TaxTMI 
TaxTMI 
2016 (9) TMI 1529
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....and authorities are proceeding without application of mind. 3. Details of relevant Assessment Year (hereinafter referred to as "A.Y.) in respective writ petitions and date of notice etc. are stated as herein:­ Serial no. Writ petition no. A.Y. Date of notice under Section 148 Date of order passed on objection filed by Assessee against reassessment notice 1 682 of 2006 2009-10 29.03.2016 10.08.2016 2 184 of 2016 2010-11 30.11.2015 08.01.2016 3 182 of 2016 2011-12 30.11.2015 08.01.2016 4 237 of 2016 2012-13 30.11.2015 08.01.2016 5 183 of 2016 2013-14 30.11.2015 08.01.2016 4. Basic facts are common. As agreed by learned counsel for parties, we have taken up Writ (Tax) no. 682 of 2016 and Writ (Tax) no. 182 of 2016 as leading cases for the purpose of referring pleadings therefrom. Parties also agreed that though counter affidavit has been filed only in three cases i.e. Writ Tax no. 182 of 2016, Writ Tax no. 183 of 2016 and Writ Tax no. 184 of 2016, but pleadings therein may be read in remaining two writ petitions. 5. By notification dated 24.04.2001, issued under Section (3) of Uttar ....
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....ter dated 14.12.2015 requesting DCIT to treat Returns of Income, previously filed by it, towards compliance of notice under Section 148 of Act 1961. Similar letter in respect to A.Y. 2009­-10 was submitted by YEIDA on 28.04.2016. DCIT then sent letters/notices dated 16.12.2015 under Section 143(2)/142(1), similarly worded in respect to all A.Ys. except A.Y. 2009-­10 enclosing questionnaire. 9. Since reasons for issuing notice under Section 148 of Act 1961 were not communicated to YEIDA, DCIT, subsequently, on an application submitted by YEIDA, communicated "reasons for believe" that Income has Escaped Assessment. The reasons appended as 'Annexure­A' show date mentioned by DCIT was 20.11.2015 but communicated to YEIDA along with letters dated 16.12.2015 referring to YEIDA's application dated 14.12.2015. 10. The aforesaid letters dated 20.11.2015, containing reasons forthe purpose of Section 147/148 of Act 1961, are almost similarly worded in respect to all A.Y.'s except A.Y. 2009­-10. Five paragraphs in all four letters except for A.Y. 2012­-13 where it had six paragraphs. In order to show similarity of reasons given in all letters, Para 5 in respect to A.Y....
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....­15/3426 dated 27.03.2015 order passed u/s 201(1), 201(1A) of Income Tax Act, 1961. The assessee is liable to deduct TDS on payment of interest u/s 194A of the I.T. Act, 1961, but he has failed to deduct TDS. Hence they are liable to be disallowed u/s 40(a)(ia). (ii) Advertisement expenses of Rs. 2,00,95,431/­ this year compared to Rs. 2,31,65,429/­ last year. If the same was executed through contract, TDS is deductible u/s 194C of the I.T. Act, 1961. The same needs to be verified. (iii) Consultancy Expenses of Rs. 3,33,33,898/­ this year compared to Rs. 4,85,36,284/­ last year. The same is liable for TDS u/s 194J of the I.T. Act, 1961 and needs to be verified. (iv) The sundry creditors have decreased to Rs. 3933.63 Crores as compared to 2827.83 crores last year which needs verification. (v) The assessee has claimed depreciation on electrical equipment @ 15% instead of 10% during the relevant previous year which is prima facie inadmissible." A.Y. 2012-­13 5. "On perusal of Income and Expenditure A/c and Balance sheetfor A.Y. 2012­-13 it is seen that the assessee has debited expenses totaling Rs. 3,20,....
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....as deducted and paid the expenses are liable to be disallowed 40(a)(ia). The same needs to be verified. (iii) Consultancy Expenses of Rs. 6,09,04,803/­ this year compared to Rs. 4,76,91,925/­ last year. The same is liable for TDS u/s 194J of the I.T. Act, 1961 and needs to be verified. (iv) The sundry creditors have decreased to Rs. 3800.58 Crores as compared to 3617.41 crores last year which needs verification. (v) The assessee has claimed depreciation on electrical equipment @ 15% instead of 10% during the relevant previous year which is prima facie inadmissible." 11. In respect to A.Y. 2009-­10, YEIDA received the document dated 15.03.2016 along with letter dated 16.05.2016 issued by DCIT containing reasons for initiating proceedings under Section 148 of Act 1961 and para 5 thereof reads as under:­ A.Y. 2009­-10 5. "On examination of Balance Sheet and Income and Expenditure A/c for A.Y. 2009-­10, the following issues emerge: (i) "On perusal of Income and Expenditure A/c for A.Y. 2009-10 it is seen that the assessee has declared Rs. 1,57,36,299/­ as expenditur....
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....ments of the assessee, were found and seized. The assessee has well acknowledged the papers (Page No. 4 & 5) of Annexure A­2 and offered the same for tax but now after attending many days of assessment proceedings filed objection on the basis that other pages are just estimation or not related to the assessee or explained in the Books of the Account of the assessee. As referred by the Hon'ble Supreme Court in the case of ACIT Vs Rajesh Jhaveri Stock Broker Pvt. Ltd. If he has reason to believe that income for any assessment year has escaped assessment. The word "reason" in the phrase "reason to believe" would mean cause or justification. It the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion." In view of above, I hold that the AO was well within his rights to invoke the proviso to section 147 of the I.T. Act. Likewise other objections relating to other reasons are rebutted as they lack assertion and logi....
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....f land shall be used namely for industrial or commercial or residential purpose, as the case may be. YEIDA is not a 'local authority', within the term Section 10(20) of Act 1961. This Court in Writ Petition no. 1338 of 2005, decided on 28.02.2011, negativing status of Local Authority claimed by New Okhla Industrial Development Authority (hereinafter referred to as "NOIDA'). Its review application has also been rejected by this Court. It is said that, though the judgment dated 28.02.2011 was in respect to NOIDA but status, nature of activities, nature of income etc. of NOIDA, YEIDA and Greater New Okhla Industrial Development Authority i.e. NOIDA are similar, hence whatever has been hold in the case of NOIDA shall hold good for YEIDA also. 17. Petitioner ought to have filed Return of Income within due date, as per Section 139(1) of Act 1961, but it failed. It is only in response to notice issued under Section 142(1) of Act 1961 on 07.08.2014, that Returns in respect to aforesaid Assessment Years were submitted by YEIDA. The Return Forms, however are virtually blank. Except name of petitioner, address, PAN and Assessment Year, almost everything has been left blank. Assessment proc....
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....cedent for such initiation. 21. Now before examining the impugned orders passed by competent authority, as also "reasons to believe" for issuing notices under Section 148 of Act 1961, it would be appropriate to have a bird eye view of relevant authorities on the subject and statutory exposition of law on this aspect. 22. Section 147 gives power to Assessing Officer to assess or reassess where it has "reason to believe" that any income chargeable to Tax has escaped assessment for any Assessment Year. This power of re­assessment however, is subject to provisions of Section 148 to 153. Section 147 and 148 reads as under: "Income escaping assessment. 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year conce....
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....nder section 92E; (c) where an assessment has been made, but- (i) income chargeable to tax has been under assessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (includingfinancial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub­section (2) of section 148.] Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st ....
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....hall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section. (2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so." 23. In the context of old Income Tax Act i.e. Income Tax Act, 1922, Section 34 wherein dealt with situation of income escaping assessment, this issue as to when re­assessment proceedings can be initiated, came up before a Constitution Bench in Calcutta Discount Co. Ltd. Vs Income­Tax Officer, Companies District I, Calcutta, and another, (1961) 41 ITR 191 (SC). The issue was decided by majority of 3/2. Court held, while it is duty of Assessee to disclose full and true, all primary relevant facts, the inference, to be drawn therefrom is the duty of Revenue. Assessee cannot be expected to assisst Revenue for deciding as to what inference on facts should reasonably be drawn or what inference ultimately be drawn. Thus, it would be a material bearing on the question of under­assessment and it would give a jurisdiction to Assessing Officer to issue notice under Section 34 for re­assessment. Whether grounds, are....
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....ax Officer could not have reason to believe that any part of the income of the assessee had escaped assessment and such escapement was by reason of the omission or failure on the part of the assessee to disclose fully and truly all material facts and the notice issued by him would be liable to he struck down as invalid." (emphasis added) 25. In Commissioner of Income Tax, Delhi Vs Kelvinator of India Limited, (2010) 2 SCC 723, Court, referring to legislative intention for introducing condition of "reason to believe" said that it is not a power of review. There is a conceptual difference between power to review and power to re­assess. Assessing Officer has not power to review, he has power to re­assess. But re­assessment has to be based on fulfillment of certain pre­condition and if the concept of "change of opinion" is removed, then, in the garb of re­opening the assessment, review would take place. Court said that "change of opinion", if introduced in the context of Section 147, it would confer arbitrary powers upon Assessing Officer to review assessment at any stage and at any point of time. Court observed "one needs to give a schematic interpretat....
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....ither because some fresh facts come to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his possession which tends to expose untruthfulness of those facts. In such situations, it is not a case of mere change of opinion or the drawing of a different inference from the same facts as were earlier available but acting on fresh information. No doubt sufficiency of reasons for forming the belief, is not for the Court to judge, but it is open to an assessee to establish that there, in fact, existed no belief or that the belief was not at all a bona fide one or was based on vague, irrelevant and non­specific information. Only to that limited extent, Court may look into the conclusion arrived at by Income­tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by Incometax Officer and further whether that material had any rational connection or a live link for the formation of requisite belief. 28. In Assistant Commissioner of Income Tax Vs Rajesh Jhaveri Stock Brokers Pvt. Ltd., 2008 (14) SCC 208, Court said that the word "reason"&nbs....
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....information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. In case of there being a change of opinion, there must necessarily be a nexus that requires to be established between "change of opinion" and the material present before Assessing Authority. Discovery of an inadvertent mistake or non­application of mind during assessment would not be a justified ground to re­initiate proceedings on the basis of change in subjective opinion. 30. Learned counsel for petitioner has also relied on certain judgments of this Court and other High Courts also which have been followed in similar line and exposition of law and we may only refer to those judgments i.e. Assistant Commissioner of Income Tax Vs Greater Noida Industrial Development Authority (2015) 379 ITR 14 (All); Greater Noida Industrial Development Authority Vs Commissioner of Income Tax (Writ Tax no. 985/2015­order dated 23.12.2015); Ishwar Chandra Vs Union of India & others. (decided by Hon'ble Allahabad High Court on 04.02.2015); Indra Prastha Chemicals Pvt. Ltd. & others Vs Commissioner of Income Tax & another (2004) 271 ITR 113 (All); Aroni Commercials L....
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....no consistent increase or decrease but it is in both ways. The Assessing Authority in the reasons, however, has consistently mentioned that Sundry Creditors have decreased and needs verification. When the difference is on both ways i.e. decrease and increase, mention of only one way i.e. decrease by Assessing Authority, not only shows non­application of mind but also shows that it is only conjecture and there is no material to constitute "reasons to believe". 34. There are three grounds relating to non­deduction of TDS:­ (a) TDS on interest of payment was not deducted under Section 194A and it was dis­allowable under Section 40(a), 1(a). (b) Non­deduction of TDS under Section 194C on advertisement expenses. (c) Non­deduction of TDS on consultancy expenses under Section 194J. 35. For all the aforesaid allegations of non­deduction of TDS, Assessing Authority after referring to the same has said that the matter requires verification with respect to deduction of TDS on interest payment it has also referred to an order passed by ACIT (TDS) under Sections 201(1) and 201(1)(a) of Act, 1961 on 27.03.2015. 36. Without looking i....
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....:­ Financial Year A.Y. Interest paid Short/NonDeduction under section 201 Default months Interest under section 201(1A) Total Tax liability 2010-11 2011-12 3352391732 335239173 60 201143504 536382737 2011-12 2012-13 380126887 380126887 48 182460906 562587841 2012-13 2013-14 2224316262 222431626 36 80075385 302507047 39. If that be so, with regard to TDS, issue was already clear. We find that at the stage, when notices for re­assessment were issued, it cannot be said that there was anything which was not disclosed by Assessee or any subsequent fact or material had come to the notice of DCIT for justifying re­assessment. 40. Last reason/justification, that, YEIDA claimed depreciation on electrical equipment at the rate of 15% instead of 10%, which is prima facie inadmissible, is also unsustainable for the reason that it is a clear case of change of opinion. Assessee at the time of filing Return was not found incorrect but now a different opinion is being formed that depreciation should be lesser than that actually claimed. 41. In order dated 10.08.2016, height of non application o....