Wp/163/2020 Of Maharashtra State Power Generation Company Limited v. Prayer (A) Of The Petition Reads As Under

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 163 OF 2020 Maharashtra State Power Generation Company Ltd., … Petitioner. Vs. Deputy Commissioner of Income-Tax, Circle -14 (2)(1), Mumbai & 2 Ors. … Respondents. --- Mr. J. D. Mistri, Senior Advocate a/w. Mr. Niraj Sheth i/by Mr. Atul K.Jasani for the Petitioner. Mr. Suresh Kumar, Advocate for the Respondents. --- CORAM : K.R. SHRIRAM & R.N. LADDHA, JJ. DATED : JANUARY 20, 2022 (Through Video Conferencing) P.C.:- 1.Prayer (a) of the Petition reads as under :- “(a)to issue a Writ of Certiorari or a Writ in the nature ofCertiorari or any other appropriate Writ, Order or Direction underArticle 226 of the Constitution of India calling for the records ofthe Petitioner’s case and after examining the legality and validitythereof, quash and set aside the impugned notice dated 30[th]March, 2019 (Exhibit “G”) issued by Respondent No.1 sectionsection 148 of the Act to reopen the assessment for the assessmentyear 2012-13 as well as the impugned order dated 19[th] November,2019 (Exhibit “K”) rejecting the Petitioner’s objections for theassessment year 2012-13.” 2.Petitioner had filed its return of income for AY 2012-13 on 28SHALIKRAMDigitally signed bySHALIKRAMSeptember, 2012, declaring loss of Rs. 1,34,38,07,555/-. Thereafter,PRALHADRAOBOREYPRALHADRAO BOREYDate: 2022.01.2114:33:23 +0530 Petitioner filed revised return of income on 19 March, 2014, declaring aloss of Rs. 1,33,61,85,017/-. Assessment was completed by passing orderon 31 March, 2015 under section 143 (3), determining total income loss ofRs. 82,54,63,907/- under normal provisions and Rs. 2,02,97,77,002/- undersection 115 (J)(b). 3.More than four years from the end of the relevant Assessment Year, anotice dated 30.03.2019 under section 148 of the Income Tax Act, 1961 (thesaid “Act”) came to be issued. At the request of Petitioner, reasons recordedfor reopening assessment was also provided by communication dated 2September, 2019. As the notice has been issued after expiry of four yearsfrom the end of relevant Assessment Year and Assessment has beencompleted under section 143(3) of the Act, proviso to section 147 shallapply. The case is that Respondent has to show that there was failure onthe part of Petitioner to disclose truly and fully material facts required forthe assessment. Shri Suresh Kumar submitted that the reasons do mentionthat there has been failure to disclose. Having considered the reasons, inour view, a statement, in the reasons for reopening, that there has beenfailure to disclose material fact is clearly made as an attempt to take the caseout of the restrictions imposed by the proviso to section 147 of the Act. Inour view, it is a clear case of change of opinion which, as held repeatedly byvarious Courts including this Court and the Apex Court, was notpermissible. On consideration of material on record, Assessing Officer inAssessment Order dated 31 March, 2015 has taken conclusively one view.It will not be open to the Assessing Officer now to reopen the assessmentbased on the very same material with a view to take another view. 4.Even the reasons clearly indicate that it is change of opinion and theperson, who has provided the reasons and the Assessing Officer, whoproposed to reopen is only attempting to review the matter. We say this, as it is quite evident from paragraphs 4, 5 and 6 of the reasons, which read asunder : “4.Enquiries made by the AO as sequel to informationcollected / received : Based on the above, the Computation of income, the annualfinancial statements and records have been perused. It is seenthat a claim of additional depreciation has been made amountingto Rs. 24,59,58,375/- and claim of depreciation on licenses hasbeen made at the rate of 60%. 5.Finding of the AO : 4.Even the reasons clearly indicate that it is change of opinion and theperson, who has provided the reasons and the Assessing Officer, whoproposed to reopen is only attempting to review the matter. We say this, as it is quite evident from paragraphs 4, 5 and 6 of the reasons, which read asunder : “4.Enquiries made by the AO as sequel to informationcollected / received : Based on the above, the Computation of income, the annualfinancial statements and records have been perused. It is seenthat a claim of additional depreciation has been made amountingto Rs. 24,59,58,375/- and claim of depreciation on licenses hasbeen made at the rate of 60%. 5.Finding of the AO : On verification of the records and in view of the detailsas aforesaid, for the above mentioned A.Y.2012-13, the excessclaim of depreciation made at the rate of 60% in respect ofsoftware licences and the said claim of additional depreciationduring the present AY are not in order. 6.Basis of forming reason to believe and details ofescapement of income : During the year under consideration, as per the detailed factsand discussion hereinabove, it is seen that claim of depreciationon software licences is allowable at the rate of 25% rather than60%. Therefore, the correct depreciation allowable is Rs.70,95,954/- in place of claimed depreciation of Rs. 1,69,43,891/-(difference amounting to Rs. 98,83,937). Further, the claim ofadditional depreciation on plant and machinery amounting toRs. 24,59,58,375/- is not allowable. Therefore, based on theabove facts, the undersigned has reason to believe that theincome chargeable to tax to the extent of Rs. 25,58,42,312/-has escaped assessment for A.Y.2012-13.” 5.As stated in the Petition and also in the objections filed by Petitionerthrough their Chartered Accounts’ letter dated 23 September, 2019, reopening is made on the basis of the objections received from the revenueaudit cell, usually referred as audit objections. Identical objection, as raisedin the reasons for reopening, was raised and communicated to Petitioner on14.03.2019. Petitioner, in response to the audit queries, had providedclarifications to the Assessing Officer. It is a well laid down principle thatthe re-assessment proceedings initiated merely on the basis of the auditobjections are illegal and not valid in law and as such re-assessmentproceedings have been repeatedly again quashed and set aside by theCourts. As held in : (i) Indian and Eastern Newspaper Society v/s. CIT (1979)119 ITR 996 (SC) : “AO having allowed assessee’s claim for depreciation in theregular assessment and reopened the assessment pursuant toaudit objection, it cannot be said that he had formed his ownopinion that the income had escaped assessment, and thereopening being based on mere change of opinion, same was notvalid.” (ii) ICICI Home Finance Co. Ltd., v.s. ACIT (2012) 25taxmann. Com 241 (Bom.): “The reasons do not rely upon any tangible material in the auditreport but merely upon an opinion and the existing materialalready on record. This itself indicates that there was noindependent application of mind by the Assessing Officer beforehe issued the impugned notice. On this ground alone, theassumption of jurisdiction by the Assessing Officer can be faulted.” (iii)IL & FS Investment Managers Ltd., v/s. ITO and Ors(2008) 298 ITR 32 (Bom.) : “Reopening of assessment pursuant to audit objection thatdepreciation was not admissible on intangible assets was not valid.Thus, reopening of the assessment without any basis and merelyon change of opinion, was not permissible.” vi. Jagat Jayantilal Parikh vs. DCIT (2013) 32 taxmann.com161 (Guj.) : (iii)IL & FS Investment Managers Ltd., v/s. ITO and Ors(2008) 298 ITR 32 (Bom.) : “Reopening of assessment pursuant to audit objection thatdepreciation was not admissible on intangible assets was not valid.Thus, reopening of the assessment without any basis and merelyon change of opinion, was not permissible.” vi. Jagat Jayantilal Parikh vs. DCIT (2013) 32 taxmann.com161 (Guj.) : “The reasons for reopening of the assessment are almostidentically worded as that of audit report. No material worth thename emerges to indicate any independent application of mind.Facts are quite glaring and they clearly establish absence ofsubjective satisfaction of Assessing Officer. Thus the groundraised by the assessee that such notice of reopening is invalid forthe Assessing Officer having not formed his independent beliefrequires to be sustained.” 6.Even in the case at hand, the reasons for reopening of the assessmentare almost identically worded as that of audit report. In view of theforegoing, since, in the case at hand also the reopening of the assessmentbeing at the behest of the audit party, the reopening of the assessment ismisconceived, incorrect and bad in law. 7.In the circumstances, Petition is allowed in terms of prayer clause(a), as reproduced earlier. 8.Petition disposed accordingly with no order as to costs. (R.N. LADDHA,J.) (K.R. SHRIRAM, J.) .....