Wp/969/2022 Of Solarfield Energy Tow Pvt.ltd v. Deputy Commissioner Of Income Tax 2(3)(1) Mumbai

Digitallysigned byPURTIPURTIPRASADPRASADPARABPARABDate:2022.03.0811:23:21+0530 IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO. 969 OF 2022 Solarfield Energy Two Private Limited V/s.Deputy Commissioner of Income Tax2(3)(1), Mumbai & Ors. ….Petitioner …Respondents ---- Mr. Ruturaj H. Gurjar for Petitioner.Mr. Suresh Kumar for Respondents. ---- CORAM : K.R. SHRIRAM & N. J. JAMADAR, JJ. DATED : 3[rd] MARCH, 2022 P.C. : 1.Petitioner has approached this court being aggrieved by noticedated 24[th] March, 2021 issued under Section 148 of the Income Tax Act,1961 (the Act) for A.Y. 2017-18 and the order dated 17[th] January, 2022 rejecting petitioner’s objections to re-opening. 2. Paragraph nos. 1, 2 and 3 of the reasons for re-opening reads as under : 1.Brief details of the assessee : The assessee filed its return of income for A.Y. 2017-18 on 01.11.2017 declaring loss of Rs.3,66,52,669which was selected for scrutiny under CASS andassessed income was determined at (Rs.3,66,52,669) on20.12.2019. 2.Analysis of information collected/received : On verification of records it is observed that theassessee had debited Rs.4,75,70,885 from P&L A/c onaccount of premium paid on INR/USD option contracts. In submission of reply dated 19[th] Nov 2019, the assesseestated that the company had taken a loan of USD2,34,95,259 during F.Y. 2013-14 from the Export-Importbank of the Unites States for acquiring fixed assets forexpansion if its business. The company entered into anoption contract with Indusind Bank Ltd. in order tohedge the foreign exchange fluctuation risk. Since theloan was taken for acquiring fixed asset for expansion ofthe assessee business, the payment made for hedging ofsuch loan is also of a capital nature. Therefore, theexpenditure of Rs.4,75,70,885 should have beendisallowed. The incorrect allowance of capital expenditureresulted in under assessment of income byRs.4,75,70,885. 3.Reason to believe and details of escapement ofincome. Considering all these facts as explained in aboveParas, it is evident that the amount debited to P&Laccount is not allowable as business expenditure since itis incurred for expansion of business and its capital innature. On similar issue, in the case of assessee for A.Y.2014-15, the department had made addition. Hence, I have reasons to believe that the assesseeclaimed and allowed the business expenses to the tuneof Rs.47570885/- being capital in nature has resultedunder assessment of income in the hand of SolarfiledEnergy Two Pvt. Ltd. XXXXX 3. Admittedly, in this case assessment proceedings under Section 143(3) of the Act has been completed. Though the proposed re-opening iswithin the expiry of four years from the end of the relevant assessment year,still re-opening based on change of opinion is not permissible because theassessment order under Section 143(3) of the Act has already been passedwhere the then Assessing Officer has taken a particular view. 4.If we consider paragraph no.2 of the reasons for re-openingquoted above, it is quite clear that this proposed re-opening is based onchange of opinion which is not permissible in law. In the reasons by statingthat assessee “In submission of reply dated 19[th] November, 2019 ………”the Assessing Officer has admitted that this has been the subject matter ofconsideration during the earlier assessment proceedings. Moreover, inparagraph no.3 of the reasons the Assessing Officer states “On similar issue,in the case of assessee for A.Y. 2014-15, the department had madeaddition……….” 5. 5.Therefore, this cannot be even considered tangible material for re-opening the assessment. 6.In the circumstances, petition is allowed in terms of prayer clause – (b) which reads as under : 4.If we consider paragraph no.2 of the reasons for re-openingquoted above, it is quite clear that this proposed re-opening is based onchange of opinion which is not permissible in law. In the reasons by statingthat assessee “In submission of reply dated 19[th] November, 2019 ………”the Assessing Officer has admitted that this has been the subject matter ofconsideration during the earlier assessment proceedings. Moreover, inparagraph no.3 of the reasons the Assessing Officer states “On similar issue,in the case of assessee for A.Y. 2014-15, the department had madeaddition……….” 5. 5.Therefore, this cannot be even considered tangible material for re-opening the assessment. 6.In the circumstances, petition is allowed in terms of prayer clause – (b) which reads as under : (b) Issue a Writ of Certiorari or a Writ in the nature ofCertiorari or any other appropriate Writ, order ordirection under Article 226 of the Constitution of India,quashing the Impugned Notice u/s. 148 of the Act dated24 March 2021 (Exhibit I) and the Impugned Order onobjections dated 17 January 2022 (Exhibit M) and theimpugned reassessment proceedings for A.Y. 2017-18 asbeing wholly without jurisdiction, illegal and arbitrary. 7.Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)