TaxTMI 
TaxTMI 
TaxTMI 
2015 (7) TMI 363
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the nature of Mandamus or any other appropriate writ, order or direction under Article 226 of the Constitution of India ordering and directing Respondents to forthwith withdraw and cancel the notice dated 28th March, 2014 (Exhibit 'A') issued by Respondents under section 148 of the Act seeking to reopen the assessment for the assessment year 2007-08; 2. Since the affidavit in reply has been filed and Mr.Irani states he is proceeding on the basis of denial and records that we have heard both sides extensively. 3. Rule. Respondents waives service. By consent the petition is heard finally. 4. The petitioner before us is a company engaged in the business of manufacturing and trading in industrial chemicals and having a registered office at the address mentioned in the cause title. 5. It is regularly assessed to income tax. The present proceeding relates to the assessment year 2007-08. 6. Respondent Nos.1 & 2 are the officers who exercise powers under the statute being Income Tax Act, 1961 and exercised in this case and which is captioned under 148 of that Act. 7. The circumstance in which the petition came to be filed have been narrated elaborately. That on 7th Novembe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....eals before the Tribunal and the Tribunal decided the same on 28th August, 2014 by a common order. 12. There is also another attempt by the respondent to revise the assessment and in that regard the second respondent sought to resort to power under section 263 of the I.T. Act. He directed the assessing officer to revise the additional depreciation claim @ 50%, addition of provision for doubtful debts under section 115JB of the I.T. Act, etc. That order was passed on 17th January, 2012 and 4th December, 2012 and the assessing officer passed an order giving effect to these directions and added back the provision for doubtful debts while computing the book profit under section 115JB of the I.T. Act and reduced the claim of additional depreciation. This is contained in the order at annexure-O to the petition. 13. On 29th March, 2014 the first respondent also passed an order in reassessment proceedings initiated in the case of the petitioner for immediately preceding assessment year 2006-07. The issues concern the depreciation on windmills and reconciliation of the tax deducted at source on the income assessed to tax. Thus, the assessment was reopened for the preceding assessment year....
X X X X Extracts X X X X
X X X X Extracts X X X X
....it petition was moved before us on 25th March, 2015. On that day we passed an order directing that no orders pursuance to impugned notice and the refusal to entertain objections and accept them shall be passed by the competent authority. That ad-interim order continues till today. 19. Mr.Irani, learned counsel appearing on behalf of the petitioner submitted that the impugned notice is ex-facie illegal and invalid. He would submit that the assessment year 2007-08 is the year in which the assessment was made and which is sought to be reopened. It is sought to be reopened after a period of four years and, therefore, the assessing officer must indicate clearly and in terms of the proviso that income chargeable to tax has escaped assessment for reasons of failure on the part of the assessee to make a return under section 139 of the I.T. Act or in response to section (1) of section 147 or 148 of the I.T. Act or to disclose fully and truly all material facts necessary for that assessment year. Mr.Irani submits that the impugned notice falls short of this requirement and the legal mandate. He has tendered a chart/table for our benefit and convenience and a copy of which is handed over to ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....k and it has been also pointed out that excess depreciation at 15% is completely dealt with during the original assessment. There is a discussion on depreciation in the assessment order. Equally, the tax audit report refers to all these material facts. In so far as depreciation is concerned, it is stated to be in excess. Mr.Irani submits that there is a specific query raised during the original assessment. There is a detailed response to the query. The discussion on depreciation in the assessment order pages 327 to 329 is relied upon claiming that in the absence of these disclosures, it would not have been possible for the assessing officer to discuss this issue and to render any finding on the same. Pertinently, the argument is that this issue was also raised in reassessment proceedings in the immediately preceding assessment year 2006-07 but no addition/disallowance was made on this ground. In that regard, it is pointed out with some vehemence that the order dated 29th March, 2014 which was passed in the reassessment proceedings for immediate preceding assessment year 2006-07 is after the date on which the impugned notice has been issued. It cannot be that the assessing officer a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f the reasons. This Court cannot consider the issue in such details and as proposed by the petitioner. In his submission, the writ jurisdiction cannot be exercised to resolve a factual dispute or any issue which touches the merits of the controversy. Therefore, the recorded reasons were enough to reopen the assessment. It is not necessarily revisiting in the earlier proceedings and the matter should not be examined by this Court on merits in its limited jurisdiction. He relied upon the statements made in the reasons and the affidavit-in-reply by the respondent. He submits that the writ petition be, therefore, dismissed. 24. With the assistance of learned counsel appearing on both sides, we have perused the bulky paper-book and equally the annexures which are relevant for our purpose. At page 38 of the paper-book is the impugned notice and it states that respondent No.1 has reasons to believe that income chargeable to tax for the assessment year 2007-08 has escaped assessment within the meaning of section 147 of the I.T. Act. At annexure-B is a letter from the Additional Commissioner of Income Tax addressed to the petitioner on 29th July, 2009 which refers to certain points in conn....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... that a perusal of the order of assessment passed on 21st December, 2009 reveals that the issues that are now sought to be raised were not dealt with. 28. It is impossible to reconcile this statement with others made on an affidavit on oath. Pertinently, the deponent of the affidavit is present in the Court. She is supposed to have dealt with the objections to the reasons recorded in the impugned notice. When her attention was invited to the objections and which have been raised by the petitioner-assessee from pages 454 to 459 of the paper-book, we find that the said detailed objections running into about 7-8 pages, the deponent had no knowledge of the same. Therefore, no reference is made in the order rejecting the objections to these factual materials. Yet, it is boldly asserted that the issue sought to be raised by the impugned notice is not the subject matter of the appellate or revision proceedings. This is a specific statement and stand taken at page 482 of the paper-book of the affidavit-in-reply. However, in the same breath at pages 483 and 484 this deponent exhibits knowledge of the appeal, revision and reassessment proceedings. It has been asserted that "I make bold to s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ference to non production of a separate cash flow statement. So also, the claim with regard to excess depreciation and TDS details a reference is made in the reasons for reopening the assessment. A specific assertion of the petitioner is that the assessment for the year under consideration was completed under section 143(3) of the I.T. Act by the assessment order dated 21st December, 2008 and after making a detailed inquiry and after obtaining several details. After the regular assessment, further proceedings under section 263 of the I.T. Act were initiated and in terms of directions of the Commissioner, an order under section 143(3) read with section 263 of the I.T. Act dated 4th December, 2012 was passed, wherein the provision for bad debts was added to the book profit under section 115JB of the I.T. Act and additional depreciation on plant and machinery used for one hundred and eighty two days or less was restricted to 50% of additional depreciation allowable. 31. With regard to disallowance under section 14A, we find at page 454, 455 & 456 of the paper-book that there is a specific reference made to the questionnaire which we had pointed out above, correspondence pursu....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... income. If that has escaped in the assessment proceedings and such fact has come to the Assessing Officer's notice, then, that assessee is required to be dealt with to recover the revenue legitimately and lawfully due. If this is the object of enacting section 147 of the I.T. Act and the power that is conferred in the assessing officer is in the nature of a trust, then we would not countenance such an order as has been passed on 26th February, 2015. 33. We do not find that all matters concerning the objections to the reasons and for which notice under section 148 of the I.T. Act has been issued have been dealt with in a single line conclusion. That conclusion is not enough for the purpose of the present case. 34. If the objection is raised, then the speaking order must indicate as to why the same has not been found tenable. The objection cannot be refuted or dealt with by reiterating or repeating the reasons which have been recorded. Once the reasons have been objected to, then the justification for the same ought to be spelt out and that is how a speaking order would meet the requirement of law. 35. We have found that on each of the factual materials and which have been ta....