M/S.ge T&D India Limited(Formerly Known As Alstom T&D India Limited)Rep.by Its Authorised Signatorymr.sivaramakrishnan Sundararaman19 v. Deputy Commissioner Of Income Tax,Large Tax Payer Unit

IN THE HIGH COURT OF JUDICATURE AT MADRASDATED : 26.04.2021 M/s.GE T&D India Limited(Formerly Known as Alstom T&D India Limited)19/1, IOC Building,GST Road, PallavaramChennai-600 043. ..Petitioner in W.P.No.30450 of 2018 M/s.GE T&D India Limited(Formerly Known as Alstom T&D India Limited)Rep.by its authorised SignatoryMr.Sivaramakrishnan Sundararaman19/1, IOC Building,GST Road, PallavaramChennai-600 043. ..Petitioner in W.P.No.33943 of 2018 vs. 1. Deputy Commissioner of Income Tax,Large Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, Chennai-600 034. ..R1 in W.P.No.30450 of2018 2.Joint Commissioner of Income TaxLarge Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, 3.Assistant Commissioner of Income Tax,Large Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, Chennai-600 034. ..Respondent in W.P.No.33943 of 2018 PRAYER in W.P.No.30450 of 2018 : Writ Petition filed underArticle 226 of the Constitution of India, praying for the issue https://hcservices.ecourts.gov.in/hcservices/ of a Writ of Certiorari, to call for the records on the file ofthe first respondent and quash the impugned order inLTU1/AAACG2115R/2018-19 dated 18.09.2018 along with notice inPAN: AAACG2115Rdated29.03.2018innotice numberITBA/AST/S/148/2017-18/1009529791(1) issued under Section 148 ofthe Income Tax Act for the assessment year 2013-14. PRAYER in W.P.No.33943 of 2018 : Writ Petition filed underArticle 226 of the Constitution of India, praying for the issueof a Writ of Certiorari, to call for the records on the file ofthe respondent and quash the impugned order in PAN: AAACG2115Rdated 19.11.2018 passed under Section 143(3) read with Section147 of the Income Tax Act for the assessment year 2013-14. The writ petition in W.P.No.30450 of 2018 is filedchallenging the notice issued under Section 148 of the IncomeTax Act in proceedings dated 29.03.2018 as well as the order ofdisposal of the objections for reopening of the assessmentissued by the Authority in proceedings dated 18.09.2018 areunder challenge. 2. The writ petition in W.P.No.33943 of 2018 is filedchallenging the assessment order dated 19.11.2018 passedpursuant to the reopening of the assessment initiated underSection 147 of the Act. 3. The petitioner is a listed Company incorporated on13.03.1957 and is engaged in the business of manufacturing ofheavy electrical equipment and executes projects involvingtransmission and distribution of power and other turnkeyprojects. 4. The learned counsel appearing for the petitioner, withreference to the issues, contended that the initiation ofproceedings under Section 147 of the Income Tax Act itself isuntenable, in view of the fact that there is no element ofreason to believe as mandated under Section 147 and the noticeunder Section 148 of the Act was issued based on change ofopinion. In order to substantiate the said contention, thelearned counsel appearing for the petitioner solicited the 3. The petitioner is a listed Company incorporated on13.03.1957 and is engaged in the business of manufacturing ofheavy electrical equipment and executes projects involvingtransmission and distribution of power and other turnkeyprojects. 4. The learned counsel appearing for the petitioner, withreference to the issues, contended that the initiation ofproceedings under Section 147 of the Income Tax Act itself isuntenable, in view of the fact that there is no element ofreason to believe as mandated under Section 147 and the noticeunder Section 148 of the Act was issued based on change ofopinion. In order to substantiate the said contention, thelearned counsel appearing for the petitioner solicited the attention of this Court with reference to return of income filedby the petitioner for the assessment year 2013-14 and theconsequential assessment order passed by the Assessing Officerafter considering all the facts and circumstances. Pertinently,the learned counsel appearing for the petitioner referred theincome by way of capital gains with reference to sale ofPerungudi Property. The details are provided at the time oforiginal assessment itself. The facts and figures are notdisputed by the Assessment Officer while scrutinizing. Thisapart, the capital gains tax was also given in the Notes to theFinancial Statements and the said portion reads as under:During the year, the Company sold certainimmovable properties. Capital gains tax on such salehas been provided based on the actual salesconsideration as per the sale deed. The RegisteringAuthority has not accepted the value as per the saledeed and is in the process of fixing the appropriatevalue for these properties for the purpose of stampduty. Pending such determination, the actual saleconsideration is treated as the market value of theproperties. The Company has also obtained a valuationreport from a professional valuer for the subjectproperties and the same is comparable with the actualsale consideration. 5. Based on the informations as well as the detailsprovided by the petitioner, the Assessing Officer issued aquestion seeking certain clarification. The petitioner, indetail, furnished all the informations as well as theclarification sought for by the Assessing Officer in letterdated 26.10.2016. In the said letter, the petitioner hascategorically stated with reference to the details and documentsrelating to Purchase and Sale of Perungudi land which reads asunder: 28.Details and documents relating to Purchaseand Sale of Perungudi land:-The sale deed for the sale of Perungudi land isgiven as Annexure 7 to this submission.Out of the total sale consideration ofRs.22,36,07,844 received, we wish to submit thatRs.1,69,82,069 attributable to buildings is reducedas from the block of "Buildings" (please referAppendix 3 to Form 3CD). The balance saleconsideration of Rs.20,66,25,775 is considered forcomputing capital gains on sale of land. The Assetregister for purchase of the land is enclosed asAnnexure 8 to this submission. 6. Further, the petitioner has provided the detailsregarding the sale of fixed asset. Considering all such facts https://hcservices.ecourts.gov.in/hcservices/ and circumstances as well as the clarifications and additionaldetails provided by the petitioner/assessee, the AssessingOfficer passed the final order of assessment under Section 143(3) read with 92CA of the Income Tax Act on 19.12.2016. Theoriginal order of assessment passed by the Assessing Officer isself-contained which would speak that the petitioner/assesseehad furnished all the details and informations as well as thedocuments which are all relevant for the purpose of assessment. 6. Further, the petitioner has provided the detailsregarding the sale of fixed asset. Considering all such facts https://hcservices.ecourts.gov.in/hcservices/ and circumstances as well as the clarifications and additionaldetails provided by the petitioner/assessee, the AssessingOfficer passed the final order of assessment under Section 143(3) read with 92CA of the Income Tax Act on 19.12.2016. Theoriginal order of assessment passed by the Assessing Officer isself-contained which would speak that the petitioner/assesseehad furnished all the details and informations as well as thedocuments which are all relevant for the purpose of assessment. 7. When the matter stood like that, the reopeningproceedings are initiated under Section 147 of the Act based onaudit objections. The learned counsel appearing for thepetitioner contended that the audit objection, which isextracted in the order providing reason for reopening of theassessment, itself is untenable as all such factual detailsraised in the reopening order had been dealt with by theAssessing Officer in the original assessment order. A specificfinding was given. Thus, the very initiation of proceedingsunder Section 147 of the Act is without jurisdiction anduntenable. The element of reason to believe contemplated underthe provision is missing. Thus, the entire exercise is to beconstrued as non-est in law. 8. Regarding the principles to be followed with reference toSection 147, the learned counsel appearing for the petitionerreiterated that only if there is a reason to believe asestablished by the Department, then alone, the proceedings underSection 147 can be sustained and not otherwise. Mere suspicionis insufficient to institute the reopening proceedings underSection 147 of the Act. The suspicion, if supported with newmaterials, then alone, the proceedings can be initiated. Whenthe material facts as well as the documents regarding the saleproperties were furnished by the assessee and the AssessingOfficer also taken into consideration, scrutinized the same andpassed final assessment order, then any other initiation basedon some materials would be nothing but change of opinion and notthe reason to believe. 9. The learned counsel appearing for the respondent disputedthe contention raised on behalf of the petitioner in entirety bystating that it is not change of opinion as pleaded by thepetitioner. There are materials and informations made availablefor reopening of the assessment. The learned Senior StandingCounsel made a submission that the fact regarding the appealfiled by the purchaser of the property from the petitioner underSection 47A of the Indian Stamp Act regarding the payment ofstamp duty has not been informed to the Department. This apart,the sale deed which is necessary was also not produced to removethe duty in this aspect. Thus, there are new materials availableon record and further, it is contended that the auditobjections, if provides a new information or materials, then the same would constitute a valid ground for the purpose ofinitiation of reopening proceedings under Section 147 of theAct. In the present case, the reason for reopening stated inorder dated 06.07.2018, would reveal that the Assessee Companyhas sold the land and the building comprised in three documents.It is evident from the Notes to the Financial Statements (48Capital Gains Tax), wherein it is stated that "the RegisteringAuthority has not accepted the value as per the sale deed and isin the process of fixing the appropriate value for theseproperties for the purpose of stamp duty. Hence, it is evidentthat the property is undervalued". The details regardingundervaluation of the documents registered are also consideredby the Authority. Further, the order speaks that as per Section50C of the Income Tax Act, the value of the land would beRs.77,73,62,250/-. However, the assessee had shown saleconsideration of the land as Rs.20,66,25,775/- only. If this isconsidered, the Long Term Captial Gain would beRs.75,69,88,005/- and difference in Long Term Capital Gain to beoffered to tax is Rs.57,07,36,475/- as detailed hereunder: 11. This Court is of the considered opinion that the saleconsideration shown by the assesee in the return of income forthe assessment year 2013-14 is not disputed. The documentregistered, which is now in appeal under Section 147A of theIndian Stamps Act is also not in dispute. Thus, the market valueas stated in the document is disputed and the actual marketvalue and the stamp duty paid is also in dispute. Thus, thedisputes are providing new material facts and informations tothe Income Tax Department for reopening of the assessment. Themanner in which the sale deed was valued by the assessee and thestamp duty paid at the time of registration as well as theappeal filed under Section 47A of the Indian Stamp Act and theactual market value prevailing during the relevant point of timewith reference to the subject property, provides new information and an additional material, which were not considered by theAssessing Officer at the time of original assessment. Thus, thesaid factors would be new material for the purpose of reopeningof assessment. Thus, the reopening of the assessment by theAssessing Officer is in consonance with the provisions ofSection 147 and no further inference is required from the handsof this Court. 12. Though all these grounds raised in W.P.No.30450 of 2018challenging the notice issued under Section 148 of the Act aswell as the disposal of objections raised by the assessee forreopening of assessment, the Department had proceeded furtherand passed assessment order under Section 143(3) read with 147of the Income Tax Act in proceedings dated 19.11.2018. As far asthe said assessment order is concerned, this Court is of theconsidered opinion that the petitioner has to prefer an appealunder Section 246A of the Act. 13. When an appellate remedy is provided in respect of thefinal order of the assessment passed by the Competent Authority,the assessee must exhaust the said appellate remedy. Therefore,the petitioner is at liberty to approach the Appellate Authorityunder Section 246A of the Act in respect of final assessmentorder passed by the Assessing Officer in impugned proceedingsdated 19.11.2018, as far as W.P.No.33943 of 2018 is concerned. 13. When an appellate remedy is provided in respect of thefinal order of the assessment passed by the Competent Authority,the assessee must exhaust the said appellate remedy. Therefore,the petitioner is at liberty to approach the Appellate Authorityunder Section 246A of the Act in respect of final assessmentorder passed by the Assessing Officer in impugned proceedingsdated 19.11.2018, as far as W.P.No.33943 of 2018 is concerned. 14. In respect of W.P.No.30450 of 2018 is concerned, thisCourt has elaborately considered the ground for reopening ofassessment under Section 147 of the Act. Therefore, the saidground is not made available to the petitioner as this Court isof the opinion that the initiation of 147 proceedings is inconsonance with the provisions of the Act. Therefore, there isno perversity or infirmity. Thus, the petitioner is at libertyto prefer an appeal under Section 246A of the Act in order toredress any further grievance with reference to the finalassessment order passed in the impugned proceedings dated19.11.2018 within a period of three weeks from the date ofreceipt of a copy of this Order. In the event of filing any suchappeal, the Appellate Authority has to consider the same onmerits and in accordance with law and pass appropriate ordersand by affording opportunity to the writ petitioner. 15. With these observations, both the writ petitions standdismissed. No costs. Consequently, connected miscellaneouspetitions are also closed. Sd/- Assistant Registrar(CS-VII) //True Copy// Sub Assistant Registrar ssb To 1. Deputy Commissioner of Income Tax,Large Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, Chennai-600 034. 2.Joint Commissioner of Income TaxLarge Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, Chennai-600 034. 3.Assistant Commissioner of Income Tax,Large Tax Payer Unit-1,7th Floor, New Block,121, Mahatma Gandhi Road, Chennai-600 034. +2cc to Mr.N.V.Balaji, Advocate, S.R.No.25895,25896 +2cc to Ms.Hema Muralikrishnan, Advocate, S.R.No.25476,25477 W.P.Nos.30450 & 33943 of 2018VG-II(CO)CB(18/06/2021)