Wp/28176/2018 Of M/S.kone Elevator India Pvt Ltd v. The Assistant Commissioner Of Income Tax

IN THE HIGH COURT OF JUDICATURE AT MADRAS CORAM THE HONOURABLE MR.JUSTICE S.M. SUBRAMANIAM M/s.Kone Elevator India Private Limited,Represented by its Director Mr.C.V.S.Krishna Kumar,S/.o.C.V.Seshadri, Aged 53 years,Prestige Centre Court, 9[th] Floor,The Forum Vijaya Mall,Plot No.183, NSK Salai,Arcot Road, Vadapalani, Chennai – 600 026. .. Petitioner The Assistant Commissioner of Income Tax,Corporate Circle 4(2),Room No.433, 4[th] Floor, Main Building,No.121, Mahatma Gandhi Road,Nungambakkam, Chennai – 600 034... Respondent Petition filed under Article 226 of the Constitution ofIndia praying for issuance of Writ of Certiorari, calling forthe records in Corporate Circle-4(2)/PAN: /2018-19dated 11.10.2018 on the file of the respondent relating to theA.Y.2013-14 and quash the same. The writ on hand is filed challenging the validity of theproceedings dated 11.10.2018 passed by the respondent disposingof the objections filed by the petitioner/assessee. 2.The petitioner is engaged in the business of design,manufacture, supply, erection and installation of lifts and https://hcservices.ecourts.gov.in/hcservices/ supply, erection, installation of escalators. The petitioner isengaged in maintenance of such erected elevators and escalator.The petitioner filed its return of income for the assessmentyear 2013-14 on 29.11.2013. Form No.3CEB was filed on 23.11.203since there were international transactions during the previousyear. The return of income was taken up for scrutiny. Inrespect of transfer pricing issue, a reference was made to theTransfer Pricing Officer under section 92CA(1) of the Income TaxAct [hereinafter referred to as “the Act”] on 31.08.2015.Notice under section 92CA(2) was issued by the Transfer PricingOfficer to the petitioner on 08.09.2015 calling forinformation which the petitioner submitted and appeared beforethe Transfer Pricing Officer. 3.The Transfer Pricing Officer passed an order underSection 92CA(1) recommending an upward adjustment ofRs.25,73,41,261/- towards international transactions vide hisreport dated 31.10.2016. Upon receipt of the said report, theAssessing Officer issued a draft assessment order under Section144C dated 21.12.2016. The said draft assessment order wasserved on the petitioner on 03.01.2017. 4.The petitioner had not chosen to file any objectionagainst the said draft assessment order neither before theDispute Resolution Panel on or before 02.03.2017 being 30days limit prescribed for filing objections nor before theAssessing Officer. Since the petitioner did not object within30 days on receipt of draft assessment order, the AssessingOfficer ought to have passed a final assessment order confirmingthe draft assessment order on or before 31.03.2017 being the endof one month from the end of the month in which the period forfiling of objections under section 144C(2) of the Act expires.However, the respondent failed to pass a final order within thelimitation provided and long thereafter, the respondent issued anotice under section 148 of the Act on 28.03.2018. In responseto the said notice, the petitioner filed a return of incomeelectronically on 19.04.2018. 5.The petitioner vide letter dated 20.04.2018 sought reasonsfor reopening the assessment for the assessment year 2013-14.The respondent communicated the reasons for reopening theassessment to the petitioner vide office letter dated 20.08.2018. 6.The petitioner in letter dated 14.09.2018 objected to thereopening on the ground that the assessment cannot be reopenedmerely because there was a failure on the part of the AssessingOfficer to complete the assessment in accordance with law andwithin the time frame provided by law by observing that incomehad escaped assessment. 5.The petitioner vide letter dated 20.04.2018 sought reasonsfor reopening the assessment for the assessment year 2013-14.The respondent communicated the reasons for reopening theassessment to the petitioner vide office letter dated 20.08.2018. 6.The petitioner in letter dated 14.09.2018 objected to thereopening on the ground that the assessment cannot be reopenedmerely because there was a failure on the part of the AssessingOfficer to complete the assessment in accordance with law andwithin the time frame provided by law by observing that incomehad escaped assessment. 7.The respondent issued a notice under section 143(2) of theAct requiring the petitioner to attend the respondent's officeon 09.10.2018 at 10.30 a.m. with all the documents, accounts andother evidences in support of the return filed. The petitionerappeared before the respondent. Thereupon, the respondent videimpugned order dated 11.10.2018 rejected the objections filed bythe petitioner for reopening of assessment. 8.The learned counsel for the petitioner with reference tothe facts in nutshell narrated above, contended that thereopening of assessment is per se illegal andbeyond the scope of jurisdiction and not warranted against themandate as under the provisions of the Income Tax Act. In thiscontext, the learned counsel for the petitioner relied onsection 92CA at the first instance to establish that referenceto the Transfer Pricing Officer was admittedly made in the caseof the petitioner/assessee in view of the admitted internationaltransactions as explained in the return of income by thepetitioner/assessee. However, the procedures contemplated morespecifically in sub-clause (4) to section 92CA of the Act, it iscontended that on receipt of the order under sub-section (3) theAssessing Officer shall proceed to compute the total income ofthe petitioner under sub-section (4) to section 92CA inconformity with the Arm's Length price as so determined by theTransfer Pricing Officer. 9.In this context, the attention of this Court is drawn withreference to the order passed by the Transfer Pricing Officerwherein the Transfer Pricing Officer fixed the Arm's lengthprice of international transactions. Additions were made andthe proceedings of the Transfer Pricing Officer was communicatedto the Assessing Officer and based on the said report of theTPO, the Assessing Officer passed the draft assessment order on30.12.2016 under section 143(3) r/w. Section 92CA of the Act.It is contended that beyond the report of the Transfer PricingOfficer, the Assessing Authority considered the disallowanceunder section 40(a)(ia) and made additions and thereafter theAssessing Officer considered the claim of the assessee regardingthe expenditure and other aspects of the matter. In paragraph 6of the draft assessment order, total taxable income is computed.Relying on the said draft assessment order, the petitionerstates that once the draft assessment order is passed by theAssessing Officer then under section 144C, he has to pass thefinal assessment order within a period of 30 days from the endof the month. Section 144C stipulates reference to DisputeResolution Panel. Sub-clause (4) enumerates “the AssessingOfficer shall notwithstanding anything contained in section 153or section 153B pass the assessment order under sub-section (3)within one month from the end of the month in which; (a) theacceptance is received; or (b) the period of filing ofobjections under sub-section (2) expires. Relying on the said provisions, it is contended that the petitioner assessee had notraised any objections. Therefore, under sub-clause (4) tosection 144C the Assessing Officer is mandated to pass anassessment order. Admittedly in the present case no final orderof assessment was passed. However, the respondent has chosen toinvoke the powers under section 147 of the Act and issued anotice under Section 148 of the Act for reopening of assessment.Admittedly the procedures are followed as directed by the ApexCourt of India in the case of GKN Driveshafts (India) Ltd., vs.Income Tax Officer [(2002) 125 Taxman 963(SC)]. However, thereopening of proceedings under section 147 of the Act oncompletion of draft assessment order issued pursuant to thereport of the TPO is impermissible and beyond the jurisdictionof the Assessing Authority. 10.The learned counsel for the petitioner is of an opinionthat sub-clause (4) to section 144C contemplates “the AssessingOfficer has to pass an order within one month from the end ofthe month”. In the present case admittedly no final order ofassessment was passed. As far as the present facts areconcerned, the reason for reopening of assessment is culled outfrom the report of the TPO and therefore the reopening ofassessment is not permissible. In other words, the Arm's lengthprice was determined by the TPO who is an expert bodyconstituted under the provisions of the Act. When the expertbody constituted considered the issues and determined the Arm'slength price by making additions in the present case, the samecannot be a ground for reopening of assessment under section 147of the Act by the Assessing Authority as the materials regardinginternational transactions were considered and determined by theTransfer Pricing Officer. In the draft assessment order, twomore additions were also made by the Assessing Authority.Therefore, with reference to the additions made in other itemswhich forms part of reasons for initiation of reopeningproceedings, there is no jurisdiction for the authority toinvoke section 147 of the Act and thus the proceedings are to beset aside. 11.The learned counsel for the petitioner elaborated thescope of section 147 of the Act to determine the income escapingassessment. In his opinion, section 147 of the Act enumeratessuch income and also any other income chargeable to tax whichhas escaped assessment. When the language is adopted “suchincome” and when that income which is the reason for reopeningwas adjudicated by the Transfer Pricing Officer and a draftassessment order is passed, there cannot be any power undersection 147 of the Act for reopening of assessment and issuenotice under Section 148 of the act”. Thus, in the absence ofany scope for reopening, the Assessing Authority cannot furtherstretch the provisions for the purpose of reopening ofassessment, which is illegal and without jurisdiction. The learned counsel for the petitioner reiterated that section 153of the Act prescribes time limit for completion of assessment,re-assessment and re-computation. Therefore, in the presentcase, none of these procedures contemplated are followed by theAssessing Authority and for all these reasons, the writ petitionis to be allowed. 12.The learned counsel for the petitioner in support of hiscontentions relied on the judgment of the Hon'ble Supreme Courtand various High Courts. (i)In the case of KLM Royal Dutch Airlines vs. AssistantDirector of Income Tax [(2007) 292 ITR 0049], the High Court ofDelhi made an observation as extracted hereunder: learned counsel for the petitioner reiterated that section 153of the Act prescribes time limit for completion of assessment,re-assessment and re-computation. Therefore, in the presentcase, none of these procedures contemplated are followed by theAssessing Authority and for all these reasons, the writ petitionis to be allowed. 12.The learned counsel for the petitioner in support of hiscontentions relied on the judgment of the Hon'ble Supreme Courtand various High Courts. (i)In the case of KLM Royal Dutch Airlines vs. AssistantDirector of Income Tax [(2007) 292 ITR 0049], the High Court ofDelhi made an observation as extracted hereunder: “15.Applying this line of decisions to thefacts of the present case, the inescapableconclusion that would have to be reached is thatwhile assessment proceedings remain inchoate, no'fresh evidence or material' could possibly beunearthed. If any such material or evidence isavailable, there would be no restrictions orconstraints on its being taken into considerationby the AO for framing the then current assessment.If the assessment is not framed before the expiryof the period of limitation for a particular AY, itwould have to be assumed that since proceedings hadnot been opened under Section 143(2), the Returnhad been accepted as correct. It may be argued thatthereafter recourse could be taken to Section 147,provided fresh material had been received by the AOafter the expiry of limitation fixed for framingthe original assessment. So far as the present caseis concerned we are of the view that it is evidentthat, faced with severe paucity of time, the AO hadattempted to travel the path of Section 147 in thevain attempt to enlarge the time available forframing the assessment. This is not permissible inlaw. 16..........Suffice it to state that whereverand whenever it appears to the High Court thatproceedings have been initiated or are continuingwithout the authority of the law the High Courtwould be in dereliction of duty if it hesitated inexercising the extraordinary powers contained underArticles 226/227 of the Constitution of India. Inthe present case since the AO was duty-bound toconclude the assessment before resorting to Section147 of the IT Act, it is our bounden duty to issuea writ of Certiorari so as to bring these legalproceedings to a definitive halt. The dicta in GKNDrive has been not duly followed since the Objections filed by the Petitioners, in our view,have been disposed off contrary to law.” (ii)In the case of Smt.Sova Sarkar and others vs. Income TaxOfficer [(1983) 139 ITR 0386], the High Court of Calcutta madean observation as extracted hereunder: “14.It thus appears to be well-settled thatwhen a return has been filed by an assessee, itcannot be ignored by the ITO and he will have nojurisdiction to issue a notice under Section148 without completing the assessment on thereturn filed by the assessee. Even though a returnis invalid in the sense that it is not correct andcomplete within the meaning of Section 139 of theI.T. Act, 1961, the ITO cannot ignore or disregardthe same for the purpose of issuing a noticeunder Section 148 of the Act, unless the returncan be regarded as not a return in the eye of lawas in the case of the two illustrations givenabove. In the instant case, the ITO acted on thereturns filed by the appellant, issued noticesunder Section 143(2) and heard the appellant forthe assessment years in question under Section 143(3), but without completing the assessments hetook recourse to reopen the assessmentsunder Section 147 by issuing the impugned noticesunder Section 148 of the Act. In our view, the ITOhas acted without jurisdiction in issuing theimpugned notices.” (iii)In the case of T.Manavedan Tirumalpad and another vs.Commissioner of Income Tax [(1955) 28 ITR 0615], the High Courtof Madras made an observation as extracted hereunder:“5.........We have come almost to the end ofthe financial year and it is necessary that theassessment should be completed early. I thereforecomplete the assessment tentatively now leavingthe question of assessment of the income fromforests on lands assessed to land revenue to beconsidered later. Action under Section 34 of theAct would be taken in due course to assess suchincome from forests on lands assessed to landrevenue as has now escaped assessment. 6...............It was just a case ofpiecemeal assessment in the course of theproceedings in the assessment year 1941-42. Section 23 of the Act does not provide forsuch piecemeal assessment. It was true that a portion of the assessee's income had not beentaxed, and in that sense it had escapedassessment. But that escape was fully known to theIncome-tax Officer even before 28th February, 1942and was the result of a procedure deliberatelyadopted by the Income-tax Officer, a procedurewhich turned out to be wrong in law. There couldbe, in the circumstances of this case, no freshdiscovery after 28th February, 1942, that theforest income had escaped assessment in 1941-42. Adeferred assessment is not discovery of escapedassessment. Section 34 could not have been calledin aid to complete an assessment deliberatelydeferred. Authority is not wanting either tonegative the contention of the department,see Debi Prasad Malaviya v. Commissioner ofIncome-tax (1952) 22 ITR 539, where the learnedJudges referred to two earlier decisions FazalDhala v. Commissioner of Income-tax (1944) 12I.T.R. 341 and Chuni Lal Nayyar v. Commissioner ofIncome-tax (1951) 20 I.T.R. 568. We answer thethird question in the negative and in favour ofthe assessee.” (iv)In the case of Gemini Leather Stores vs. Income TaxOfficer [(1975) 100 ITR 1(SC)], the Hon'ble Supreme Court ofIndia ruled as follows: “.......In the case before us the assesseedid not disclose the transactions evidenced by thedrafts which the Income-Tax Officer discovered.After this discovery the Income-tax Officer had inhis possession all the primary facts, and it wasfor him to make necessary enquiries and drawproper inferences as to whether the amountsinvested in the purchase of the drafts could betreated as part of the total income of theassessee during the relevant year. This theIncome-tax officer did not do. It was plainly acase of oversight, and it cannot be said that theincome chargeable to tax for the relevantassessment year had escaped assessment by reasonof the omission or failure on the part of theassessee to disclose fully and truly all materialfacts. The Income tax officer had all the materialfacts before him when he made the originalassessment. He cannot now take recourse to Section147(a) to remedy the error resulting from his ownoversight. (v)In the case of Vijay Television (P) Ltd. DisputeResolution Panel and others [(2014) 369 ITR 0113(Mad)], the HighCourt of Madras made the following observations: (v)In the case of Vijay Television (P) Ltd. DisputeResolution Panel and others [(2014) 369 ITR 0113(Mad)], the HighCourt of Madras made the following observations: “23.It is evident from the above decision ofthe Honourable Supreme Court that if an order ispassed beyond the statutory period prescribed, suchorder is a nullity and has no force of law. In thatcase before the Honourable Supreme Court, theperiod for assessment proceedings expired andthereafter, fresh assessment orders have beenissued by anti-dating it. In those circumstances,it was held that the High Court ought not to haveremanded the matter back to the assessment officerand by doing so, the statutory period prescribedfor completion of assessment has been extended byconferring jurisdiction upon the Assessing Officer,which he otherwise lacked on the expiry of the saidperiod. In that case, the Honourable Supreme Courtalso held that there is a distinction between anorder which is a nullity and an order which isirregular and illegal. Where an authority makingorder lacks inherent jurisdiction, such an orderwill be null and void ab initio, as the defect ofjurisdiction goes to the root of the matter andstrikes at his very authority to pass any order andsuch a defect cannot be cured even by consent ofthe parties. 24. This decision squarely applies to thefacts of this case. In this case, the order passedby the second respondent lacks jurisdictionespecially when it is beyond the period oflimitation prescribed by the statute. When there isa statutory violation in not following theprocedures prescribed, such an order cannot becured by merely issuing a corrigendum.” (vi)In the case of Parashuram Pottery Works Co. Ltd. vs.Income Tax Officer [(1977) 106 ITR 0001], the Hon'ble SupremeCourt held as follows: “15.It has been said that the taxes are theprice that we pay for civilization. If so, it isessential that those who are entrusted with thetask of calculating and realising that price shouldfamiliarise themselves with the relevant provisionsand become well versed with the law on the subject.Any remissness on their part can only be at thecost of the national exchequer and must necessarilyresult in loss of revenue. At the same time, we https://hcservices.ecourts.gov.in/hcservices/ have to bear in mind that the policy of law is thatthere must be a point of finality in all legalproceedings, that state issues should not bereactivated beyond a particular stage and thatlapse of time must induce repose in and set at restjudicial and quasi-judicial controversies as itmust in other spheres of human activity. So far asincome-tax assessment orders are concerned, theycannot be reopened on the scope of income escapingassessment under section 147 of the Act of 1961after the expiry of four years from the end of theassessment year unless there be omission or failureon the part of the assessee to disclose fully andtruly all material facts necessary for theassessment. As already mentioned, 'this cannot besaid in the present case. The appeal isconsequently allowed; the judgment of the HighCourt is set aside and the impugned notices arequashed. The parties in the circumstances shallbear their own costs throughout.” (vii)In the case of K.M.Sharma vs. Income Tax Officer[(2002) 254 ITR 772 (SC)], the Hon'ble Supreme Court held asfollows: (vii)In the case of K.M.Sharma vs. Income Tax Officer[(2002) 254 ITR 772 (SC)], the Hon'ble Supreme Court held asfollows: 13. Fiscal statute more particularly on aprovision such as the present one regulating periodof limitation must receive strict construction. Lawof limitation is intended to give certainty andfinality to legal proceedings and to avoid exposureto risk of litigation to litigant for indefiniteperiod on future unforeseen events. Proceedings,which have attained finality under existing law dueto bar of limitation cannot be held to be open forrevival unless the amended provision is clearlygiven retrospective operation so as to allowupsetting of proceedings, which had already beenconcluded and attained finality. The amendment tosub-section (1) of Section 150 is not expressed tobe retrospective and, therefore, has to be held asonly prospective. The amendment made to sub-section(1) of Section 150 which intends to lift embargo ofperiod of limitation under Section 149 to enableAuthorities to reopen assessments not only on thebasis of Orders passed in proceedings under the ITAct but also on Order of a Court in any proceedingsunder any law has to be applied prospectively on orafter 1.4.1989 when the said amendment wasintroduced to sub-section (1). The provision insub-section (1) therefore can have only prospective operation to assessments, which have not becomefinal due to expiry of period of limitationprescribed for assessment under section 149 of theAct. (viii)In the case of Hope Textiles Ltd. vs. Union of India[(1994) 205 ITR 508(SC)], the following observations are made bythe Apex Court: “......The writ petition was dismissedobserving that no mandamus can be issuedcompelling the Income-tax Officer to make an orderof assessment beyond the period of limitationprescribed by Section 153(2). In this appeal, itis urged by Sri Sen, learned Counsel for theappellant, that by virtue of Clause (ii) of Sub-section (3) of Section 153, the High Court couldhave directed the Income-tax Officer to pass anorder of reassessment pursuant to the aforesaidnotice, notwithstanding the expiry of the periodprescribed in Sub-section (2) of Section 153. Weare not prepared to agree. A writ of mandamus canbe issued to a statutory authority to compel it toperform its statutory obligation. It cannot issueto compel him to pass an order in violation of astatutory provision. The Income-tax Officer had nopower to make a reassessment beyond the periodprescribed by Sub-section (2), unless the casefell under any of the other sub-sectionsunder Section 153 or other provision extending thesaid period of limitation.” (ix)In the case of Commissioner of Income Tax vs. AnjumM.H.Ghaswala [(2001) 252 ITR 1 (SC)], the Apex Court ruled asunder:“24...........It is a normal rule ofconstruction that when a statute vests certainpower in an authority to be exercised in aparticular manner then the said authority has toexercise it only in the manner provided in thestatute itself. If that be so since the Commissioncannot exercise the power of relaxation foundin Section 119(2)(a) in the manner provided thereinit cannot invoke that power under Section 119(2)(a) to exercise the same in its judicialproceedings by following a procedure contrary tothat provided in sub-section (2) of Section 119.”(x)In the case of TANMAC India vs. Deputy Commissioner ofIncome Tax [(2016) 97 CCH 0189], the High Court of Madras heldas follows: “12.If the assessing officer, after issuingintimation u/s section 143(1) does not to issue anotice u/s 143(2) of the Act to initiateproceedings for scrutiny of the return of income,the obvious conclusion is that he does notconsider it necessary or expedient to do so, theinference being that the Return of Income filed inorder. It is this opinion that cannot bearbitrarily changed by the assessing officer, tore-assess income on the basis of stale material,already on record. If we thus keep in the mind theabove fundamental requirement of section 147, itwould be apparent that the exercise undertaken bythe Revenue in this case is not one of re-assessment, but of review. The reasons make itabundantly clear that the re-assessment is soughtto be initiated on the basis of the return ofincome and the enclosures which were availablewith the assessing officer since 2.11.1998 andwhich ought to have prompted him to issue a noticeunder section 143(2) of the Act to conduct theproceedings under scrutiny. What is sought to bedone by the re-assessment ought to have beenachieved by scrutiny assessment proceedings.Having missed the bus earlier, the Departmentcannot be permitted to avail of the extended timelimit in the absence of any new or tangiblematerial, when the time for scrutiny assessmenthas elapsed on 31.3.2001, prior to issue of noticeu/s 148. The notice under section 148 dated9.12.2002 is thus an arbitrary exercise of powerand a review of proceedings impermissible in law.” (xi)In the case of Smt.Savitri Rani Malik vs. Commissionerof Income Tax [(1990) 186 ITR 701], the High of Gauhati made thefollowing observations: “17.Before we part with this opinion, we mayadvert to one argument that was advanced in thisregard by learned counsel for the Revenue. Counselreferred to the facts in the instant case showingthat there are no extenuating circumstances tostretch the provisions of the enactment to benefitthe assessee in this regard. Like pleas are oftenadvanced whenever questions of limitation have theeffect of saving the individuals who, by theirconduct, do not deserve any compassionateconsideration.IncourtswhereBritishjurisprudence prevails, statutes of limitation arejurisprudential necessities. See the Americancase, Bell v. Mormon [1828] 1 Peters 351 at page 360. Limitation is said to be "a statute ofrepose". Corpus Juris Secundum, Vol. 53, at page901 : "Statutes of limitation are statutes ofrepose, the object of which is to suppressfraudulent and stale claims from springing up atgreat distances of time and surprising the partiesor their representatives when all the propervouchers and evidences are lost or the facts havebecome obscure from the lapse of time or thedefective memory or death, or removal of witnesses..... that the statute (of limitation) is for thebenefit and repose of individuals and not tosecure general objects of policy and morals." Inthe U.K., the most ancient case is that of A'Court v. Cross [1825] 3 Bing 329 at page 360, inthat limitation was described as "an act ofpeace". In an opinion expressed in AmpthillPeerage's case [1976] 2 All ER 411 at p. 423, theHouse of Lords observed : "Truth may be shut out(by operation of limitation) but society considerstruth may be bought. . . the fundamental principle... (is) that there should be some end tolitigation . . .". We find solace in what isstated to be the eternal verity of life and lawthat statutes of limitation achieve peace and goodadministration but do not advance morals and poodconduct. 18.We answer that the assessment order for1970-71 and the assessment proceedings are barred.The answer is recorded against the Revenue. Asrespects 1971-72, the assessment order is notbarred, and we answer the question against theassessee and in favour of the Revenue. No costs.” 18.We answer that the assessment order for1970-71 and the assessment proceedings are barred.The answer is recorded against the Revenue. Asrespects 1971-72, the assessment order is notbarred, and we answer the question against theassessee and in favour of the Revenue. No costs.” 13.Relying on the above judgments, the learned counsel forthe petitioner reiterated that the Courts have consistently heldthat the scope of section 147 cannot be extended in suchcircumstances where the TPO determined the Arm's length priceand the Assessing Authority passed a draft assessment orderconsidering the materials as well as the report of the TPO andadditions are also made. It is not only beyond the scope ofjurisdiction it is not within the time limit prescribed. Someof the judgments are cited to elaborate the importance of thelimitation prescribed under the Income Tax Act which ismandatory. The other judgments are cited for the purpose ofunderstanding the procedures to be followed for reopening ofassessment. Certain judgments are for the purpose of contendingthat reopening of assessment in certain circumstances areimpermissible. Broadly these contentions are raised in supportof the case of the petitioner and it is contended that in the present case, the respondent has not followed any of theprinciples settled by the Courts across the Country and the ApexCourt of India. Thus the writ petition deserves to beconsidered in favour of the petitioner. 14.The learned standing counsel appearing on behalf of therespondent objected the contentions of the petitioner inentirety. It is contended that the petitioner cannot sustainhis claim based on erroneous interpretation of the provisions ofthe Act. The learned Standing counsel strenuously contendedthat the writ petition is not entertainable. The scope ofjurisdiction is well defined under the scheme of the Act andthus the interpretation offered on behalf of the petitioner isnot in consonance with the spirit of the procedures as well asthe scheme contemplated under the Act. Thus the writ petitionis devoid of merits. The learned standing counsel proceededwith by elaborating the scope of section 147 of the Act. Thereis no embargo to initiate proceedings under section 147/148 ofthe Act in such circumstances with reference to the factsplaced by the petitioner. There is no bar absolutely forreopening of assessment even in such cases where draftassessment orders are passed or the issues relating tointernational transactions were referred to the Transfer PricingOfficer. The scope of section 147 of the Act is wider enoughand conferred on the Assessing Officer to reopen the assessmentif he has reason to believe that income chargeable to taxescaped assessment. Thus the scope of wider interpretation asrightly accepted by the Constitutional Courts cannot be narroweddown for the purpose of limiting the power conferred on theauthority to reopen the assessment in such circumstances wherethe issues are referred to the TPO and a draft assessment orderhas been passed. 15.The learned standing counsel referred section 148 of theAct and stated that sub-clause (1) commence as “before makingthe assessment, re-assessment and re-computation under section147, the Assessing Officer shall serve on the assessment anotice requiring him to furnish within such period as it mayspecific in the notice”. Relying on the said clause, thelearned standing counsel contended that a notice under section148 of the Act may be issued before making the assessment, re-assessment or re-computation. In the present case, admittedlyno assessment order has been passed. The Transfer PricingOfficer submitted his report, and draft assessment order waspassed. However under section 144C(4), no final assessment orderhas been passed and therefore, the respondent is vested withpower to invoke section 147 of the Act and issue notice undersection 148 of the Act. 16.The learned standing counsel referred section 149 of theAct which stipulates time limit for notice. Relying on sub-clause (1)(b) which states that “if four years, but not more than six years, have elapsed from the end of the relevantassessment year unless the income chargeable to tax which hasescaped assessment amounts to or is likely to amount to one lakhrupees or more for that year”. In the present case admittedlythe reopening of assessment is made within four year, therefore,there is no irregularity or infirmity as such. The Assessingofficer has not passed any final assessment order under section144C(4) of the Act, therefore, he is well within his power toinvoke section 147 and issue notice under section 148 whichstates that such notice can be issued before making anyassessment, re-assessment or re-computation. Therefore, thecircumstances as narrated would establish that the notice undersection 148 was issued by following the procedures ascontemplated under sections 147 and 148 of the Act and thus,there is no perversity and the writ petition is to be rejected. 17.Considering the arguments, two issues are to beconsidered, with reference to the facts and circumstances.Firstly, whether the Assessing Officer can issue notice undersection 148 of the Act when the Assessing Officer has not passedan assessment order under section 144C(4) of the Act? Secondly,whether the Assessing Officer can cover up the lapses andwhether there is such provision under the Income Tax Act to doso? 18.Let us consider the procedures contemplated in ChapterXIV of the Act for the purpose of cogent understanding withreference to the purpose and object of the Act which is to beconsidered as paramount. Any such procedures contemplated underChapter XIV of the Act must have nexus, purpose and objectsought to be achieved and therefore the Courts cannot adopt anisolated approach with reference to the procedures as well asthe object sought to be achieved. As far as the procedures areconcerned, pragmatic and constructive interpretations aremandatory. 19.The golden rule of interpretation would be that, thelanguage employed in the Statute must be read over as it is andthe Courts cannot substitute any other language for the purposeof interpretation of statutes. Thus the Courts cannot add wordsto a statute and offer a different interpretation. However, therule of constructive interpretation require that the languageemployed in the statutes are to be interpreted with reference tothe purpose and object sought to be achieved under the Act. 20.With this, let us consider the scope of section 147 ofthe Act at the first instance though the Constitutional Courtshave repeatedly considered the same in umpteen number ofjudgments. Undoubtedly, consideration of the provision isimminent as the facts of the particular case warrant the same.Section 147 of the Act stipulates that if the Assessing Officerhas reason to believe that any income chargeable to tax escaped 20.With this, let us consider the scope of section 147 ofthe Act at the first instance though the Constitutional Courtshave repeatedly considered the same in umpteen number ofjudgments. Undoubtedly, consideration of the provision isimminent as the facts of the particular case warrant the same.Section 147 of the Act stipulates that if the Assessing Officerhas reason to believe that any income chargeable to tax escaped assessment for any assessment year, he may subject to theprovisions of sections 148 to 153, assess or reassess suchincome and also any other income chargeable to tax which hasescaped assessment and which comes to his notice subsequently inthe course of the proceedings under this section, or recomputethe loss or the depreciation allowance or any other allowance,as the case may be, for the assessment year concerned. 21.In the present case, reopening of assessment is madewithin a period of four years. Therefore, the proviso clausemay not have any application. Perusal of Section 147 of the Actand its scope undoubtedly is wider enough to cover numerouscircumstances, wherein the Assessing Authority can invoke if hehas reason to believe that any income chargeable to tax hasescaped assessment. Many other circumstances are alsoelaborated in explanation (1) and explanation (2) to Section 147of the Act. As far as the reopening of assessment is concerned,if the Assessing Officer has reason to believe that any incomechargeable to tax has escaped assessment for any assessmentyear. As far as the reopening of assessment is concerned, ifthe Assessing Officer has reason to believe that any incomechargeable to tax escaped assessment for any assessment year.Therefore irrespective of the assessment order and within theperiod of limitation contemplated under the proviso clause theAssessing Officer is empowered to reopen the assessment byfollowing the procedures contemplated. 22.There is no other condition stipulated under Section 147of the Act with reference to the procedures contemplated underSection 92CA or under Section 144C of the Income Tax Act.Contrarily section 144C(4) states that the Assessing Officershall notwithstanding anything contained in section 153 orsection 153B pass an assessment order. Therefore there is ascope for reopening of assessment even in cases where noassessment order is passed under sub-clause (4) to section 144Cof the Act. Undoubtedly, in the present case, the petitionerassessee had not raised any objection. Therefore, under sub-clause (4) the Assessing Officer is empowered to pass an orderof assessment, however, he has not passed any orders and haschosen to reopen the assessment by invoking the powers conferredunder section 147 of the Act. Section 147 of the Act providespower to assess or re-assess. The section did not contemplatethe stages under which such assessment or re-assessment can bemade. For this purpose, Chapter XIV of the Act is to be readcogently to form an opinion that the assessment or re-assessmentshall be made at any point unless there is a specificprohibition contemplated under any of the clauses under ChapterXIV of the Act. When there is no embargo under Section 147 ofthe Act with reference to the stages under which reopening canbe made there is no impediment for the Assessing Officer toinvoke powers under Section 147 of the Act and in the present case, no assessment order has been passed and therefore, theAssessing Officer is empowered to invoke section 147 and issuenotice under section 148 of the Act. case, no assessment order has been passed and therefore, theAssessing Officer is empowered to invoke section 147 and issuenotice under section 148 of the Act. 23.As far as the arguments advanced on behalf of thepetitioner though the Transfer Pricing Officer submitted hisreport determining the Arm's Length Price with reference to theinternational transactions, the disallowance under section 40(a)was also considered by the Assessing Authority when theseaspects were considered and a draft assessment order is passed,then there is no scope for invoking section 147 of the Act. 24.What is necessary for invoking section 147 of the Act isthat any income chargeable to tax has escaped assessment. Thatbeing the heart and soul of the provision and if the AssessingOfficer has reason to believe, then he is empowered to issuenotice under Section 148 of the Act. Thus the stages underwhich the reopening can be made are wider enough to cover thecircumstances which all are prevailing in the case of thepetitioner also. There is no restriction to assess or re-assessany income chargeable to tax has escaped assessment except therestrictions imposed under the proviso clause with reference tothe time limit prescribed as well as the additional conditionsfor invoking the provision beyond the period of four years.Admittedly, in the present case reopening is within the periodof four years and therefore, the assessment and re-assessmentshall be made if the Assessing Officer has reason to believe. 25.As far as the ground taken regarding the reason tobelieve is concerned, this Court has to consider the reasons forreopening of assessment. The reasons for reopening ofassessment states as follows: “The above additions and disallowances arerecorded in the order sheet and are duly vouched bythe authorized representative of the assesseecompany. The draft order was served on the assesseeon 31.01.2017. Thereafter, it is transpired thatthe assessee company would be filing its objectionsbefore the learned Dispute Resolution Panel againstthe said order. However, when a copy of theobjections before the learned DRP was called forfrom the assessee, the assessee feigned ignorance.Hence, as the assessee's income i.e, the additionsand disallowances as mentioned above has escapedassessment for the A.Yr.2013-14 and to bring thesame to tax, the assessment has been reopened.” 26.The reasons stated above would reveal that after passingof the draft assessment order on 30.12.2016 it transpired thatthe assessee Company would filing its objection before the learned Dispute Resolution Panel against the order. However,when a copy of the objections before the learned DisputeResolution Panel was called for from the assessee, the assesseefeigned ignorance. Hence, as the assessee's income i.e, theadditions and disallowances as mentioned above has escapedassessment for the year 2013-14 and to bring the same to tax,the assessment has been reopened. 27.Regarding the impugned order disposing of the objections,the Assessing Officer made a finding which reads as follows:“For making this claim, the assessee has reliedon three case laws which are either not related tothe facts of this case or supportive of thedepartments action of issuing notice u/s.148. Thesame are discussed as under: The first case viz T.Manavedan Tirumalpad vs.CIT [1955] deals with the provisions of Act as theyexist prior to independence which are redundantafter the 1961 Act came into force. The second case Viz, Parashuram Pottery WorksCo. Ltd. vs. ITO [1977] relates to the invoking ofSection 147 of the Act of 1961 after the expiry offour years from the end of the assessment year,where as in the instant case the provisions of sec.147 have been invoked within the stipulated periodof four years. The first case viz T.Manavedan Tirumalpad vs.CIT [1955] deals with the provisions of Act as theyexist prior to independence which are redundantafter the 1961 Act came into force. The second case Viz, Parashuram Pottery WorksCo. Ltd. vs. ITO [1977] relates to the invoking ofSection 147 of the Act of 1961 after the expiry offour years from the end of the assessment year,where as in the instant case the provisions of sec.147 have been invoked within the stipulated periodof four years. The third and last case viz. KLM Royal DutchAirlines vs. ADIT speaks mainly about thedistinction between the time limits set down bysection 153 for framing the assessment u/s. 143 andu/s.147. Interestingly, at para8 of this case lawrelating to the Judgment of the honourable HighCourt of Delhi the following was quoted from thedecision in an Australian case law to defineassessment. “Assessment means the completion of the processby which the provisions of the Act relating toliability to tax are give concrete application in aparticular case with the consequence that aspecified amount of money will become due andpayable as the proper tax in that case.” The instant case perfectly fits into thiscomprehensive definition, as 'the process of givingconcrete application of the provisions of the Actresulting in a specified amount of money becomingdue and payable as the proper tax' has not beencompleted due to the reason that the demand noticeu/s.156 along with the regu