Wp/3575/2019 Of Rashtriya Chemicals And Fertilizers Ltd v. The Assistant Commissioner Of Income Tax Ltu,Circle 1 And 2 Ors

1/5 408 WP3575.2019.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 3575 OF 2019 Rashtriya Chemicals and Fertilizers Limited,Mumbai v/s. The Assistant Commissioner of Income Tax,LTU, Circle 1, Mumbai and ors. …. Petitioner …. Respondents --- 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. :- 1.Petitioner is impugning a notice dated 15/03/2019 issued undersection 148 of the Income Tax Act, 1961 (hereinafter referred to as ‘the saidAct’) for AY 2012-13 and order dated 25/11/2019 rejecting petitioner’sobjections to the issuance of notice under section 148 of the said Act. 2.This is a case where the notice has been issued after the expiryof four years from the relevant assessment year and as the assessment undersection 143(3) of the Act has also been completed, proviso to section 147 ofthe Act shall apply. Under section 147, there is a bar in re-opening theassessment after the expiry of four years where assessment under section143(3) of the Act has been completed unless there has been failure on thepart of petitioner to truly and fully disclose all material facts required for P.H. Jayani assessment. The onus is on the respondents to prove that there was suchfailure on the part of petitioner. 3.We have considered the reasons recorded for re-opening and there is afailure on the part of respondents to even disclose what was the material factthat petitioner failed to disclose. Using the words “as there is a failure onthe part of assessee to disclose fully and truly all material facts necessary forits assessment during the year under consideration” would be of noassistance to respondents since it is clear that it has been made only as anattempt to get out of the restrictions imposed by proviso to section 147 ofthe Act. In fact, in the order dated 25/11/2019 rejecting the objectionswhich is impugned in this petition respondents in fact says that he has notmade out a case of failure on the part of petitioner to disclose. According torespondent, to confer jurisdiction under Section 147(a), two conditions wererequired to be satisfied, firstly, the Assessing Officer must have reasons tobelieve that income, profits or gains chargeable to income tax has escapedassessment, and secondly he must also have reason to believe that suchescapement has occurred by reason of either omission or failure on the partof the assessee to disclose fully or truly all material facts necessary for hisassessment of that year. Both these conditions has to be satisfied before theAssessing Officer could assume jurisdiction for issue of notice under Section148 read with Section 147(a). But under the substituted Section 147 3/5 408 WP3575.2019.doc existence of only the first condition suffices. In other words, if the AssessingOfficer has reason to believe that income has escaped assessment, that wasenough to confer jurisdiction to reopen the assessment. For this view of theAssessing Officer, that for issuing notice to reopen assessment, the AssessingOfficer must only be satisfied that he had reasons to believe that income,profits and gains chargeable to income tax has escaped assessment and thesecond condition that such escapement has occurred by reason of eitheromission or failure on the part of the assessee to disclose fully or truly allmaterial facts necessary for his assessment is not required, Mr. Suresh Kumarin fairness agreed that that view of the Assessing Officer was incorrect. Mr.Suresh Kumar, as an Officer of the Court, agreed that both these arepreconditions which are required to be fulfilled when assessment is sought tobe reopened after four years. A Division Bench of this Court in Sesa GoaLimited V/s. Joint Commissioner of Income Tax and Ors.1has held :- “ The power to reopen an assessment is not unbridled orunrestricted. The power is subject to the proviso embodied in thesection itself. The proviso prescribes restrictions on the power ofreopening the assessment by limiting the time period to four yearsfrom the end of the relevant assessment year, unless any incomechargeable to tax has escaped assessment by reason of failure onthe part of the assessee …….. to disclose fully and truly allmaterial facts necessary for the assessment of the income for thatassessment year”. ………….. Section 147 of the Act is the sourceof power of the Assessing Officer for reopening of the assessment.Section 148 contains procedural restrictions for issuance of anotice for exercise of the power of reopening of an assessmentconferred under Section 147. Section 149 prescribes the timelimit for issuance of a notice under Section 148. In our opinion,the conditions laid down under Section 147 of the Act for thepurposes of reopening the assessment must be satisfied before the 4/5 408 WP3575.2019.doc notice can be issued. The conditions laid down in Section 147 arethe jurisdictional facts necessary for the purpose of exercise of thepower under Section 147. The jurisdictional facts prescribedunder section147 must exist before a notice under section 148 canbe issued. …….. In other words, if the basic jurisdictional factsrequired for reopening of an assessment under section 147 of theAct do not exist it would not be competent for the AssessingOfficer to issue a notice under Section 148. Even where thejurisdictional facts prescribed under Section 147 exist and allconditions laid down under Section 147 and the proviso theretoare satisfied, the notice under Section 148 can be issued only afterthe Assessing Officer has recorded his reasons for doing so underSub-section (2) of Section 148 and has further obtained thenecessary sanction for issuance of the notice as required underSection 151 of the Act. ….. The restriction …….. of a period offour years, ……. In the present case, the reasons which have been recorded by theAssessing Officer for reopening of the assessment do not disclosethat the assessee had failed to disclose fully and truly all materialfacts necessary for the purpose of assessment. No doubt in the lastparagraph of the reasons, the first respondent has stated : I am satisfied that due to furnishing the false particularsof the income by way of incorrect certificate whichmeans failure on the part of the assessee to disclose fullyand truly all material facts required for the assessmentincome of Rs.6,10,10,272 had escaped assessment. The said statement is clearly made only an attempt to take thecase out of the restriction imposed by the proviso to Section 147of the Act. ” 4.Paragraph 2.1 of the reasons recorded for re-opening assessment readsas under :- “ 2.1 It is seen that the assessee had claimed deduction u/s35AD amounting to Rs.189,76,44,660/- relating to theexpenditure capitalized in respect of Ammonia Plant at Thalwhich was revamped and commissioned in April 2012. Itwas seen that during the scrutiny assessment the assesseewas allowed to claim the entire deduction withoutexamining the conditions stipulated in the provision as theassessee was not eligible to claim the same since the 5/5 408 WP3575.2019.doc operations had not commenced during the previous year2011-12. This irregular claim and allowance of deduction tothe extent of Rs.189.76 crore needs to be examined. ” 5.Therefore, it is quite obvious that there is nothing but change of opinion which is not permissible as held in Ananta Landmark Pvt. Ltd v/s.2Deputy Commissioner of Income Tax Central Circle 5(3), Mumbai and ors. In the circumstances, we are satisfied that the notice dated 15/03/2019under section 148 of the Act is issued without jurisdiction and requires to beset-aside. Consequently, the order dated 25/11/2019 impugned in thepetition also requires to be set-aside. 6.Petition is allowed in terms of prayer clause (a) which reads asunder :- 5/5 408 WP3575.2019.doc operations had not commenced during the previous year2011-12. This irregular claim and allowance of deduction tothe extent of Rs.189.76 crore needs to be examined. ” 5.Therefore, it is quite obvious that there is nothing but change of opinion which is not permissible as held in Ananta Landmark Pvt. Ltd v/s.2Deputy Commissioner of Income Tax Central Circle 5(3), Mumbai and ors. In the circumstances, we are satisfied that the notice dated 15/03/2019under section 148 of the Act is issued without jurisdiction and requires to beset-aside. Consequently, the order dated 25/11/2019 impugned in thepetition also requires to be set-aside. 6.Petition is allowed in terms of prayer clause (a) which reads asunder :- “ a. to issue a Writ of Certiorari or a Writ in the natureCertiorari or any other appropriate Writ, Order or Directionunder Article 226 of the Constitution of India calling for therecords of the Petitioner’s case and after examining thelegality and validity thereof, quash and set aside theimpugned notice dated 15[th] March 2019 (Exhibit “H”) issuedby Respondent No.1 under section 148 of the Act to reopenthe assessment for the assessment year 2012-13 as well asthe impugned order dated 25[th] November 2019 (Exhibit “R”)rejecting the Petitioner’s objections for the assessment year2012-13; ” 7.Petition disposed. No order as to costs. (R.N. LADDHA, J.) (K.R. SHRIRAM, J.)