioner filed his objections, which were rejected by theAssessing Authority by a speaking order. That particular orders areunder challenge. 25. It is pertinent to note that all the requirements, asobserved by the Hon'ble Supreme Court, have been followed by thepetitioner and it is only the rejection order which is challengednow, against which, in the opinion of this Court, the Writ ismaintainable and it cannot be said that the petitioner has rushed tothe Court without availing the alternative remedy. 26. Further, insofar as the contention raised by therespondents that as per explanation 1, once the Assessing Authoritywith due diligence has discovered some material evidence, it willnot amount to disclose the same within the meaning of Section 147 ishttps://hcservices.ecourts.gov.in/hcservices/ 25. It is pertinent to note that all the requirements, asobserved by the Hon'ble Supreme Court, have been followed by thepetitioner and it is only the rejection order which is challengednow, against which, in the opinion of this Court, the Writ ismaintainable and it cannot be said that the petitioner has rushed tothe Court without availing the alternative remedy. 26. Further, insofar as the contention raised by therespondents that as per explanation 1, once the Assessing Authoritywith due diligence has discovered some material evidence, it willnot amount to disclose the same within the meaning of Section 147 ishttps://hcservices.ecourts.gov.in/hcservices/ concerned, the Hon'ble Supreme Court has held that it is theassessee who can only produce the documents and he cannot beexpected to give inference to the disclosure. Once all the primaryfacts are before the Assessing Authority, he requires no furtherassistance by way of disclosure and it is not possible for theassessee to draw any particular inference and communicate the sameto the Assessing Authority and explanation given to Section 147,does not cast a duty upon the assessee to disclose the inferences inthe following lines: "Does the duty, however, extend beyond the full andtruthful disclosure of all primary facts? In our opinion,the answer to this question must be in the negative. Onceall the primary facts are before the assessing authority,he requires no further assistance by way of disclosure.It is for him to decide what inferences of facts can bereasonably drawn and what legal inferences haveultimately to be drawn. It is not for somebody else - farless the assessee - to tell the assessing authority whatinferences, whether of facts or law, should be drawn.Indeed, when it is remembered that people often differ asregards what inferences should be drawn from given facts,it will be meaningless to demand that the assessee mustdisclose what inferences - whether of facts or law - hewould draw from the primary facts. If from primary facts more inferences than one couldbe drawn, it would not be possible to say that theassessee should have drawn any particular inference andcommunicated it to the assessing authority. How could anassessee be charge with failure to communicate aninference, which he might or might not have drawn? It may be pointed out that the Explanation to thesub-section has nothing to do with "inferences" and dealsonly with the question whether primary material facts notdisclosed could still be said to be constructivelydisclosed on the ground that with due diligence theincome-tax Officer could have discovered them from thefacts actually disclosed. The Explanation has not theeffect of enlarging the section, by casting a duty on theassessee to disclose "inferences" - to draw the properinferences being the duty imposed on the income-taxofficer." 27. In the instant cases, the assessee has submitted Form-2disclosing all the materials giving all the explanations. In suchcircumstances, it cannot be said that he has not submitted all thematerials fully and truly. Therefore, once the assessee hassubmitted reply; once he submitted the returns for the assessmentyear; and once he has filed a reply to the notice under Section 148https://hcservices.ecourts.gov.in/hcservices/and files his objections to the reasons for issuance of 148 notice before the very same authority, Section 147 is fully complied with.Further, the objections raised by the assessee had been consideredand rejected by the Assessing Authority, but the reasons given bythe first respondent are contrary to the well settled principles oflaw laid down by the Hon'ble Supreme Court. before the very same authority, Section 147 is fully complied with.Further, the objections raised by the assessee had been consideredand rejected by the Assessing Authority, but the reasons given bythe first respondent are contrary to the well settled principles oflaw laid down by the Hon'ble Supreme Court. 28. In view of the foregoing reasons, this Court is of theview that the impugned orders along with notices dated 31.03.2018,are liable to be set aside and accordingly, set aside andconsequently, the Writ Petitions are allowed. No costs.Consequently, the connected miscellaneous petitions are closed.Sd/- Assistant Registrar (CS II) / /2020Sub Assistant Registrar(CS) SMLTo1.The Assistant Commissioner of Income Tax, Circle 1, Trichy, No.44, Williams Road, Cantonment, Tiruchirapalli-620 001. 2.The Deputy Commissioner of Income Tax, Central Circle -2, New Delhi. 3.The Principal Commissioner of Income Tax 1 - Trichy, No.44, Williams Road, Cantonment, Tiruchirappalli-620 001.+3 CC to M/s.N.DILIP KUMAR, Advocate (SR-95052[F],SR-95053[F] SR-95054[F] dated 31/10/2019 )+3 CC to M/s.N.V.BALAJI, Advocate ( SR-95314[F],SR-95315[F],SR-95316[F] dated 31/10/2019 ) W.P.(MD)Nos.19202, 19825and 19826 of 2018Dated: 30.10.2019 KMV(CO) KK(20.10.2020) 15P 10C