Wp v. Assistant Commissioner Of Income Tax (Ltu)(Circle-2) And 2 Ors

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3440 OF 2019 The Shipping Corporation of India Ltd. ….Petitioner V/s.Assistant Commissioner of Income TaxLTU Circle -2 & Ors. ….Respondents ---- Mr. Srihari Iyer for petitioner.Mr. Suresh Kumar for respondents. ---- CORAM : K.R. SHRIRAM &AMIT B. BORKAR, JJ. DATED : 20[th] DECEMBER 2021 AMIT B. BORKAR, JJ. P.C. : 1Petitioner is impugning a notice dated 11[th] March 2019 issuedunder Section 148 of the Income Tax Act, 1961 (the said Act) and orderdated 28[th] October 2019 rejecting the objections of petitioner. 2Notice under Section 148 of the said Act dated 11[th] March 2019for Assessment Year 2012-2013 has been issued after the expiry of four yearsfrom the relevant assessment year and as scrutiny assessment under Section143(3) of the said Act had been completed, proviso to Section 147 of thesaid Act applies. Respondents have to show failure on the part of petitionerto truly and fully disclose all material facts. 3We have considered the reasons and there is no indication thatthere was any failure on the part of petitioner to truly and fully disclose anymaterial fact. Simply using the words "as there is a failure on part of assessee to disclose fully and truly all material facts necessary for itsassessment during the year under consideration" would not help. These arenothing but bald averments. A failure has to be spelt out in the reasonsrecorded. Respondents have failed in that. The entire basis for reopening isthat provisions of Section 14A and Rule 8D with regard to dividend incomewas attracted but while completing the scrutiny assessment no mention ismade for the same. During the assessment proceedings, after petitioner filedits revised return of income on 29[th] March 2014, respondent no.1 issuednotice under Section 142(1) of the said Act on 17[th] September 2014. Amongother queries, respondent no.1 specifically inquired about the details ofdividend income earned and computation of expenses incurred on earningthis income as per the provisions of Rule 8D. Petitioner, in its reply dated24[th] September 2014 to the notice issued under Section 142(1) of the saidAct, has specifically addressed the query with regard to dividend income.Petitioner has stated that the amount of dividend income is exempt so it isnot included in computation as taxable income. As far as Rule 8D wasconcerned, petitioner has submitted that the company is taxable as per thetonnage tax scheme and thereby, it is not claiming any expenditure, viz.-a-viz., the exempt income and hence, Rule 8D was not applicable. 4After considering these submissions of petitioner, the originalassessment order under Section 143(3) of the said Act was passed on 28[th] January 2015. Respondent no.1 has, therefore, applied his mind withregard to petitioner's dividend income while passing the assessment orderunder Section 143(3) for Assessment Year 2012-2013. We find that thenotice has been issued without proper jurisdiction. 4After considering these submissions of petitioner, the originalassessment order under Section 143(3) of the said Act was passed on 28[th] January 2015. Respondent no.1 has, therefore, applied his mind withregard to petitioner's dividend income while passing the assessment orderunder Section 143(3) for Assessment Year 2012-2013. We find that thenotice has been issued without proper jurisdiction. 5Mr. Suresh Kumar relied upon a judgment of this Court inCrompton Greaves Ltd. V/s. Assistant Commissioner of Income Tax, Circle 6(2) 1 to submit that even if the reason for reopening does not specificallystate that there was any failure on the part of petitioner to disclose fully andtruly all material facts necessary for its assessment for the relevantassessment year, it will not be fatal to the assumption of jurisdiction underSections 147 and 148 of the Act. We would certainly agree with Mr. SureshKumar but as held in Crompton Greaves Ltd. (Supra), this is subject to therider that there must be cogent and clear indication in the reasons supplied,that in fact there was failure on the part of the assessee to disclose fully andtruly all the material facts necessary for its assessment. If the factum offailure to disclose can be culled down from the reasons in support of thenotice seeking to reopen assessment, that will certainly not be fatal to theassumption of jurisdiction under Sections 147 and 148 of the Act. The Courtheld “However, if from the reasons, no case of failure to disclose is madeout, then certainly the assumption of jurisdiction under Sections 147 and148 of the Act would be ultra vires, being in excess of the jurisdictional 1. (2015) 55 taxmann.com 59 (Bombay) restraints imposed by the first proviso to Section 147 of the Act”. 6It is not permissible for respondents to change its opinion based on the same set of facts. In our view, this petition has to be allowed and is hereby allowed in terms of prayer clause - (a), which reads as under : (a) For a writ of certiorari or a writ, direction ororder in the nature of certiorari or any otherappropriate writ, direction or order under Article226 of the Constitution of India calling for therecords of the case after examining the legality andvalidity thereof quashed and set aside the impugnednotice dated 11.03.2019 issued by the RespondentNo.1 u/s. 148 of the Act to reopen the assessmentfor the assessment year 2012-13 and rejecting theobjections of the Petitioner to the issuance of thenotice u/s. 148 of the Act. 7Petition disposed. 8 We clarify that we have only considered the jurisdictional aspect in issuing the notice under Section 148 of the said Act and have not gone into the merits of the case. (AMIT B. BORKAR, J.) (K.R. SHRIRAM, J.)