TaxTMI 
TaxTMI 
2005 (10) TMI 76
X X X X Extracts X X X X
X X X X Extracts X X X X
....reciate the rival contentions are taken from Writ Petition No. 619 of 2005, wherein the assessment year involved is 1998-99. The facts: The petitioners are a public limited company engaged in the business of manufacturing pharmaceutical products and other formulations. The return of income for the assessment year 1998-99 was filed on November 29, 1998. The last date of the assessment year was March 31, 1998. The assessment order was passed under section 143(3) of the Act on January 7,2000. The last date for issue of notice under section 148(1) as per the proviso to section 147 was March 31, 2003, whereas notice under section 148(1) came to be issued on September 15, 2003; which came to be served on the petitioners on October 8, 2003. The petitioners responded to the notice under protest and filed a letter seeking the reasons for issuing the notice to reopen the assessment. In spite of specific request, respondent No.1 did not disclose the reasons. Hence, the petitioners were required to file writ petition being Writ Petition No. 3065 of 2004. On being noticed, the respondent-Department appeared and disclosed the reasons vide their affidavit dated January 17, 2005, for r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ioner of Income-tax, Mumbai, suffers from non-application of mind. According to him, the approval was granted in a most casual manner. He placed reliance on the judgment of the Delhi High Court in the case of United Electrical Co. P. Ltd. v. CIT [2002] 258 ITR 317, wherein the Delhi High Court held that the power vested in the Commissioner under section 151 to grant or not to grant approval to the Assessing Officer to reopen an assessment is coupled with a duty. The Commissioner was duty bound to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. That power cannot be exercised casually, in a routine and perfunctory manner. Learned counsel further submits that the reasons recorded do not attribute any omission or inadvertence on the part of the petitioners to make true and full disclosure of its income. In his submission, no material is available on record to justify formation of the belief that the income of the petitioners had escaped assessment. Learned counsel further submits that full information with respect to the tax deducted at source from the payments made to various parties towards its expendi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ull and true disclosure of relevant material the assessment remained under section 147 of the Act. He further submits that the respondent applied the provisions of section 147 which empowers reopening of assessments completed under section 142(3) after recording reasons. The reasons recorded for re-opening the assessment were already furnished and, therefore, the action of the respondent was in accordance with law. He further submits that the reasons furnished were objected to by the petitioner and the same were decided in accordance with law and, therefore, the petition is liable to be dismissed. Learned counsel for the Revenue also pressed into service two affidavits; one filed by Shri Samir Takriwal, Deputy Commissioner of Income-tax, Circle 6(3), Mumbai, who had jurisdiction over the petitioners. He has stated on oath that he had prepared a proposal for opening of the assessment year 1998-99 and since four years had already elapsed, he did obtain prior approval from the Commissioner of Income-tax to reopen assessment. According to him, he had prepared the proposal and he himself had gone to the office of the Commissioner of Income-tax on September 15, 2003, with the file for....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ate as such, according to the petitioners, the first reason pressed into service to reopen is unsustainable. So far as the second reason for issuing notice under section 148(1) with respect to valuation of closing stock with Modvat (excise and customs duty paid) is concerned, it may be noted that the inventory is required to be valued either at cost or market price whichever is lower. According to this principle, the assessee had valued its closing stock at cost. The cost of purchase consists of purchase price including duties and taxes, freight inwards and other expenditure attributable to acquisition and bringing the stock in the present situation and location as on the date of valuation. The excise duty and. sales tax paid on the purchase of raw materials form part of the cost and are required to be taken into consideration for the purpose of valuation of closing stock as laid down by the apex court in the case of British Paints India Ltd. [1991] 188 ITR 44. The very same judgment has been followed in the assessment order dated December 21, 2000 (exhibit D). The assessment order also refers to section 145A. The same order related to the assessment year 1998-99 which was al....