Wp/5457/2022 Of Aspect Technology Center (India) Private Limited v. Additional/Joint/Deputy/Assistant Commissioner Of Income Tax

Digitally signed by BKMAHENDRAKUMARLocation: High Courtof Karnataka IN THE HIGH COURT OF KARNATAKA AT BENGALURUDATED THIS THE 15 DAY OF JUNE, 2023 BEFORE. THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV|'WRIT PETITION NO. 5457 OF 2022 (TIT) BETWEEN: 1.ASPECT TECHNOLOGY CENTER (INDIA) |PRIVATE LIMITEDEMBASSY STAR, 2 FLOOR,8 PALACE ROAD, BANGALORE NORTE,BANGALORE-560 0527REPRESENTED BY ITSMR.KOTAMRAJU GAURAV RAO,REPRESENTED HEREIN BY OUR DIRECTOR. .. PETITIONER (BY SRI. TANMAYEE RAJKUMAR., ADVOCATE A/WSMT. MANASA ANANTHAN, ADVOCATE) AND: 1.ADDITIONAL/JOINT/DEPUTY/ASSISTANTCOMMISSIONER OF INCOME TAXINCOME TAX OFFICER,COMMISSIONER OF INCOME TAXINCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTREROOM NO.401, 2 FLOOR, E-RAMP_JAWAHARLAL NEHRU STADIUM,|DELHI-110 OO3.| 2.ASSISTANT COMMISSIONER OF INCOME-TAX.CIRCLE 1(1) (1), BMTC BUILDING, |CIRCLE 1(1) (1), BMTC BUILDING, | SOFT. ROAD, 6 BLOCK,KORAMANGALA, |BANGALORE-560 O95. 3.PRINCIPAL COMMISSIONER OF INCOME TAX-]1BMTC BUILDING, 80 FI. ROAD,6 BLOCK, KORAMANGALA,BANGALORE-560 O95. _ RESPONDENTS| (BY SRI. K.V. ARAVIND, ADVOCATE A/WSRI M. DILIP, ADVOCATE)SRI M. DILIP, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OFTHE CONSTITUTION OF INDIA, PRAYING TO DECLARING THAT|THE IMPUGNED PROCEEDINGS INITIATED BY THE RZ UNDER|SECTION 14/7 READ WITH SECTION 148 OF THE ACT ANDCONTINUED BY THE RIL ARE BARRED BY LIMITATION ANDOPPOSED TO THE SAID PROVISIONS AND THEREOF WITHOUT|JURISDICTION AND ETC, THIS WRIT PETITION COMING ON FOR PRELIMINARY,HEARING IN 'B'’ GROUP, THIS DAY, THE COURT MADE THEFOLLOWING: ORDER The petitioner has sought for declaration that theproceedings initiated by respondent No.2 under Section|147 read with Section 148 of the Income Tax Ac (the Actfor short) and continued by the respondent No.1 areDarred by limitation and opposed to law and the petitioner|has|challengedthe|noticeal Annexure-'F’dated31.03.2021 issued under Section 148 of the Act for the.Assessment Year 2013-2014 and has also sought forsettingasideof.the|order.datedO27.03.707) at -3- Annexure-M' passed by respondent No.1 disposing of thepetitioner's objections as to the Officer's jurisdiction. 2 |Learned counsel appearing for the petitionerSubmits that the return was filed for the Assessment Year.2013-2014 and for the purpose of initiating re-assessmentproceedings under the un-amended Section 14/7 of theAct, the period normally available was four years from theend of relevant Assessment Year, which in the presentcase would end on 31.03.2018. 3.|It is submitted that in the present case, as thenotice under Section 148 was issued on 31.03.2021, the|Proviso to Section 147 of the un-amended Act requires to)be satisfied and unless the Authority were to demonstrate|that there is failure to disclose fully and truly all materialfacts, the power under Section 147 cannot be invoked. It.is submitted that upon request of the assessee, thereasons for reopening communicated to the petitioner|found at Annexure-H do not fulfill the jurisdictionalrequirement as per the Proviso to Section 147 of the Act. -4.- NC: 2023:KHC:20710WP No. 5457 of 2022 4 iIt is further contended that the Assessing|Officer has referred to the material placed before it andhas also recorded that there Is a mistake In short.computation of ‘income’ including interest and accordingly,no grounds are made out for reopening on the basis of.reasons contained at Annexure-H._ 5 |Reliance is placed by the petitioner on the|judgment of Bombay High Court in the case ofHindustan|Lever Ltd.V.R.B. Wadkarreported in.[2004] 137TAXMAN 479 (BOM.)and has also relied on the decision |of Division Bench of this Court in the case of ITA.Nos.406/2007 c/w 407/2007 disposed off on 19.09.2011. 6.|Heard both sides. J |It is clear that, as the notice is issued on.31.03.2021 as regards the Assessment Year 2013-2014|and the extended period of four years to six years issought, the requirement of Proviso under Section 147 of 5 |Reliance is placed by the petitioner on the|judgment of Bombay High Court in the case ofHindustan|Lever Ltd.V.R.B. Wadkarreported in.[2004] 137TAXMAN 479 (BOM.)and has also relied on the decision |of Division Bench of this Court in the case of ITA.Nos.406/2007 c/w 407/2007 disposed off on 19.09.2011. 6.|Heard both sides. J |It is clear that, as the notice is issued on.31.03.2021 as regards the Assessment Year 2013-2014|and the extended period of four years to six years issought, the requirement of Proviso under Section 147 of the Act is a jurisdictional requirement. The Proviso toSection 14/7 reads as hereunder: “Provided that where an assessment Under|sub-section (3) of section 143 or this section hasbeen made for the relevant assessment year, noaction shell be taken under this section after the|expiry of four years from the end of the relevant:assessment year, unless any income chargeable totax Nas escaped assessment for sucn assessmentyear by reason of the failure on the part of theassessee to make a return Under section 139 or In|response to a notice issued under sub-section (1)of section 142 or section 148 or to disciose fullyand truly all material facts necessary for hisassessment, for that assessment year: 8.|In the present case, a perusal of the reasons forre-opening communicated to the petitioner would reveal|that the Assessing Authority was of the view that receiptof re-assets would be chargeable under Section 28(iv) ofthe Act. 9.|It must be noticed that there is no finding|recorded regarding the ‘failure to disclose fully and truly. -6§- NC: 2023:KHC:20710WP No. 5457 of 2022 all material facts’. Though there is reference in the saidreasons relating to this very amount in the earlier material available before the Assessing Officer as noticed, however,without entering into such aspect as to whether thematerial having been mentioned in the earlier proceedings|would be sufficient or not and on the only ground thatthere is absence of finding that the assessee has failed todisclose fully and truly all material facts, the notice underSection 148 of the Act dated 31.03.2021 is required to beset aside and also the preliminary order at Annexure-'M’.dated 02.03.2022 is required to be set aside andaccordingly, they are set aside. 10. The Co-ordinate Bench of this Court in the caseofMphasis Ltd.,VV.Dy. Commissioner of Income TaxandOtherspassedIn W.P.No.55355/2017hasobserved at para 3(bD) as follows:- ‘(bD) in the notice dated01.09.7017 atiAnnexure K tne 2nd respondent has assigned the.Fea@SsOnforresortingtore-opening of.theassessment, relevant part of wnich reads as under: -/- "From the above discussion, isclear that asessee was liable to deductTDS but failed to do so before makingpayments for onsite services and selling commission to the AEs. Hence, it Isreguired to disallow the said expensesu/s. 40(a)(1) of the IT Act. Therefore IhaveFeaSOlfTObelievethatRs.722,02,48, 792/-hasescapedassessment within themeaning ofsection 14/7 of the IT Act’. The text of the reasons nownere states that there I[sfailure on the part of tne petitioner to disclose the.alleged non- deduction of TDS; what ts stated Is thatthe petitioner had failed to deaquct the TDS; theProviso employs the expression “by reason of the.failure on tne part of the assessee... to disclose fully|and truly all material facts’: the expression impliessome guilt in mind howsoever little it may be,attributable to the assessee; in other words, afailure to deaquct the TDS per se does not fit into theSaid expression as rightly contended by the counselfor the petitioner; 11. Accordingly,|the|Co-ordinateBench.has|observed that, in effect, the finding that there is failure onthe part of assessee to disclose fully and truly all materialfacts is a jurisdictional requirement for exercise of powerunder Section 148 of the Act. Such view requires. -8- 11. Accordingly,|the|Co-ordinateBench.has|observed that, in effect, the finding that there is failure onthe part of assessee to disclose fully and truly all materialfacts is a jurisdictional requirement for exercise of powerunder Section 148 of the Act. Such view requires. -8- acceptance, in the present factual matrix and in the.absence|ofsuch.findingfoundIn|thereaSOnscommunicated to the petitioner, such power could notNave been exercised at all Dy the Assessing Authority. | 12. As the petition is being disposed off on this|jurisdictional point, the other contention raised by theassessee including tnat there nas been disclosure at an|earlier point of time and accordingly, the proceedings ofre-assessment cannot be initiated on a different view on|the same facts, is a contention that is not entered into. Accordingly, the petition is disposed off. Sd/-|JUDGE| VGR