Wtax/796/2017 Of M/S Honda Motor India Pvt. Ltd v. Asstt. Commissioner Of Income Tax Circle-I And Another

Court No. - 35Case :- WRIT TAX No. - 796 of 2017Petitioner :- M/S Honda Motor India Pvt. Ltd.Respondent :- Asstt. Commissioner Of Income Tax Circle-I & AnotherCounsel for Petitioner :- Suyash Agarwal,Amit Srivastava,Deepak ChopraCounsel for Respondent :- S.S.C.Hon'ble Bharati Sapru,J.Hon'ble Neeraj Tiwari,J. Heard Sri Deepak Chopra, Advocate assisted by Sri Suyash Agrawal and Sri Amit Srivastava, learned Counsel for thepetitioner and Sri Manish Goyal, learned Counsel for thedepartment. Counter and Rejoinder Affidavits have been exchangedbetween the parties and, therefore, the matter is being disposedof at the stage of admission itself. The following prayers have been made by the petitioner :- "(i) Issue writ order or direction in the nature of Certiorari quashing the noticeand reasons dated 03.06.2016 issued by the Assistant Commissioner of IncomeTax, Circle -1, NOIDA-Respondent No.1, under Section 148 of the Act for A.Y.2012-13 . (ii) Issue writ order or direction in the nature of Certiorari quashing the orderdated 09.10.2017 passed by the Assistant Commissioner of Income Tax, Circle-1, NOIDA-Respondent No.1, on the objection filed against the reasons recordedfor issuing notice under Section 148 of the Act for A.Y. 2012-13. (iii) Issue writ order or direction in the nature of prohibition restraining AssistantCommissioner of Income Tax, Circle-1, NOIDA - Respondent No.1 fromproceeding with the reassessment proceedings under Section 148 for A.Y. 2012-13." It is the contention of the petitioner that the reassessmentproceedings initiated against the petitioner by way of an orderdated 03.06.2016 were not justified in view of the fact thatthere was no new or tangible material against the petitioner,which was found in order to reopen the matter. However, anotice was issued on 17.05.2017 and, thereafter, reasons werereceived by the petitioner on 26.05.2017. The reasons recorded reveal that the AO had already recordedfrom material available on record that the income of the petitioner with regard to spare parts purchased fromAssociated Enterprises and thepayment of royalty to theparent company of the petitioner had an escapped assessmentand this reason was based on the basis of earlier years 2009-10, 2010-11 and 2011-12. The current petition deals with theAssessment Year 2012-13. It was this income the AO said, hehad reason to believe had not been included in the income asstated by him in his order. The State has filed a counter affidavit. For ready referenceparagraphs no.10 & 11 of the counter affidavit are quotedhereunder:- "10. That the contents of paragraph 2.12 and 2.13 of the writ petition aremisconceived, misleading, incorrect and are denied. The petitioner has misreadthe reasons that were recorded by the Assessing Officer inasmuch as theAssessing Officer in the reasons that were recorded has not relied upon theassessment proceedings in the year 2009-10, 2010-11 and 2011-12. There is areference to the same for the reasons which have been recorded and there is nodispute raised that the purchase policy of the assessee during the year underconsideration remained the same. Hence, no plausible objections could be takenby the assessee as it has followed the same purchase policy during the yearunder consideration. The reasons that have ben recorded clearly establish thatthe information mentioned therein was not taken into consideration whilepassing the assessment order and as such rightfully the assessee has been put onnotice for drawing re-assessment as there exists reasons to believe that incomechargeable to tax has escapped assessment. Mere supply of information does notnecessarily imply that an assumption can be drawn regarding such informationbeing considered to be satisfactory. If such issue has not been addressed oradjudicated upon in the assessment order then there is every right in theAssessing Officer to reopen the assessment proceedings and to adopt theprocedure for re-assessment. 11. That the contents of paragraph 2.14 of the writ petition are misconceived,misleading, incorrect and are denied. From a perusal of Annexure-10 to the writpetition, it is evident that only legal objections were taken and there was nospecific denial as of fact to the reasons that were recorded for reopening theassessment. There has been no specific denial to the effect that the purchasepolicy remains the same. There is no specific denial of the fact that there was acase of shifting of profit from India to foreign tax jurisdiction. There is also nodenial of the fact that the transaction was not on the arms length price. It wasmerely alleged in the objections to be a speculation on the part of the AssessingOfficer but candidly the assessee avoided a direct emphatic denial of the same.Likewise the issue of royalty payment was found to be on the basis of the sameagreement without any equivalent benefit to the company or any change in the business pattern of the company, which aspect has not been denied in theobjections by the assessee. This clearly shows that the objections taken by theassessee were only superlative and had no foundation in them." It is apparent from the reading of these two paragraphs that the department had itself given up the case on the basis of theassessment proceedings held in the year 2009-2010, 2010-11and 2011-12. From a perusal of the order passed on 09.10.2017 whereby theobjections of the petitioner have been decided. It is apparentthat the objection taken by the petitioner with regard to thematerial, which was already on record has not been dealt withspecifically. The record reflects that this issue had engaged the attention ofthe AO earlier also, who had in the proceedings under Section143(3) for the year 2012-13 referred to the same in itscommunication dated 19.02.2015, which is on record asAnnexure No.5 to the writ petition. The order passed on the objections clearly do not deal with allthe material, which is already on record. Learned Counsel for the revenue has sought to argue that sinceno specific ground was taken on this question the same couldnot have been taken into consideration while deciding theobjections. We are not satisfied with the reply. On the contrary it was this very issue which was engaging theattention of the department when the matter was sought to bereopened, the material was there, the explanations were there,it could certainly have been part of the order passed on theobjections but no reference is made to the material, which isalready there. We are, therefore, of the opinion that in the facts andcircumstances of this case, it would be appropriate and in theinterest of justice that the matter go back to the authority to It is made clear that the decision will be made on the basis ofthe material, which is already on record. A fresh order may bepassed within the next one month. Till decision by the authority concerned, the reassessmentproceedings may be kept in abeyance. The Writ Petition stands disposed of. No costs. Order Date :- 19.1.2018S.P.