Polaris Financial Technology Limited v. The Assistant Commissioner Of Income Tax, Corporate Circle 5

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE MR.JUSTICE C.SARAVANAN Polaris Financial Technology Limited,Represented by its Director,M/s Polaris Presently Known as Consulting and Services Ltd34, IT Highway, Navalur,Chennai – 603 103. ... Petitioner Vs. 1.The Assistant Commissioner of Income Tax, Corporate Circle 5-2, 4[th] Floor, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 2.The Deputy Commissioner of Income Tax, Corporate Circle 5 (2), 4[th] Floor, Ayakar Bhavan, 121, M.G.Road, Nungambakkam, Chennai – 600 034. ...Respondents Writ Petition filed under Article 226 of the Constitutionof India praying to issue a Writ of Certiorari, to call for therecords of the respondents pertaining to reopening Notice underSection 147 of the Act bearing No.ITBA/AST/S/148/2016-17/1003707383(1) dated 30.03.2017 issued by the 2[nd] respondentand the consequential order bearing ACIT.Co.CIR.5(2)/2017-18dated 24.11.2017 issued by the 1[st] respondent and quash the same. For Petitioner: Mr.Srinath Sridevan For Respondents : Mr.D.Prabhu Mukunth Arunkumar Senior Standing Counsel for M/s.Hema Muralikrishnan Standing Counsel. https://hcservices.ecourts.gov.in/hcservices/ O R D E R The petitioner has challenged the impugned notice dated30.03.2017 issued for the Assessment Year 2012-2013 seeking tore-open the assessment after a lapse of four years from the dateof assessment. 2. The petitioner had requested the 1[st] respondent toprovide reasons for re-opening of the assessment in terms of thedecision of the Hon’ble Supreme Court in GKN Driveshafts (India)Ltd. Vs. Income Tax Officer and Others, (2003) 1 SCC 72. 3. As per the decision, an assessee who has been issuedwith a notice under Section 148 of the Income-tax Act, 1961hasto file a return and if he so desires, can ask for reasonsfor issuing notices and that the assessing officer is bound tofurnish reasons within a reasonable time. In this case, thepetitioner asked for such reasons. 4. By a communication dated 13.10.2017, the 1[st]respondent furnished the reasons for re-opening the assessment.It reads as under: “The assessee company, M/s.Polaris FinancialTechnology Ltd., is engaged in the business ofsoftware development. It filed its Return ofIncome on 30/11/2012 admitting a total income ofRs.119,80,36,060/-. The assessment u/s 143(3)r.w.s.92CA(3) was made on 10.05.2016 aftermaking addition of Rs.6,12,74,728 on account ofTPO adjustment and Rs.2,64,68,238 towardsdisallowance u/s 14A. The assessee has claimeddeductionu/s80JJAAamountingtoRs.17,93,76,639/-. It was noticed that theassessee had treated many persons as a workmen,who were working in managerial or administrativecapacity such as Senior Project Lead, Seniorconsultant, etc. As these employees are notregular “workmen”, as contemplated in theIndustrial Dispute Act, (hereinafter read asI.D.Act), 1947, the payment mode do not qualifyfor the deduction u/s 80JJAA of the I.T.Act.Further, the assessee failed to substantiatewhether the said employees were actuallyreceiving wages from the company less thanRs.6500 per month. As the said conditions (iii)& (iv) of the Section 2(s) of I.D.Act are notsatisfied, the said payments do not qualify fordeduction u/s 80JJAA of the I.T.Act. The intention of the legislature as per thefinance Act, 2013 was to provide deduction onthe wages paid to blue collar workers employed in industrial undertakings & not to white collaremployees like the employees of the assesseecompany. Therefore, the payments made as wagesto such employees who do not come under thepurview of I.D.Act are also not eligible fordeduction u/s 80JJAA of the I.T.Act. Hence, thisamount of Rs.17,93,76,639/- need to beexamined/disallowed in this year, i.e.A.Y.2012-13.” The intention of the legislature as per thefinance Act, 2013 was to provide deduction onthe wages paid to blue collar workers employed in industrial undertakings & not to white collaremployees like the employees of the assesseecompany. Therefore, the payments made as wagesto such employees who do not come under thepurview of I.D.Act are also not eligible fordeduction u/s 80JJAA of the I.T.Act. Hence, thisamount of Rs.17,93,76,639/- need to beexamined/disallowed in this year, i.e.A.Y.2012-13.” 5. The petitioner filed its objection to the aforesaidreasons given for re-opening of the assessment, which culminatedin the impugned communication dated 24.11.2017 of the 1[st]respondent overruling the objection of the petitioner againstthe re-opening of the assessment pursuant to the impugned noticedated 30.03.2017. 6. Challenging the impugned notice dated 30.03.2017 andthe impugned communication dated 24.11.2017, overruling theobjection for re-opening of the assessment, the petitioner hasfiled the present writ petition. 7. It is the contention of the petitioner that therespondents cannot re-open the assessment merely based on changeof opinion. Such an exercise was contrary to the decision of theHon’ble Supreme Court in Kelvinator of India Vs. Commissioner ofIncome Tax, (2010) 187 Taxmann 312 (SC). It is further submittedthat the decision of the Hon’ble Supreme Court rendered inCalcutta Discount Co. Ltd. V. Income Tax Officer, AIR 1961 SC372 is still relevant, though rendered in the context of Section34 of the Income Tax Act, 1961. It is submitted that there isjurisdictional error in re-opening of the assessment andtherefore the impugned notice dated 30.03.2017 and the impugnednotification dated 24.11.2017 are liable to be quashed. 8. It is submitted that the petitioner has claimeddeduction under Section 80JJAA of the Income Tax Act, 1961 andhad filed the Income Tax Returns on 30.11.2012, which culminatedin scrutiny assessment on 30.05.2016 after elaborate exchange ofcommunication pursuant to a notice u/s 142(1) of the Income TaxAct, 1961. 9. It is submitted that the petitioner had given all thedetails to the 2[nd] respondent for the purpose of assessment,while claiming deduction under Section 80JJAA and therefore amere change in opinion by an Assessing Officer, did not entitlethe said officer to re-open the assessment. 10. The learned counsel appearing for the petitioner drew https://hcservices.ecourts.gov.in/hcservices/ my attention to communication dated 03.03.2016, pursuant to anotice issued under Section 142(1) and after the personalhearing held on 15.02.2016 and 22.02.2016. It is the contentionof the learned counsel appearing for the petitioner that thepetitioner had clearly explained the basis on which thededuction under Section 80JJAA of the Income Tax Act was claimedby the petitioner. The learned counsel appearing for thepetitioner relied on the following decisions:- 11. On the other hand, the learned counsel appearing forthe respondents submits that the impugned notice and theimpugned communication overruling the objection cannot beinterfered, inasmuch as it impedes the re-assessment proceedingsunder Section 148 of the Income Tax Act, 1961. It is submittedthat it is open for the petitioner to make all its submissionson merits, which has been raised before this Court and in case,as has been contended by the petitioner that if there was achange of opinion and if the petitioner is liable to establishthat there was no failure on the part of the petitioner to fullyand truly disclose all materials required for assessment, theofficer would be obliged to drop the proceedings. 12. I have considered the submissions of the learnedcounsel for the petitioner and the respondents and decisionscited by the learned counsel for the petitioner. 12. I have considered the submissions of the learnedcounsel for the petitioner and the respondents and decisionscited by the learned counsel for the petitioner. 13. On the one hand, it is the contention of the learnedcounsel for the petitioner that the impugned proceedings arewithout jurisdiction and therefore the petitioner was entitledfor the relief. On the other hand, it is the contention of the https://hcservices.ecourts.gov.in/hcservices/ respondents that the present Writ Petition is liable to bedismissed. 14. Though, the purpose of issuing notice under Section148 of the Income Tax Act, 1961 is for passing an order of re-assessment under Section 147 of the Income Tax Act, 1961.Section 148 of the Income Tax Act, 1961 is however not governedby the restrictions contained in Section 147 of the Income TaxAct, 1961. 15. For the aforesaid purpose, the Assessing Officer hasto merely issue a notice within the time limit prescribed underSection 149 of the Income Tax Act, 1961. Before issuing notice,he has to record reason. In view of the decision of theHonourable Supreme Court in GKN Drive Shafts referred to supra,an assessee is now entitled to ask for the reasons for reopeningof the assessment after filing the returns. The AssessingOfficer has to merely communicate the reasons for reopening theassessment if desired by the assessee. The communication ofreasons for reopening of the assessment is merely to allow anassessee to participate in the re-assessment proceedings bygiving effective reply. The overruling of the objection by therespondents through a speaking order is however not an orderunder Section 147 of the Income Tax Act, 1961. 16. The decision of the Hon’ble Supreme Court in CalcuttaDiscount Company Ltd.Vs.Income Tax Officer,Companies DistrictI, Calcutta and Others, (1961) 2 SCR 241 was rendered in thecontext of Section 34(1)(a) of the Income Tax Act, 1922. Thecourt there held that for an Assessing Officer to exercise hisjurisdiction under Section 34(1)(a) of the Income Tax Act, 1922,the Assessing Officer has to satisfy two conditions co-exist,namely:- 17. It must also be remembered that Section 148 of theIncome Tax Act, 1961 as it stands now and Section 34 of theIncome Tax Act, 1922 as it stood when the decision was renderedread differently. They are reproduced below for easy reference:- https://hcservices.ecourts.gov.in/hcservices/ Section 34(1) “If— (a) the Income Tax Officerhas reason to believe thatby reason of the omission orfailure on the part of anassessee to make a return ofhis income under Section 22for any year or to disclosefully and truly all materialfacts necessary for hisassessment for that year,income, profits or gainschargeable to income taxhave escaped assessment forthat year, or have beenunder assessed, or assessedat too low a rate, or havebeen made the subject ofexcessive relief under theAct, or excessive loss ordepreciation allowance hasbeen computed, or(b) notwithstanding thatthere has been no omissionor failure as mentioned inclause (a) on the part ofthe assessee, the Income TaxOfficer has in consequenceof information in hispossession reason to believethat income, profits orgains chargeable to incometax have been underassessedor assessed at too low arate, or have been made thesubject of excessive reliefunder this Act, or thatexcessivelossordepreciation allowance hasbeen computed,he may incases falling under clause(a) at any time within eightyears and in cases fallingunder clause (b) at any timewithin four years of the endof that year, serve on theassessee, Section 148. Issue of noticewhere income has escapedassessment. Section 148. Issue of noticewhere income has escapedassessment. (1)Beforemakingtheassessment, reassessment orrecomputation under Section147, the Assessing Officershall serve on the assessee anotice requiring him tofurnish within such period,as may be specified in thenotice, a return of hisincome or the income of anyother person in respect ofwhich he is assessable underthis Act during the previousyear corresponding to therelevant assessment year, inthe prescribed form andverified in the prescribedmanner and setting forth suchother particulars as may beprescribed;andtheprovisions of this Act shall,so far as may be, applyaccordingly as if such returnwere a return required to befurnished under Section 139 : Provided that in a case— (a) where a return has beenfurnished during the periodcommencing on the 1st day ofOctober, 1991 and ending onthe 30th day of September,2005 in response to a noticeserved under this Section,and (b) subsequently a notice hasbeen served under sub-Section(2) of Section 143 after theexpiry of twelve monthsspecified in the proviso tosub-Section (2) of Section or, if the assessee is acompany, on the principalofficer, thereof, a noticecontaining all or any of therequirements which may beincluded in a notice undersub-Section (2) of Section 22and may proceed to assess orreassess such income, profitsor gains or recompute the lossor depreciation allowance; andthe provisions of this Actshall, so far as may be, applyaccordingly as if the noticewere a notice issued underthat sub-Section: Provided that—(i) the Income Tax Officershall not issue a notice underthis sub-Section, unless hehas recorded his reasons fordoing so and the Commissioneris satisfied on such reasonsrecorded that it is a fit casefor the issue of such notice;(ii) the tax shall bechargeable at the rate atwhich it would have beencharged had the income,profits or gains not escapedassessment or full assessment,as the case may be; and(iii) where the assessmentmade or to be made is anassessment made or to be madeon a person deemed to be theagent of a non-resident personunder Section 43, this sub-Section shall have effect asif for the periods of eightyears and four years a periodof one year was substituted.Explanation.—Production beforethe Income Tax Officer ofaccountbooksorotherevidence from which materialfacts could with due diligencehave been discovered by theIncome Tax Officer will notnecessarilyamounttodisclosure within the meaningof this Section.” 143, as it stood immediatelybefore the amendment of saidsub-Section by the Finance Act,2002 (20 of 2002) but before theexpiry of the time limit formaking the assessment, re-assessment or recomputation asspecified in sub-Section (2) ofSection 153, every such noticereferred to in this clause shallbe deemed to be a valid notice:Provided further that in a case—(a) where a return has beenfurnished during the periodcommencing on the 1st day ofOctober, 1991 and ending on the30th day of September, 2005, inresponse to a notice servedunder this Section, and (b) subsequently a notice hasbeen served under clause (ii) ofsub-Section (2) of Section 143after the expiry of twelvemonths specified in the provisoto clause (ii) of sub-Section(2) of Section 143, but beforethe expiry of the time limit formakingtheassessment,reassessment or recomputation asspecified in sub-Section (2) ofSection 153, every such noticereferred to in this clause shallbe deemed to be a valid notice.Explanation.—For the removal ofdoubts, it is hereby declaredthat nothing contained in thefirst proviso or the secondproviso shall apply to anyreturn which has been furnishedon or after the 1st day ofOctober, 2005 in response to anoticeservedunderthisSection.(2) The Assessing Officer shall,before issuing any notice underthis Section, record his reasonsfor doing so. 18. It was in the context of a provision which was acomposite provision. It was further observed that where,however, the Income Tax Officer has prima facie reasonablegrounds for believing that there has been a non-disclosure of aprimary material fact, that by itself gives him the jurisdictionto issue a notice under Section 34 of the Act and the adequacyor otherwise of the grounds of such belief is not open toinvestigation by the Court. 19. If an assessee wants to challenge such jurisdiction,he has to establish that the Income Tax Officer had no materialfor such belief. It observed as under:-“6.To confer jurisdiction under this section toissue notice in respect of assessments beyondthe period of four years, but within a period ofeight years, from the end of the relevant yeartwo conditions have therefore to be satisfied.The first is that the Income Tax Officer musthave reason to believe that income, profits orgains chargeable to income tax have been under-assessed. The second is that he must have alsoreason to believe that such “underassessment”has occurred by reason of either (i) omission orfailure on the part of an assessee to make areturn of his income under Section 22, or (ii)omission or failure on the part of an assesseeto disclose fully and truly all material factsnecessary for his assessment for that year. Boththese conditions are conditions precedent to besatisfied before the Income Tax Officer couldhave jurisdiction to issue a notice for theassessment or reassessment beyond the period offour years but within the period of eight years,from the end of the year in question.” 20.It was further observed as follows:- “14.The position therefore is that if therewere in fact some reasonable grounds forthinking that there had been any non-disclosureas regards any primary fact, which could have amaterialbearingonthequestionof“underassessment” that would be sufficient togive jurisdiction to the Income Tax Officer toissue the notices under Section 34. Whetherthese grounds were adequate or not for arrivingat the conclusion that there was a nondisclosure of material facts would not be openfor the court's investigation. In other words,all that is necessary to give this special jurisdiction is that the Income Tax Officer hadwhen he assumed jurisdiction some prima faciegrounds for thinking that there had been somenon-disclosure of material facts.” 21. Thus, it is clear that for issuing a notice underSection 148 of the Income Tax Act, 1961 as it stands today, theAssessing Officer has to satisfy the requirements of Section 149of the Income Tax Act, 1961. 22. However, while passing final order of re-assessmentunder Section 147 of the Income Tax Act, 1961, the AssessingOfficer has to bear in mind the express language of the 1[st]proviso to Section 147 of the Act. As per the 1[st] proviso toSection 147 of the Income Tax Act, 1961, no action shall betaken under the said Section after expiry of four years from theend of the relevant assessment year, unless income chargeable totax has escaped assessment for such assessment year by reason ofthe failure on the part of the assessee to make a return underSection 139 or in response to a notice issued under sub-Section(1) of Section 142 or 148 or to disclose fully and truly allmaterial facts necessary for that assessment year. 23. Unlike Section 34 of the Income Tax Act, 1922,Section 148 of the Income Tax Act, 1961 is a standaloneprovision. Reopening of the assessment begins with a noticeunder Section 148 of the Income Tax Act, 1961. It culminateswith an order under Section 147 of the Income Tax Act, 1961 witheither dropping or confirming the proposal. Section 148 is notrestricted by Section 147 of the Income Tax Act, 1961. 23. Unlike Section 34 of the Income Tax Act, 1922,Section 148 of the Income Tax Act, 1961 is a standaloneprovision. Reopening of the assessment begins with a noticeunder Section 148 of the Income Tax Act, 1961. It culminateswith an order under Section 147 of the Income Tax Act, 1961 witheither dropping or confirming the proposal. Section 148 is notrestricted by Section 147 of the Income Tax Act, 1961. 24. The Honourable Supreme Court while passing order inThe Income Tax Officer Vs. Lakhmani Mewal Das, (1976) 3 SCC 757,has concluded that Sections 147 to 153 of the Income Tax Act,1961 corresponded with Section 34 of the Income Tax Act, 1922. 25. At the time when the above decision was rendered,Section 147 of the Income Tax Act, 1961 was not as comprehensiveas it reads now. The provision did not have all the sub-clauseswhich came to be inserted subsequently. 26. There is a vast different between language of Section147 during the period in dispute in the said case and as itstands today. Under Section 147 as it stands today, any otherincome chargeable to tax which had escaped assessment and whichcomes to his notice subsequently in the course of theproceedings under this section also can be taxed. Forcomparison, they are reproduced below:- Provisions as it stoodProvision as it stands todaywhen the decisionrenderedSections 147 & 148 of the IncomeSections 147 & 148 ofTaxthe Income Tax147. Income escaping147.Income escaping assessment.assessment.—If—(a) the Income TaxIf the Assessing Officer has reasonOfficer has reason toto believe that any incomebelieve that, by reasonchargeable to tax has escapedof the omission orassessment for any assessment year,failure on the part ofhe may, subject to the provisionsan assessee to make aof Sections 148 to 153, assess orreturn under Section 139reassess such income and also anyfor any assessment yearother income chargeable to taxto the Income Taxwhich has escaped assessment andOfficer or to disclosewhich comes to his noticefully and truly allsubsequently in the course of thematerial facts necessaryproceedings under this Section, orfor his assessment forrecompute the loss or thethatyear,incomedepreciation allowance or any otherchargeable to tax hasallowance, as the case may be, forescaped assessment forthe assessment year concernedthat year, or(hereafter in this Section and in(b) notwithstanding thatSections 148 to 153 referred to asthere has been nothe relevant assessment year) :omission or failure asProvided that where an assessmentmentioned in clause (a)under sub-Section (3) of Sectionon the part of the143 or this Section has been madeassessee, the Income Taxfor the relevant assessment year,Officerhasinno action shall be taken under thisconsequenceofSection after the expiry of fourinformationinhisyears from the end of the relevantpossession reason toassessment year, unless any incomebelieve that incomechargeable to tax has escapedchargeable to tax hasassessment for such assessment yearescaped assessment forby reason of the failure on theany assessment year,part of the assessee to make a he may, subject to thereturn under Section 139 or inprovisions of Sectionsresponse to a notice issued under148 to 153, assess orsub-Section (1) of Section 142 orreassess such income orSection 148 or to disclose fullyrecompute the loss orand truly all material factsthedepreciationnecessary for his assessment, forallowance, as the casethat assessment year:maybe,fortheProvided further that nothingassessmentyearcontained in the first provisoconcerned (hereafter inshall apply in a case where anySections 148 to 153income in relation to any assetreferred to as the(including financial interest inrelevantassessmentany entity) located outside India,year).chargeable to tax, has escapedExplanation 1.— For theassessment for any assessment year:purposesofthisProvided also that the AssessingSection, the followingOfficer may assess or reassess suchshall also be deemed toincome, other than the incomebe cases where incomeinvolving matters which are thechargeable to tax hassubject matters of any appeal,escapedassessment,reference or revision, which isnamely:chargeable to tax and has escaped(a)whereincomeassessment.chargeable to tax hasExplanation 1.—Production beforebeen underassessed; orthe Assessing Officer of account(b) where such incomebooks or other evidence from whichhas been assessed at toomaterial evidence could with duelow a rate; ordiligence have been discovered bythe Assessing Officer will not(c) where such incomenecessarily amount to disclosurehas been made thewithin the meaning of the foregoingsubject of excessiveproviso.relief under this Act orunder the Indian IncomeExplanation 2.—For the purposes ofTax Act, 1922 (11 ofthis Section, the following shall1922); oralso be deemed to be cases whereincome chargeable to tax has(d) where excessive lossescaped assessment, namely :—ordepreciationallowancehasbeen(a) where no return of income hascomputed.been furnished by the assesseealthough his total income or thetotal income of any other person inrespect of which he is assessableunder this Act during the previousyear exceeded the maximum amountwhich is not chargeable to income-tax; Explanation2.—Production before theIncome Tax Officer ofaccount books or otherevidence from whichmaterial evidence couldwith due diligence havebeen discovered by theIncome Tax Officer willnot necessarily amountto disclosure within themeaning of this Section. 2.—(b) where a return of income hasbeen furnished by the assessee butno assessment has been made and itis noticed by the Assessing Officerthat the assessee has understatedthe income or has claimed excessiveloss, deduction, allowance orrelief in the return ; (ba) where the assessee has failedto furnish a report in respect ofany international transaction whichhe was so required under Section92E; (c) where an assessment has beenmade, but— (i) income chargeable to tax hasbeen underassessed; or (ii) such income has been assessedat too low a rate; or (iii) such income has been made thesubject of excessive relief underthis Act; or (iv) excessive loss or depreciationallowance or any other allowanceunder this Act has been computed; (ca) where a return of income hasnot been furnished by the assesseeor a return of income has beenfurnished by him and on the basisof information or document receivedfrom the prescribed income-taxauthority, under sub-Section (2) ofSection 133C, it is noticed by theAssessing Officer that the incomeof the assessee exceeds the maximumamount not chargeable to tax, or asthe case may be, the assessee hasunderstated the income or hasclaimed excessive loss, deduction,allowance or relief in the return; (d) where a person is found to haveany asset (including financialinterest in any entity) locatedoutside India. (iii) such income has been made thesubject of excessive relief underthis Act; or (iv) excessive loss or depreciationallowance or any other allowanceunder this Act has been computed; (ca) where a return of income hasnot been furnished by the assesseeor a return of income has beenfurnished by him and on the basisof information or document receivedfrom the prescribed income-taxauthority, under sub-Section (2) ofSection 133C, it is noticed by theAssessing Officer that the incomeof the assessee exceeds the maximumamount not chargeable to tax, or asthe case may be, the assessee hasunderstated the income or hasclaimed excessive loss, deduction,allowance or relief in the return; (d) where a person is found to haveany asset (including financialinterest in any entity) locatedoutside India. Explanation 3.—For the purpose ofassessment or reassessment underthis Section, the Assessing Officermay assess or reassess the incomein respect of any issue, which hasescaped assessment, and such issuecomes to his notice subsequently inthe course of the proceedings underthis Section, notwithstanding thatthe reasons for such issue have notbeen included in the reasonsrecorded under sub-Section (2) ofSection 148. Explanation 4.—For the removal ofdoubts, it is hereby clarified thatthe provisions of this Section, asamended by the Finance Act, 2012,shall also be applicable for anyassessment year beginning on orbefore the 1st day of April, 2012.Section 148.Issue of notice whereincome has escaped assessment. 148. Issue of noticewhere income has escapedassessment.— (1) Before making the assessment,(1) Before making thereassessment or recomputation underassessment, reassessmentSection 147, the Assessing Officeror recomputation undershall serve on the assessee aSection 147, the Incomenotice requiring him to furnishTax Officer shall servewithin such period, as may beon the assessee a noticespecified in the notice, a returncontaining all or any ofof his income or the income of anythe requirements whichother person in respect of which hemay be included in ais assessable under this Act duringnotice under sub-Sectionthe previous year corresponding to(2) of Section 139 ; andthe relevant assessment year, inthe provisions of thisthe prescribed form and verified inAct shall, so far as maythe prescribed manner and settingbe, apply accordingly asforth such other particulars as mayif the notice were abe prescribed; and the provisionsnotice issued under thatof this Act shall, so far as maysub-Section.be, apply accordingly as if suchreturn were a return required to befurnished under Section 139 : (2) The Income TaxProvided that in a case—Officer shall, before(a) where a return has been furnishedissuing any notice underduring the period commencing on the 1stthis Section, record hisday of October, 1991 and ending on the30th day of September, 2005 in response toreason for doing so.”a notice served under this Section, andSub-Section(1)of(b) subsequently a notice has been servedSection 149 prescribesunder sub-Section (2) of Section 143 afterthe time limit forthe expiry of twelve months specified innotice and reads asthe proviso to sub-Section (2) of Section143, as it stood immediately before theunder:amendment of said sub-Section by the“(1) No notice underFinance Act, 2002 (20 of 2002) but beforethe expiry of the time limit for makingSection 148 shall betheassessment,re-assessmentorissued,recomputation as specified in sub-Section(2) of Section 153, every such notice(a) in cases fallingreferred to in this clause shall be deemedunder clause (a) ofto be a valid notice:Section 147—Provided further that in a case—(i) for the relevant(a) where a return has been furnishedassessment year, ifduring the period commencing on the 1steight years have elapsedday of October, 1991 and ending on thefrom the end of that30th day of September, 2005, in responseto a notice served under this Section, andyear, unless the casefalls under sub-clause(b) subsequently a notice has been served(ii);under clause (ii) of sub-Section (2) ofSection 143 after the expiry of twelve(ii) for the relevantmonths specified in the proviso to clause(ii) of sub-Section (2) of Section 143,assessment year, wherebut before the expiry of the time limiteight years, but notfor making the assessment, reassessment ormore than sixteen years,recomputation as specified in sub-Sectionhave elapsed from the(2) of Section 153, every such noticeend of that year, unlessreferred to in this clause shall be deemedto be a valid notice.the income chargeable totax which has escapedExplanation.—For the removal of doubts, itassessment amounts to oris hereby declared that nothing containedin the first proviso or the second provisois likely to amount toshall apply to any return which has beenrupees fifty thousand orfurnished on or after the 1st day ofmore for that year;October, 2005 in response to a noticeserved under this Section.(b) in cases fallingunder clause (b) of(2) The Assessing Officer shall,Section 147, at any timebefore issuing any notice underthis Section, record his reasonsafter the expiry of fouryears from the end offor doing so.the relevant assessmentyear.” 27. There a notice was issued under Section 148 of theIncome Tax Act, 1961 on 14.03.1967 for the purpose of re-assessment under Section 147 of the Income Tax Act, 1961. By thetime the above decision was rendered on 30.03.1976, the provisions of the Income Tax Act, 1961 had undergone severalchanges. 28. The Hon’ble Supreme Court in Income Tax Officer Vs.Lakhmani Mewal Das, (1976) 3 SCC 757 clearly mentioned that forthe purpose of the disposal of the said case, they were notrelevant. The Court was concerned with the Assessment Year 1958-59 under Income Tax Act, 1961. 29. Therefore, the ratio of the Hon'ble Supreme Court inthe above case in the Income Tax Officer Vs. Lakhmani Mewal Das(1976) 3 SCC 757, cannot be straightaway applied under theamended provision as it stands today. The Supreme Court merelyfollowed the views of the Hon’ble Supreme Court in CalcuttaDiscount Company Ltd.Vs.Income Tax Officer,Companies DistrictI, Calcutta and Others, (1961) 2 SCR 241. provisions of the Income Tax Act, 1961 had undergone severalchanges. 28. The Hon’ble Supreme Court in Income Tax Officer Vs.Lakhmani Mewal Das, (1976) 3 SCC 757 clearly mentioned that forthe purpose of the disposal of the said case, they were notrelevant. The Court was concerned with the Assessment Year 1958-59 under Income Tax Act, 1961. 29. Therefore, the ratio of the Hon'ble Supreme Court inthe above case in the Income Tax Officer Vs. Lakhmani Mewal Das(1976) 3 SCC 757, cannot be straightaway applied under theamended provision as it stands today. The Supreme Court merelyfollowed the views of the Hon’ble Supreme Court in CalcuttaDiscount Company Ltd.Vs.Income Tax Officer,Companies DistrictI, Calcutta and Others, (1961) 2 SCR 241. 30. Whether the notice that has been issued to thepetitioner was on account of change of opinion or on account offailure on the part of the petitioner to fully and trulydisclose all material required for the assessment is to bedetermined by the Assessing Officer while passing order underSection 147 of the Income Tax Act, 1961. 31. In the recent decision, the Honourable Supreme Courtin Jeans Knit Private Limited Vs. Deputy Commissioner of IncomeTax, (2018) 12 SCC 36, has held that the Karnataka High Courthad taken a view contrary to the law laid down by the HonourableSupreme Court in Calcutta Discount Co-Limited Vs. CIT referredto supra. At the same time, the Hon’ble Supreme Court has alsorefrained from making any observation on the merits of the caseand remitted the case back to the concerned High Court.Therefore, the said decision does not further the case of thepetitioner. 32. In Asianet Star Communications Pvt. Ltd. V. AssistantCommissioner of Income Tax, order dated 16.04.2019 passed bythis Court in W.P.Nos.25328 of 2018 etc. referred by the learnedcounsel for the petitioner, the Court concluded that theresponsibility was on the assessee to make true and fulldisclose and thereafter, mantle would shift on the AssessingOfficer and is expected to complete the assessment. The Courtthere quashed the notice as all material was available to opensight. 33. In the facts of the case, though the petitioner hadfurnished certain details at the time of re-assessment, thequestion still remains to be answered is whether there was fulland true disclosure by the petitioner as is contemplated underproviso to Section 147 of the Income Tax Act, 1961. 34. In this case, mere filing to the annexure by thepetitioner in response to notice during scrutiny assessment byitself may or may not have been sufficient to come to theconclusion that there was full and true disclosure by thepetitioner if the information furnished was neither complete nortrue. 35. It is therefore best left open for the petitioner todemonstrate before the 1[st] respondent that the details furnishedby the petitioner vide letter dated 03.03.2016 in annexure 2meets the requirements of full and true disclosure for theAssessing Officer to drop the proceedings in terms of 1[st] provisoto Section 147 of the Income Tax Act, 1961. 36. In case there is a change of opinion, the 1[st]respondent cannot proceed in the light of the decision of theHon’ble Supreme Court in CIT Vs. Kelvinator of India Ltd.,(2010) 2 SCC 723. The Hon’ble Supreme Court cautioned theAssessing Officers with the following observation:-“On going through the changes, quoted above, 35. It is therefore best left open for the petitioner todemonstrate before the 1[st] respondent that the details furnishedby the petitioner vide letter dated 03.03.2016 in annexure 2meets the requirements of full and true disclosure for theAssessing Officer to drop the proceedings in terms of 1[st] provisoto Section 147 of the Income Tax Act, 1961. 36. In case there is a change of opinion, the 1[st]respondent cannot proceed in the light of the decision of theHon’ble Supreme Court in CIT Vs. Kelvinator of India Ltd.,(2010) 2 SCC 723. The Hon’ble Supreme Court cautioned theAssessing Officers with the following observation:-“On going through the changes, quoted above, made to Section 147 of the Act, we findthat, prior to Direct Tax Laws (Amendment)Act, 1987, re-opening could be done underabove two conditions and fulfilment of thesaid conditions alone conferred jurisdictionon the Assessing Officer to make a backassessment, but in Section 147 of the Act(with effect from 1[st] April, 1989), they aregiven a go-by and only one condition hasremained, viz., that where the AssessingOfficer has reason to believe that incomehas escaped assessment, confers jurisdictionto re-open the assessment. Therefore, post-1[st] April, 1989, power to re-open is muchwider. However, one needs to give aschematic interpretation to the words“reason to believe” failing which, we areafraid, Section 147 would give arbitrarypowers to the Assessing Officer to re-openassessments on the basis of “mere change ofopinion”, which cannot be per se reason tore-open. We must also keep in mind theconceptual difference between power toreview and power to re-assess. The AssessingOfficer has no power to review, he has thepower to re-assess. But re-assessment has tobe based on fulfilment of certain pre-condition and if the concept of “change ofopinion” is removed, as contended on behalf of the Department, then, in the garb of re-opening the assessment, review would takeplace. One must treat the concept of “changeof opinion” as an in-built test to checkabuse of power by the Assessing Officer.” 37. In case indeed there is a mere change in opinion, the1[st] respondent will be obliged to drop the proceeding. However,to ascertain whether is a mere change of opinion or not first ithas to be established that the there was true and fulldisclosure by the petitioner. This can be demonstrated by thepetitioner only before the 2[nd] respondent and not in a proceedingunder Art.226 of the Constitution of India as scope of judicialreview is limited and it is not possible to conduct rovingenquiry on facts. 38. Under these circumstances, I do not find any meritsin quashing the impugned notice dated 13.03.2017 and thecommunication dated 24.11.2017 overruling the objection of thepetitioner. 39. In the light of the above observation, I relegate thepetitioner to participate in the proceedings before the 1[st]respondent by filing appropriate representations/objectionswithin a period of thirty days from the date of receipt of acopy of this order. The 1[st] respondent is obliged to pass orderson merits in accordance with law. It is made clear that in casethe circumstance do not justify invocation of proviso to Section147, the 1[st] respondent shall drop the proceedings. At the sametime, while passing orders under Section 147 of the Income TaxAct, the 1[st] respondent can pass assessment order as perExplanation 3 to Section 147 of the Income Tax Act, 1961. 40. Since the dispute pertains to the Assessment Year2012-13, the 1[st] respondent is requested to pass appropriateorder within a period of sixty days from the date of receipt ofa copy of this order. 41. The Writ Petition stands disposed of with the aboveobservations. No costs. Consequently, connected MiscellaneousPetitions are closed. Sd/-Assistant Registrar (CS-III) //True Copy// Sub Assistant Registrar jen 40. Since the dispute pertains to the Assessment Year2012-13, the 1[st] respondent is requested to pass appropriateorder within a period of sixty days from the date of receipt ofa copy of this order. 41. The Writ Petition stands disposed of with the aboveobservations. No costs. Consequently, connected MiscellaneousPetitions are closed. Sd/-Assistant Registrar (CS-III) //True Copy// Sub Assistant Registrar jen https://hcservices.ecourts.gov.in/hcservices/ To 1.The Assistant Commissioner of Income Tax, Corporate Circle 5-2, 4[th] Floor, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. Corporate Circle 5-2, 4[th] Floor, Aayakar Bhavan, 121, Mahatma Gandhi Road, Nungambakkam, Chennai 600 034. 2.The Deputy Commissioner of Income Tax, Corporate Circle 5 (2), 4[th] Floor, Ayakar Bhavan, 121, M.G.Road, Nungambakkam, Chennai – 600 034. Corporate Circle 5 (2), 4[th] Floor, Ayakar Bhavan, 121, M.G.Road, Nungambakkam, Chennai – 600 034. +1cc to Mr.Hema Muralikrishnan, Advocate, S.R.No. 22629+1cc to Mr.Srinath Sridevan, Advocate, S.R.No. 22568 W.P.No.31722 of 2017and W.M.P.Nos.34867 of 2017 & W.M.P.No.13876 of 2018 SAI(CO)GN(06/08/2020)