Wp v. Deputy Commissioner Of Income Tax, Circle 14(2)(1) And 2 Ors

1/5 406 WP3573.2019.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3573 OF 2019 Maharashtra State Electricity Distribution Co. Ltd. v/s. Deputy Commissioner of Income Tax,Circle 14(2)(1), Mumbai and ors. …. Petitioner …. Respondents --- Mr. J.D. Mistri, Sr. Advocate a/w. Mr. Niraj Sheth i/b. Mr. Atul K. Jasani for Petitioner. Mr. Suresh Kumar for Respondents. CORAM : K.R. SHRIRAM &R.N. LADDHA, JJ. DATED : JANUARY 04, 2022 P. C. :- .Petitioner is impugning a notice dated 30/03/2019 receivedunder section 148 of the Income Tax Act, 1961 (hereinafter referred to as‘the said Act’) for AY 2012-13 and the order dated 22/11/2019 disposingpetitioner’s objections to re-assessment proceedings. 2.Petitioner was formed as a result of demerger of the erstwhileMaharashtra State Electricity Board with effect from 5[th] June, 2006. On28/09/2012, petitioner filed its return of income for AY 2012-13 declaringloss of Rs.1179,96,17,308/-. Thereafter, petitioner filed a Revised Return ofIncome on 01/11/2013 declaring a loss of Rs.2909,14,51,735/-. Assessment Order under section 143(3) was passed on 29/03/2015 determining totalincome to Rs.323,64,17,918/-. 3.Petitioner received the impugned notice dated 30/03/2019under section 148 of the said Act by which the Jurisdictional AssessingOfficer (JAO) informed petitioner that he had reasons to believe that incomechargeable to tax for AY 2012-2013 has escaped assessment within themeaning of Section 147 of the Act. By a communication dated 02/09/2019,petitioner was also provided the reasons recorded for re-opening ofassessment. Mr. Mistri attacked the notice and the reasons straight away onthe point that the pre condition for issuing the notice under section 148 afterexpiry of 4 years from the relevant assessment year, when Assessment Orderunder section 143(3) has been passed, that there has been failure on the partof petitioner to truly and fully disclose material facts required for theassessment has not been complied with. Mr. Mistri submitted, and rightly so,that there is nothing in the reasons to indicate which was the material factthat was required to be disclosed, which has not been disclosed. Mr. Mistrisubmitted that this is nothing but change of opinion based on the same set ofmaterial which is not permissible in law. 4.Mr. Suresh Kumar, learned counsel for respondents of coursecontended that the reasons given for re-opening the assessment may be 3/5 406 WP3573.2019.doc silent that there was any failure to disclose the material fact. But he reliedupon a judgment of this Court in Crompton Greaves Ltd. v/s. AssistantCommissioner of Income Tax, Circle 6(2)1 and submitted that even if thereason for reopening does not specifically state that there was any failure onthe part of petitioner to disclose fully and truly all material facts necessaryfor its assessment for the relevant assessment year, it will not be fatal to theassumption of jurisdiction under Sections 147 and 148 of the Act. We wouldcertainly agree with Mr. Suresh Kumar but as held in Crompton Greaves Ltd.(Supra), this is subject to the rider that there must be cogent and clearindication in the reasons supplied, that in fact there was failure on the partof the assessee to disclose fully and truly all the material facts necessary forits assessment. If the factum of failure to disclose can be culled from thereasons in support of the notice seeking to reopen assessment, that willcertainly not be fatal to the assumption of jurisdiction under Section 147 and148 of the Act. The Court held “However, if from the reasons, no case offailure to disclose is made out, then certainly the assumption of jurisdictionunder Sections 147 and 148 of the Act would be ultra vires, being in excessof the jurisdictional restraints imposed by the first proviso to Section 147 ofthe Act.” 5.According to the JAO, the annual prior period expensesamounting to Rs.364,30,86,293/- are not allowable expenses during the 1(2015) 55 taxmann.com 59 (Bombay) 5.According to the JAO, the annual prior period expensesamounting to Rs.364,30,86,293/- are not allowable expenses during the 1(2015) 55 taxmann.com 59 (Bombay) 4/5 406 WP3573.2019.doc assessment year whereas disallowance has been made only ofRs.100,67,84,653/- during the original assessment proceedings. This itselfshows that the re-opening is based on change of opinion based on the sameset of material which is not permissible. 6.Having considered the reasons, it is quite obvious that theAssessing Officer who passed the original Assessment Order had all materialfacts before him when he made the original assessment. When the primaryfacts necessary for assessment are truly and fully disclosed, the AssessingOfficer is not entitled on change of opinion to commence proceedings for re- assessment. This Court in Ananta Landmark Pvt. Ltd. v/s. DeputyCommissioner of Income Tax and ors.2 has held that “ Where onconsideration of material on record, one view is conclusively taken by theAssessing Officer, it would not be open to reopen the assessment based onthe very same material with a view to take another view. In paragraph 5 ofthe reasons recorded for re-opening, the JAO himself admits that the re-opening of assessment by him is based on the very same material which wasconsidered by the original Assessing Officer, to take another view. Paragraph5 read as under :- “5. Findings of the AO : The actual prior period expenses amounting toRs.364,30,86,293/- are not allowable expenses during the AY.,whereas the disallowance of Rs.100,67,84,653/- was only made during the original assessment proceedings. The issue ofallowability of prior period income as a reduction from priorperiod expenses in order to determine the quantim ofdisallowance/addition on the issue of claim of prior periodexpenses was not specifically discussed in the originalassessment order or assessment proceedings. It is noted thatas per the assessment order u/s. 143(3) (Para 3.2 thereof), nospecific reply was furnished by the assessee in respect of theclaim of prior period expenses. ” 7.In the circumstances, it is a fit case for us to held that the notice issued for re-opening the assessment has been issued without jurisdiction.Accordingly, the notice dated 30/03/2019 issued under section 148 of the Act for AY 2012-13 and the order dated 22/11/2019 disposing petitioner’sobjections to re-assessment proceedings, are quashed and set aside. 8. Petition disposed accordingly. No order as to costs. (R.N. LADDHA, J.) (K.R. SHRIRAM, J.) Digitallysigned byPREETIPREETI HHJAYANIDate:JAYANI2022.01.1012:35:02+0530