Neutral Citation No: 2022/Dhc/000817 v. Principal Commissioner Of Income Tax -5, New Delhi& Ors

NEUTRAL CITATION NO: 2022/DHC/000817 $~A-8 IN THE HIGH COURT OF DELHI AT NEW DELHI+W.P.(C) 1409/2022 & CM APPL.4052/2022KURZ INDIA PRIVATE LIMITEDKURZ INDIA PRIVATE LIMITED ..... Petitioner Through:Mr.Piyush Kaushik, Advocate. versus PRINCIPAL COMMISSIONER OF INCOME TAX -5, NEW DELHI& ORS...... Respondents Through:Mr.Pratyaksh Gupta, Advocate. Date of Decision: 03[rd]March, 2022 % CORAM:HON'BLE MR. JUSTICE MANMOHANHON'BLE MR. JUSTICE SUDHIR KUMAR JAIN J U D G M E N T MANMOHAN, J (Oral): 1.Present writ petition has been filed challenging the impugned noticedated 28[th]March, 2021 issued under Section 148 of Income tax Act, 1961('the Act') for the assessment year 2015-16. 2.Learned counsel for the Petitioner states that reopening of assessmentwas done on the sole ground that the petitioner has made a claim ofdeduction of Rs.1,54,05,798/-; when, in fact, no such claim has ever beenmade. He states that the Petitioner had only claimed expenses as mentionedin Notes 18 to 23 to the audited accounts. He points out that it is apparentfrom the audited profit & loss account that the petitioner has not made anyclaim of contingent liabilities of Rs.1,54,05,798/- (as per Note 24 to audited accounts) as revenue expense. He states that the same was disclosed by wayof a written note in accordance with the requirements of applicableAccounting Standards i.e. AS-29. 3.Learned counsel for the Petitioner also submits that reopening isinitiated on the basis of review and re-appreciation of the same material i.e.audited accounts which were subject to verification in the course of originalassessment proceedings under Section 143(3) which is not permissible inlaw. 4.On the last dates of hearing, learned counsel for the respondents hadsought time to obtain instructions. Today, learned counsel for therespondents refers to Note No.24 to the audited accounts and states that theAssessing Officer wished to ascertain as to how the contingent liability onaccount of statutory forms – Central Sales Tax had increased fromRs.1,17,51,217/- in the last financial year to Rs.1,51,05,798/- in the currentfinancial year. Learned counsel, in these circumstances, seeks time to file acounter affidavit. 5.Upon perusal of the paper book, this Court finds that the order dated27[th]December, 2021 disposing of the objections filed by the petitioner doesnot deal with any of the contentions or submissions advanced by thepetitioner. 6.In fact, the impugned order is based on the premise that the contingentliability has been claimed as revenue expense! In the opinion of this Court,the said reason is contrary to the facts as well as to the concept of contingentliability which is only required to be disclosed by way of a note inaccordance with the requirement of applicable Accounting Standards. 7.The impugned order disposing objections dated 27[th]December, 2021also suffers from complete non-application of mind, as there are a lot ofrepetitions in the impugned order. 8.Consequently, this Court is also of the view that the reason to believeis invalid and has no rational nexus to the belief for escapement of incomeand there was no fresh material on record to initiate re-assessmentproceedings. 9.This Court is further of the view that no useful purpose would beserved by giving an opportunity to file a counter affidavit. Accordingly, thesaid request of learned counsel for the respondent is declined and theimpugned notice dated 28[th]March, 2021 and the order disposing objectionsdated 27[th]December, 2021 are quashed. 10.However, in the event the Assessing Officer has some fresh material,he shall be at liberty to take action in accordance with law. In the event suchan action is taken, the petitioner shall be at liberty to file appropriateproceedings in accordance with law. Accordingly, the writ petition andapplication stand disposed of. MANMOHAN, J MARCH 3, 2022TS SUDHIR KUMAR JAIN, J