Tax & Ors v. Chhabil Dass Agarwal Reported In (2014) 1 Scc 603

Digitallysigned byMEERAMEERAMAHESHMAHESHJADHAVJADHAVDate:2022.04.1211:36:30+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTIONWRIT PETITION NO. 710 OF 2015 WITH WRIT PETITION NO.765 OF 2015 Solvay Specialties India Pvt Ltd. V/s.The Deputy Commissioner of IncomeTax, Circle 7(2) Mumbai & Ors. ….Petitioner …Respondents ---- Mr. Madhur Agarwal a/w Mr. Upendra Lokegaonkar i/b Mint & Confreres for Petitioner Mr. Suresh Kumar for Respondents ---- CORAM : K.R. SHRIRAM &N.R. BORKAR, JJ DATED : 8[th] APRIL 2022 P.C. : 1On 17[th] December 2014 when the petition was heard for admission, the court has passed a detailed order. The said order reads as under: “1] These petitions challenge two separate notices dated 25 March 2014 issued under Section 148 of the Income Tax Act, 1961 ("the Act")seeking to reopen assessment for the Assessment Years 200708 and2008 09 respectively. Thus both the impugned notices are beyond aperiod of four years from the end of the relevant Assessment Year andthe additional requirement of failure to disclose truly and fully allmaterial facts necessary for assessment must be satisfied beforejurisdiction can be invoked. 2]Rule. 3] The reasons in support of the impugned notices are identical and also the order disposing of the objections passed by the AssessingOfficer are identical. Therefore, the interim relief is being granted onidentical grounds. 4] The reasons indicate that from perusal of Income Tax record for theA. Y. 201011 the petitioners have written off assets worth Rs.1.81crores as on physical verification the same were not found. However itis relevant to note that for the A. Y. 201011 while adding the amountof Rs.1.80 crores to the petitioner's income, the depreciation on theblock of assets which included Rs.1.81 crores was not disturbed by theAssessing Officer. It is the petitioners contention that all facts were disclosed at the time of regular assessment under Section 143(3) ofthe Act leading to the order dated 10 December 2010 for the A.Y.200708 and for the subsequent year i.e. A.Y. 200809 it would beconsidered as the written down value of the block of assets in case theRevenue is correct in its contentions for A.Y. 200708. 5] The petitioner had purchased the polymer business of M/s. Garda Chemicals Limited in its entirety including its plant, machinery,equipments, implements, tools etc. the same was subjected tovaluation of a Valuation Expert. The plants and machinery subjected tovaluation included elbows, nuts, bolts, brackets etc. Prima facie itappears that in terms of Section 32 of the Act the depreciation isallowed on a block of assets and unless the same is sold it continues tobe reflected in the block of assets as the items are not individualised.The depreciation is continued to be claimed by the Assessee on theblock of assets unless the same is sold. Be that as it may, thepetitioners have specifically in their objections to the reasons insupport of the notice taken up a stand that there was no failure on thepart of the petitioners to make true and complete disclosure. This isevidenced by the fact during the assessment proceedings for A.Y. 2007-08, at the instance of the Assessing Officer, the Purchase Agreemententered into between M/s. Garda Chemicals Limited and thepetitioners were made available to the Assessing Officer. Theobjections of the petitioners have been disposed of by the Assessing Officer by the order dated 13 October 2014 and thisparticularobjection that there was no failure to disclose true andcomplete facts has not even been adverted in the order disposing offthe objections. 6] Mr. Mohanty, learned Counsel appearing for the Revenue submitsthat at this point of time the only requirement is that the Assesseeshould have material to reach a prima facie view that income hasescaped assessment warranting its reopening. At this point of time, theAssessing Officer is not required to examine the stand of thepetitioners in detail. The above proposition is undisputable. However,the entire purpose of the Assessing Officer dealing with the objectionsand passing a reasoned order thereon is for the Assessing Officer togive some reasons to meet the objections of the Assessee and notmerely dispose of objections by being silent and then proceed withreassessment proceedings. Similarly, the Revenue has also placedreliance on the decision of the Apex Court in Commissioner of IncomeTax & Ors. vs. Chhabil Dass Agarwal reported in (2014) 1 SCC 603and submitted that the petitioners have an alternate remedy under theAct and this Court should not interfere. We are conscious of the factthat where an efficacious alternate remedy is available, we would notnormally as a matter of self restraint exercise our extra ordinaryjurisdiction under Article 226 of the Constitution of India. However asheld by the Apex Court in Chhabil Dass Agarwal (supra), where inissuing the notice the Authority has acted contrary to the statutoryprovision or in defiance of the judicial procedure, the Court wouldinterdict such a proceeding notwithstanding an alternate remedy. Weprima facie find that the impugned reopening notices have been issuedin breach of the first Proviso to Section 147 of the Act which inter aliaprovides that in the absence of a failure to make and disclose true, full and complete disclosure, the Assessing Officer has no jurisdiction toissue notice for reopening after the end of four years from the end ofthe relevant Assessment Year. Besides, the order disposing of theobjections does not deal with the petitioner's above primaryobjections. 7] Thus, prima facie it appears that there has been no failure todisclose truly and fully all material information at the time of original assessment proceedings. In the above view, interim relief granted interms of prayer clause (d).” 2 We have considered the pleadings and the documents annexed with the assistance of Mr. Agarawal and Mr. Suresh Kumar. We are also satisfiedthat since the reopening notice has been issued more than 4 years after theend of the relevant assessment year, proviso to Section 147 of the IncomeTax Act 1961 would apply and the reasons do not indicate that there hasbeen any failure on the part of petitioner to disclose truly or fully allmaterial information at the time of original assessment proceedings. We arein agreement with the observations of the court as quoted above. 3Accordingly, impugned notice dated 25[th] March 2014 and theassessment order dated 10[th] December 2010 in both the petitions arequashed and set aside. 4Petitions disposed. (N. R. BORKAR, J.) (K.R. SHRIRAM, J.)