Wp/25210/2017 Of M/S. Beta Wind Farms Private v. Dy. Commissioner Of Income Tax

RESERVED ON : 19.03.2018 DELIVERED ON : 28.03.2018 IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HON'BLE Mr. JUSTICE M.DURAISWAMY M/s.Beta Wind Farms Private LimitedSigappi Ache Building, 4[th] Floor,No.18/3, Rukmani Lakhsmipathy Salai,Egmore, Chennai – 600 008,rep by its DGM.... Petitioner The Deputy Commissioner of Income Tax,Corporate Circle (2),Aayakar Bhavan, No.121, Nungambakkam High Road,Chennai – 600 034.... Respondent Petition filed under Article 226 of The Constitution ofIndia praying to issue a writ of certiorarified mandamus tocall for the records of the respondent in his proceedingsleading to issuance of Order in reply to objection forreopening of assessment u/s 147 dated 22.08.2017, quash thesame and direct the respondent to drop the re-assessmentproceedings. For Respondent : Mrs.Hema Muralikrishnan, Senior Standing Counsel The petitioner has filed the above Writ Petition to issuea writ of certiorarified mandamus to call for the records ofthe respondent in his proceedings leading to issuance of Orderin reply to objection for reopening of assessment underSection 147 dated 22.08.2017 and to quash the same and todirect the respondent to drop the re-assessment proceedings. 2.The brief case of the petitioner is as follows: (i)According to the petitioner, they are engaged in thegeneration of electricity through non-conventional source ofWind energy. The petitioner's income tax return for theassessment year 2012-13 was taken up for scrutiny assessmentand after detailed scrutiny, including details relating to theaddition to fixed assets by way of Windmills, the AssessingOfficer had passed an assessment order. Subsequently, onaccount of Revenue Audit objection, a notice was sent forreopening of assessment and on enquiry, it was found that thedepreciation claimed was not proper as the Windmills were notcommissioned in the relevant previous year. The petitionerfiled their objections for the said query and the details ofWindmills and Commissioning Certificate issued by Tamil NaduGeneration and Distribution Corporation Limited (TANGEDCO) wassubmitted as required by the Assessing Officer at the time ofscrutiny assessment. (ii)According to the petitioner, the reopening ofassessment is only based on change of opinion and not on anymaterial documents. Further, the petitioner had furnished allthe details truly, without any concealment at the time ofscrutiny assessment. Therefore, the reopening of assessment isunlawful and against the established legal principles. On22.08.2017, the respondent had passed an order in reply to theobjection for reopening of the assessment, without consideringthe established legal principles and ignoring the principlesof natural justice. Aggrieved over the order dated 22.08.2017,the petitioner has filed the above Writ Petition. 3.The brief case of the respondent is as follows: (i)According to the respondent, the petitioner's scrutinyassessment under Section 143(3) was passed on 13.03.2015 andat the time of passing of the assessment order, two issues,viz., allowance under Section 35AD claimed and disallowanceunder Section 14A alone were discussed and based on thesediscussions, the assessment was completed. There was nomention either in the order or in the order sheet about theclaim of depreciation on the petitioner's Windmills. Only onverification of the Bills, it was found that the Windmillswere commissioned only after 12.04.2012, therefore, thepetitioner's averments that the order was passed afterconsidering all the facts relating to the Windmills arecontrary to facts. (ii)The reasons for reopening the assessment for theassessment year 2012-13 were provided to the petitionerCompany. The depreciation was wrongly made and on that ground,the assessment was reopened. The petitioner produced theparticulars regarding the details of purchase of Windmills and (ii)The reasons for reopening the assessment for theassessment year 2012-13 were provided to the petitionerCompany. The depreciation was wrongly made and on that ground,the assessment was reopened. The petitioner produced theparticulars regarding the details of purchase of Windmills and not the Commissioning Certificate from TANGEDCO. Had thepetitioner produced, there would have been no reason forreopening. (iii)It is verified from the details of Windmillspurchased and the Commissioning Certificate issued by TANGEDCOthat all the certificates present a clear picture that theUnits have been generated from 30.03.2012 to 13.04.2012. TheTANGEDCO had issued the certificates from 30.03.2012 to13.04.2012, since the Bill in question is dated 12.04.2012(i.e.) from GAMESA Wind Turbines Private Limited, which entityhas erected and commissioned the Windmills. The Certificateissued by TANGEDCO does not disclose the Units received fromthe assessee from 30.03.2012 to 13.04.2012. Therefore, itbecomes necessary to ascertain whether the commissioning wasdone on 30.03.2012, in view of the fact that the Bill forcommissioning and erection is dated 12.04.2012 issued byGAMESA Wind Turbines Private Limited, Chennai. (iv)The Bill dated 12.04.2012 would reflect the fact thatthe charges claimed on completion of erection andcommissioning of 8 Wind Turbine Generators. Therefore, it isclear that the erection and commissioning was not done before31.03.2012 and assuming that the Wind Turbine Generators arecommissioned on or prior to 31.03.2012, the Bill dated12.04.2012 remains a contradictory fact. The order dated22.08.2017 has been passed only after considering the presentfacts, circumstances and also the veracity of the erection andcommissioning of the 8 Wind Turbine Generators, which fact isclear from the Bill dated 12.04.2012, which otherwise shouldhave been dated 31.03.2012. (v)No opinion regarding date of commissioning ofWindmills and the petitioner's eligibility for depreciationwas formed during the original scrutiny assessment. Till date,the petitioner has not filed the details of Units generateddate-wise to prove that the Windmills were commissioned on30.03.2012. The invoice of completion of erection andinstallation of Windmill raised on the petitioner by itssupplier is dated 12.04.2012 and is beyond comprehension as tohow the petitioner would have commissioned the Windmills on30.03.2012. Therefore, there is a prima facie case made outfor reopening of the assessment under Section 148 and it isfor the petitioner to prove the factual details before theAssessing Officer. (vi)The order dated 13.03.2015 had been passed byconsidering the issues covered by Section 35AD and Section 14Aand no opinion was formed regarding the petitioner'seligibility to claim depreciation of Windmills for theassessment year 2012-13. The issue is not the satisfaction ofthe Assessing Officer about the eligibility of the petitioner to claim depreciation, but when there had been wrong allowanceof depreciation and the same is identified, the same has to beremedied by taking recourse to Sections 147 and 148. Whenthere had been wrong allowances of depreciation and theAssessing Officer is satisfied about that, the same authorityis at liberty to reopen the assessment. (vi)The order dated 13.03.2015 had been passed byconsidering the issues covered by Section 35AD and Section 14Aand no opinion was formed regarding the petitioner'seligibility to claim depreciation of Windmills for theassessment year 2012-13. The issue is not the satisfaction ofthe Assessing Officer about the eligibility of the petitioner to claim depreciation, but when there had been wrong allowanceof depreciation and the same is identified, the same has to beremedied by taking recourse to Sections 147 and 148. Whenthere had been wrong allowances of depreciation and theAssessing Officer is satisfied about that, the same authorityis at liberty to reopen the assessment. (vii)The impugned order dated 22.08.2017 is not with malafide intention and it is only to verify whether correctallowance of depreciation is done, which was not done at thetime of scrutiny assessment. The principles of natural justicedoes not arise in this case as it is only with a purpose toset right the wrong allowance of depreciation, which isallowable as per the provisions of Income Tax Act. Theimpugned order is not per verse, but only to consider theprovisions of the Income Tax Act. The respondent has calledupon the petitioner to prove its contention that the Windmillwas commissioned before 31.03.2012 and it is notunderstandable as to why the petitioner is feeling shy of thesame. In these circumstances, the respondent prayed fordismissal of the Writ Petition. 4.Heard Mr.S.Sathiyanarayan, learned counsel appearingfor the petitioner and Mrs.Hema Muralikrishnan, learned seniorstanding counsel appearing for the respondent. 5.Mr.S.Sathiyanarayanan, learned counsel appearing forthe petitioner submitted that the respondent had passed theimpugned order for reopening the assessment for the assessmentyear 2012-13 after the passing of the scrutiny assessmentorder on 13.03.2015, which was passed by the Assessing Officerafter examining the records in details. Further, the learnedcounsel submitted that the respondent had come to a wrongconclusion that the assessee has failed to disclose fully andtruly all material facts required for the assessment. Thelearned counsel also submitted that when the Assessing Officerwas satisfied about the eligibility of the petitioner to claimdepreciation based on the documents furnished and also on thefacts, cannot now reopen as it only amounts to case of changeof opinion and therefore, reassessment proceedings cannot besustained. 5.1.In support of his contentions, the learned counselfor the petitioner relied upon a judgment reported in (2017)99 CCH 0019 DelHC [Director of Income Tax (InternationalTaxation) & Ors. Vs. Rolls Royce Industrial Power India Ltd.,& Ors.] wherein a Division Bench of the Delhi High Court heldas follows: “... 19.The fact of the matter is that during thecourse of the original assessments under Section 143(3), the AO did serve upon the Assessee a detailscourse of the original assessments under Section 143(3), the AO did serve upon the Assessee a details 5.1.In support of his contentions, the learned counselfor the petitioner relied upon a judgment reported in (2017)99 CCH 0019 DelHC [Director of Income Tax (InternationalTaxation) & Ors. Vs. Rolls Royce Industrial Power India Ltd.,& Ors.] wherein a Division Bench of the Delhi High Court heldas follows: “... 19.The fact of the matter is that during thecourse of the original assessments under Section 143(3), the AO did serve upon the Assessee a detailscourse of the original assessments under Section 143(3), the AO did serve upon the Assessee a details questionnarie. The AO examined the nature of thetransactions involving the Assessee and the paymentsreceived therefor. The reopening was not based onany fresh material. By revisiting the same materialsthe successor AO now concluded that the paymentsreceived by the Assessee pursuant to the O&MAgreements should be treated as FTS. In thecircumstances, the view taken by a successor AO onthe same material was indeed nothing but a merechange of opinion. It is a well-settled legalproposition, as explained in Calcutta Discount Co.Ltd Vs. ITO [1961] 41 ITR 191 (SC) that once anAssessee has discharged the burden of not onlyproducing the account books and other documents, butalso the specific material relevant to theassessment, “it is for the Income-Tax Officer todraw the proper inferences of fact and law therefromand the Assessee cannot further be called upon to doso for him.” In Indian Oil Corporation Vs. ITO[1986] 159 ITR 956, the Court pertinently observed“it is for the authority to draw inference. It isnot necessary for the Assessee to draw inference.”These observations apply on all fours to the case onhand. Here the Assessee had discharged its burden ofdisclosing fully and truly all the material factsbefore the AO during the original assessments. Therewas no basis for the successor AO to conclude that“no opinion with regard to taxation” of the paymentsreceived for the services rendered had been formedby the AO. It is plain that the pre-condition forinvoking Section 147 did not exist. The assumptionof jurisdiction under Section 148 of the Act was notvalid.” 6.Countering the submissions made by the learned counselfor the petitioner, Mrs.Hema Muralikrishnan, learned seniorstanding counsel for the respondent submitted that therespondent has called upon the petitioner to prove itscontention that the Windmills were commissioned before31.03.2012 for the reason that the petitioner's supplier'sinvoice for the completion of installation and erection ofWindmill is dated 12.04.2012, therefore, the respondent hasrightly reopened the assessment of the petitioner. Further,the learned standing counsel submitted that the impugned orderis only an order disposing of the petitioner's objections tothe reasons for reopening of the assessment and that thepetitioner has contended as though the impugned order calledupon them to prove their case. The learned counsel furthersubmitted that the impugned order is not per verse and therewas no mala fide intention to pass the impugned order. 6.1.In support of her contentions, the learned seniorstanding counsel relied upon a judgment reported in [2002] 125Taxman 965 (SC) [GKN Driveshafts (India) Ltd., Vs. Income TaxOfficer] wherein the Apex Court held as follows: “... 6.1.In support of her contentions, the learned seniorstanding counsel relied upon a judgment reported in [2002] 125Taxman 965 (SC) [GKN Driveshafts (India) Ltd., Vs. Income TaxOfficer] wherein the Apex Court held as follows: “... There was no justifiable reason to interferewith the order under challenge. However, it wasclarified that when a notice under Section 148 isissued, the proper cause of action for the noticeeis to file return and if he so desires, to seekreasons for issuing notice. The Assessing Officer isbound to furnish reasons within a reasonable time.On receipt of reasons, the noticee is entitled tofile objections to issuance of notice and theAssessing Officer is bound to dispose of the same bypassing a speaking order. In the instant case, asthe reasons had been disclosed in the proceedings,the Assessing Officer had to dispose of theobjections, if filed, by passing a speaking order,before proceeding with the assessment.” 7.On a careful consideration of the materials availableon record and the submissions made by the learned counsel oneither side, it could be seen that the petitioner AssesseeCompany filed its e-Return of Income on 27.09.2012 for theassessment year 2012-13, admitting a NIL income and claimingcurrent year loss of Rs.35,05,24,397/-. After completing theformalities, scrutiny assessment under Section 143(3) waspassed on 13.03.2015 making disallowance under Section 35AD ofRs.13,96,553/- and disallowance under Section 14A ofRs.38,10,686/-, thereby, determining the current year loss atRs.34,53,17,158/-. By order dated 22.08.2017, the respondentrejected the petitioner's objections for the reasons forreopening the assessment for the year 2012-13. The respondenthad sought to reopen the assessment by issuing the noticedated 12.04.2012 containing reasons for reopening is that theassets viz., Wind Energy Generators were commissioned and putup to use only during the financial year 2012-13. Whilesubmitting their objections, the petitioner pointed out thatall the particulars were furnished to the Assessing Officerduring the scrutiny assessment under Section 143(3) of theIncome Tax Act. The Assessing Officer has also made areference in the order dated 13.03.2015 as to the presence ofthe authorized representative of the petitioner and the filingof their objections as called for. As per the Certificateissued by the Tamil Nadu Generation and DistributionCorporation Limited (TANGEDCO), the Wind Electric Generatorswere commissioned on 29.03.2012. While completing theassessment and passing the order dated 13.03.2015, theAssessing Officer has considered the Certificate issued by theTANGEDCO to the effect that the Wind Electric Generators were commissioned on 29.03.2012. The Certificate also states thatthe one Electric Generator has been tied up with TNEB 11 kvGrid. 8.On a perusal of the reasons for reopening, furnished bythe respondent, along with the letter dated 12.04.2017, itcould be seen that the respondent had no other material todisbelieve the Certificate issued by TANGEDCO. In the absenceof any material to disbelieve the Certificate issued byTANGEDCO stating that the Generators were commissioned on29.03.2012, the present attempt to reopen the assessment is aclear change of opinion. The respondent could not havereopened the assessment when the Certificate and materialswere considered by the Assessing Officer while completing theassessment and passing the order dated 13.03.2015. 9.The judgment relied upon by the learned counsel for thepetitioner applies to the present case. 10.Since the facts of the present case are different fromthe judgment relied upon by the learned standing counsel forthe respondent, the same is not applicable. 9.The judgment relied upon by the learned counsel for thepetitioner applies to the present case. 10.Since the facts of the present case are different fromthe judgment relied upon by the learned standing counsel forthe respondent, the same is not applicable. 11.The respondent himself, in his counter, has statedthat had the petitioner produced the Commissioning Certificateissued by the Tamil Nadu Generation and DistributionCorporation Limited (TANGEDCO), there would have been noreason for reopening the assessment. Now that the petitionerhad produced the Certificate from the Tamil Nadu Generationand Distribution Corporation Limited (TANGEDCO) and inspite ofreceiving the same, reopening of the assessment cannot besustained. The present attempt to reopen the assessment is aclear change of opinion and therefore, the impugned orderdated 22.08.2017 is liable to be set aside. Accordingly, thesame is set aside. The Writ Petition is allowed. No costs.Consequently, the connected miscellaneous petition is closed. Sd/Assistant Registrar /True copy/ Sub Assistant Registrar To The Deputy Commissioner of Income Tax,Corporate Circle (2),Aayakar Bhavan,No.121, Nungambakkam High Road,Chennai – 600 034. +1cc to Mr.S.Sathyanrayanan Advocate SR.No.23597 +1cc to Mrs.Hema Muralikrishnan Advocate SR.No.23816 Order made inW.P.No.25210 of 2017 andW.M.P.No.26653 of 2017 SDR 09.04.2018