Wp/3290/2019 Of Pfizer Limited v. Assistant Commissioner Of Income Tax - 14 (2) (2) And 2 Ors

GAURIAMITGAEKWAD Digitallysigned byGAURI AMITGAEKWADDate:2021.11.1510:38:05+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3290 OF 2019 Pfizer Limited ….Petitioner V/s.Assistant Commissioner of Income Tax – 14 (2) (2) and Ors. ….Respondents---- Mr. P.J. Pardiwalla, Senior Advocate a/w. Mr. Jeet Kamdar i/b. Mr. Atul K. Jasani for petitioner.Mr. Suresh Kumar for respondents. ---- CORAM : K.R. SHRIRAM &AMIT B. BORKAR, JJ. DATED : 29[th] OCTOBER 2021 P.C. : 1Petitioner has filed this petition to challenge the notice dated25[th] March 2019 under Section 148 of the Income Tax Act, 1961 (the saidAct) together with consequential notices and orders. According to petitioner,the notice is issued without jurisdiction as the required jurisdictionalconditions have not been satisfied before proceedings for reassessment canbe initiated. 2Petitioner is a company engaged in manufacturing, trading anddistribution of drugs (medicines). For Assessment Year 2012-2013,petitioner filed its return of income on 30[th] November 2012. The same wasaccepted under Section 143 (1) of the said Act and an assessment orderunder Section 143 (3) of the said Act was passed on 6[th] May 2016. 3Petitioner had received notices from the Assessing Officerbefore passing the assessment order and during the course of hearing, the Assessing Officer had raised a query as to why the margins earned by thestockists of petitioner should not be disallowed under Section 40 (a) (ia) ofthe said Act considering the fact the margins earned by the stockists weretreated to be commission and petitioner was treated as an assessee indefault on account of non-deduction of tax at source under Section 194H ofthe said Act and an order dated 26[th] March 2014 was passed under Section201 (1)/(1A) of the said Act. Petitioner had submitted its detailed replydated 30[th] March 2016. The assessment order came to be passed on 6[th] May2016 in which this issue has not been dealt with. It is settled law as held inAroni Commercials Limited V/s. The Dy. Commissioner of Income Tax – 2(1) and Anr.1relied upon by Mr. Pardiwalla that once a query is raisedduring the assessment proceedings and the assessee has replied to it, itfollows that the query raised was a subject of consideration of the AssessingOfficer while completing the assessment. It is not necessary that anassessment order should contain reference and/or discussion to disclose itssatisfaction in respect of the query raised. If the Assessing Officer hasconsidered the objection raised in the grounds for issuing notice underSection 148 of the said Act during the original assessment proceedings buthas not rejected those objections, the Assessing Officer is deemed to haveaccepted the objections. If one considers the reasons for reopening, the basis on whichreopening has been done is that the original assessment records, assessment order or office note do not bring forth any material substance to suggestthat this aspect was considered in the original assessment proceedings.Therefore, this aspect needs fresh consideration and examination. Theassessee has not disclosed fully and truly material facts during the originalassessment proceedings. From what has been noted by us above, thisassumption of the Assessing Officer in the reasons for reopening is incorrect.Therefore, on this ground alone, the notice dated 25[th] March 2019 issuedfor reopening has to be struck down. order or office note do not bring forth any material substance to suggestthat this aspect was considered in the original assessment proceedings.Therefore, this aspect needs fresh consideration and examination. Theassessee has not disclosed fully and truly material facts during the originalassessment proceedings. From what has been noted by us above, thisassumption of the Assessing Officer in the reasons for reopening is incorrect.Therefore, on this ground alone, the notice dated 25[th] March 2019 issuedfor reopening has to be struck down. 4Moreover, the tangible material on the basis of which theAssessing Officer claims to have reasons to believe that income chargeablefor tax for Assessment Year 2012-2013 has escaped assessment is becauseinformation has been received from the office of the Deputy Commissionerof Income Tax, TDS -2 (1), Mumbai vide letter dated 27[th] March 2017regarding applicability of Section 40 (a) (ia) of the said Act for nondeduction of TDS on amount of Rs.20,34,60,120/- paid to stockists forAssessment Year 2012-2013. According to the Assessing Officer, on the basisof the said information, an order under Section 201 (1)/201 (1A) of thesaid Act has been passed on 26[th] March 2014 by the Deputy Commissionerof Income Tax, TDS – 2 (1), Mumbai, deeming petitioner in default withinthe provisions of Section 201 for not deducting TDS under Section 194H.This itself cannot be accepted because he says on the basis of informationdated 27[th] March 2017 an order has been passed on 26[th] March 2014.Moreover, this order has been discussed when the original assessment proceedings were held and as noted earlier, during the course of hearing aquery was raised by the Assessing Officer and petitioner has given detailedexplanation vide its letter dated 30[th] March 2016. Therefore, there isnothing on record to even indicate that there was any tangible material forreopening the assessment. 5In the case at hand, the assessment is sought to be reopenedafter the expiry of a period of four years from the end of relevant year andhence, the proviso to Section 147 applies which stipulates a requirementthat there is an escapement of income by reasons of either omission orfailure on the part of the assessee to disclose fully or truly all material factsnecessary for assessment of that year. This condition required for reopeninghas not been satisfied. 6In the circumstances, the petition has to be allowed. The noticedated 25[th] March 2019 and order dated 2[nd] November 2019 together withconsequential notices and orders are hereby quashed and set aside. 7Petition disposed with no order as to costs. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)