M/S.morarjee Textiles Limited v. Assistant Commissioner Of Income Tax 6(3),Mumbai And Others

VISHALSUBHASHPAREKAR Digitally signed byVISHAL SUBHASHPAREKARDate: 2022.02.1110:45:08 +0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1215 OF 2014 M/s.Morarjee Textiles Limited ...Petitioner vs. Assistant Commissioner of Income Tax 6(3),Mumbai and Others ...Respondents Mr. Madhur Agrawal i/b. Atul Jasani, for the PetitionerMr. Suresh Kumar, for the Respondents CORAM :K.R. SHRIRAM &N. J. JAMADAR, JJ. DATE : FEBRUARY 10, 2022 P.C.: .Petitioner is impugning notice dated 18[th] March, 2013 issuedunder section 148 of the Income Tax Act, 1961 by whichRespondent No. 1 has informed Petitioner that he has reason tobelieve that Petitioner's income chargeable to tax for assessmentyear 2008-2009 has escaped assessment within the meaning of section 147 of the Act. We have considered the reasons recorded for reopening, which read as under: "The assessment in this case was completed u/s 143(3)of the Income Tax ACt, 1961 on 27/12/2010 at an income ofRs.23,09,82,469/-. Perusal of assessment records revealthat: 1] As per section 72 of the Income Tax Act, 1961, nobusiness loss can be carried forward and set off against anyother heads of income except income under the head ofbusiness or profession for more than eight assessmentyears immediately succeeding the assessment year for which the loss was first computed. Further as per section32 of the Income Tax Act, 1961, unabsorbed depreciationcan be carried forward for the indefinite period and it canbe set off against any heads of income except income underteh head salaries. However, no unabsorbed depreciationrelevant to assessment year 1997-98 to 2001-02 can becarried forward and set off against any other heads ofincome except income under the head business orprofession for more than eight first computed. Similarly,brought forward unabsorbed depreciation allowance forand upto A.Y. 1996-97, which could not be set off uptoA.Y.1996-97, shall be carried forward for set off againstincome under any head for a maximum period of eightA.Y.'s starting from A.Y. 1997-98 i.e. upto A.Y. 2004-05. 2] The above cited legal position was also confirmed by thespecial bench of ITAT, Mumbai on 30.06.2010 in the case ofDCIT vs. Times Guarantee Ltd. 3] In the instant case the income was assessed at a loss ofRs. 23.09 crore after scrutiny assessment completed inDecember, 2010. Verification of records revealed that theassessee had carried forward of unabsorbed depreciation ofRs. 304818624/- pertaining to A.Y.s 1998-99 to 2000-01,though the same was lapsed with current assessment yeari.e. A.Y.2008-09. (Year wise claim is detailed in the tablebelow). This resulted in incorrect carried forward of lossesof Rs. 304818624/- for future set off. In view of the above, I have reason to believe thatincome chargeable to tax as enumerated herein above, hasescaped assessment within the meaning of section 147read with proviso thereto by reason of failure on the part ofthe assessee to disclose fully and truly all material factsnecessary for the assessment." 3.Petition was admitted on 14[th] July, 2014. First of all we have to note that the Assessing Officer has relied upon the order of thespecial Bench of the ITAT in the case of DCIT vs. Times Guaranty Limitedto form an opinion that Petitioner's income has escapedassessment and therefore it would be a fit case to reopen. This orderof ITAT is dated 30[th] June, 2010 but the assessment of thePetitioner under section 143(3) of the Act was completed on 27thDecember, 2010. Therefore, the original Assessing Officer had thelegal position with him but still proceeded to pass the assessmentorder. Therefore, this is a clear case of change of opinion which isnot permissible. 3.Petition was admitted on 14[th] July, 2014. First of all we have to note that the Assessing Officer has relied upon the order of thespecial Bench of the ITAT in the case of DCIT vs. Times Guaranty Limitedto form an opinion that Petitioner's income has escapedassessment and therefore it would be a fit case to reopen. This orderof ITAT is dated 30[th] June, 2010 but the assessment of thePetitioner under section 143(3) of the Act was completed on 27thDecember, 2010. Therefore, the original Assessing Officer had thelegal position with him but still proceeded to pass the assessmentorder. Therefore, this is a clear case of change of opinion which isnot permissible. 4.Moreover, the order of ITAT has not been accepted by theHon'ble Gujrat High Court in General Motors India (P) Ltd. vs.Deputy Commissioner of Income Tax[1].This has been followed bythis Court in various matters, one of which is Pr. Commissioner ofIncome Tax, Central-2 vs. Supreme Petrochem Ltd.[2]in the order 7[th]June, 2019. When we are pointed this out to Mr. Suresh Kumar, Mr.Suresh Kumar in fairness agreed and also says that many Appealsof revenue had been withdrawn because of the settled legal position. 5.In the circumstances, Petition is allowed in terms of prayerclause (a) which read as under: (a) That this Court be pleased to issue a writ of certiorarior any other writ order or direction under Article 226 ofthe Constitution of India calling for the records of the caseor any other writ order or direction under Article 226 ofthe Constitution of India calling for the records of the case 1[2012] 25 taxmann.com 364 (Guj.)2ITA.No. 661 of 2017 Dt.07-06-20192ITA.No. 661 of 2017 Dt.07-06-2019 leading to the issue of the impugned notice and passing ofthe impugned order and after going through the same andexamining the question of legality thereof quash, canceland set aside the impugned notice (Exhibit E) andimpugned order (Exhibit G)." (N. J. JAMADAR, J.) (K. R. SHRIRAM, J.)