TaxTMI 
TaxTMI 
2025 (11) TMI 1993
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....ing the reassessment proceedings initiated by the respondent in pursuance to the impugned notice dated 31.03.2019 u/s 148 of the Income Tax Act, 1961 for the assessment year 2014-15; c. Issue a writ in the nature of mandamus or an order prohibiting the respondent to frame reassessment under the relevant provisions of the Act; d. Issue a writ in the nature of Mandamus prohibiting the respondent from making fishing and roving inquiries; e. Pass any other order(s) as this Hon'ble Court may deem to be fit and more appropriate in order to grant interim relief to the petitioner; " W.P.(C) 13495/2019 "a. Issue a writ in the nature of Certiorari or an order, quashing the impugned notice u/s 148 of the Income Tax Act, 1961 dated 31.03.2019 and the impugned order dated 20.11.2019, disposing of the objections to the initiation of the reassessment proceedings of the respondent; b. Issue a writ in the nature of Certiorari or an order quashing the reassessment proceedings initiated by the respondent in pursuance to the impugned notice dated 31.03.2019 u/s 148 of the Income Tax Act, 1961 for the assessment year 2015-16; c. Issue a ....
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....ents and Form 10DA. On 09.09.2016, the assessee furnished a note on claim under Section 80JJAA and also the details of all expenses including manufacturing expenses. He states that the AO framed the assessment on 04.11.2016, under section 143(3), assessing the income at Rs.17,47,55,280/- for the AY 2014-15. 7. It is his submission that the petitioner received the notice (impugned notice) dated 31.03.2019 by the respondent/ Revenue under section 148 of the Act. In response to this notice, the assessee filed a letter on 30.04.2019, requesting a copy of reasons for this said notice. The respondent thereafter provided a copy of the recorded reasons on 31.03.2019, mentioning that a survey was conducted at the petitioner's premises and fresh material was found, suggesting excessive claim of expenses under the head of manufacturing expenses. Additionally, the reasons also mentioned that the petitioner/assessee did not furnish form 10DA electronically. Pursuant thereto, the petitioner filed its objections to the validity of the initiation of proceedings under section 147 of the Act by issuance of notice u/s 148 of the Act dated 28.06.2019, for A.Y. 2014-2015. However, the respondent....
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....Form 10DA was also duly signed by Tax Auditor. Further, he states, on 19.04.2017, to a notice under Section 142(1), the assessee provided its financial statements and Form 10DA. On 25.09.2017, the assessee furnished a note on claim under Section 80JJAA and also furnished the details of all expenses including manufacturing expenses. 11. Mr. Aggarwal has challenged the impugned notice and the impugned order on the ground that the same are arbitrary, unreasonable, and contrary to the provisions of the Act. He states that the respondent has disposed of the objections of the petitioner in a prejudicial manner, in the absence of any new material having rational nexus with the purported impugned reasons for reopening of assessment. He states the notice and order are in contravention of judicial principles, and various decisions of High Courts and the Supreme Court. 12. He states that once the primary facts are disclosed before the AO, he must require no further assistance from the assessee and after a disclosure of the facts by the assessee, the AO must not issue a notice under Section 148 of the Act. He states that the impugned notice and impugned order are passed in excess of juri....
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....ot permissible in law. Reliance is placed on the judgment of this Court in CIT v. Star Finvest (P) Ltd. (Delhi HC) in ITA No. 468/2014. 16. He also states that the only grievance of the respondent in the reasons recorded is that Form 10DA has not been filed electronically by the petitioner, whereas, there is no whisper or allegation as to whether or not the petitioner is eligible to deduction under section 80JJAA on merits nor is there any allegation as to the wrong claim by the assessee. He states that it is trite law that when substantial justice and technical considerations are pitted against each other, cause of substantial justice deserves to be preferred. Reliance has been placed on the case of PCIT v. E Smart Systems (P) Ltd., (2019) 263 Taxman 373 (SC). 17. With respect to the second paragraph of recorded reasons, Mr. Aggarwal states that the petitioner had duly furnished complete set of books of accounts containing complete list of all expenses including manufacturing expenses vide reply dated 09.09.2016, which were also duly supported with documentary evidences. He states the AO had minutely examined the details with regards to manufacturing expenses, accepted the a....
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.....31 143(3) 2013-14 28,794.13 5,257.67 18.26 143(3) 2014-15 34,020.81 6,208.38 18.25 143(3) 2015-16 35,511.93 5,679.5 1 15.99 143(3) 2016-17 27,556.15 4,740.65 17.20 143(3) 2017-18 31,409.20 5,429.83 17.29 143(3) is under process 2018-19 28,652.31 4,881.16 17.04 - 2019-20 38,219.46 6,886.01 18.02 . 21. He states that the AO has wrongly compared only the manufacturing expenses as on 27.03.2019 with the manufacturing and other expenses, even the figures so adopted by the AO in the reasons recorded on the basis of survey dated 27.03.2019 is based on misappreciation of facts. He states that if the complete set of manufacturing and other expenses is compared, then the quantum of expenditure so incurred (as mentioned in the reasons recorded), is almost identical to the expenditure incurred in the impugned AY. 22. Mr. Aggarwal heavily presses the argument that the notice has been issued by the respondent/Revenue on the basis of a mere change of the opinion, by applying se....
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.... hereinabove. Under the Direct Tax laws (Amendment) Act, 1987, Parliament not only deleted the words 'reason to believe' but also inserted the word 'opinion' in s. 147 of the Act. However, on receipt of representations from the companies against omission of the words 'reason to believe'. Parliament re-introduced the said expression and deleted the word 'opinion' on the ground that, it would vest arbitrary powers in the AO. We quote hereinbelow the relevant portion of Circular No. 549 dated 31st Oct., 1989 [(1990) 82 CTR (St) 1], which reads as follow: 7.2 Amendment made by the Amending Act, 1989, to reintroduce the expression 'reason to believe' in s. 147 .- A number of representations were received against the omission of the words 'reason to believe' from s. 147 and their substitution by the 'opinion' of the AO. It was pointed out that the meaning of the expression 'reason to believe' had been explained in a number of Court rulings in the past and was well-settled and its omission from s. 147 would give arbitrary powers to the AO to reopen past assessments on mere change of opinion. To allay these fears, the Amending....
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....nt in the case of CIT v. Harig Crank Shafts Ltd., (2009) 177 taxmann 31 (Delhi). 27. He states that under Section 151 of the Act, an AO is required to obtain the sanction of the PCIT/CIT before issuing a notice under Section 148 of the Act. He states in the present case it was incumbent upon authorities as authorised under Section 151 of the Act to independently examine the material on record and come to a conclusion rather than a crypticone-lined statement that "it is a fit case for issue of notice u/s 148". Reliance is placed on the judgment in the case of Mohinder Singh Malik v. CCIT, (2004) 267 lTR 716 (P&H), Signature Hotels (P) Ltd. v. ITO, (2011) 338 ITR 51 (Del), Maruti Clean Coal & Power Ltd. v. ACIT, (2018) 400 ITR 397 (Chattisgarh), United Electrical Co. P. Ltd. v. CIT, (2002) 258 ITR 317 (Del). According to him this sanction by the authority is mechanical and invalid. 28. It is also his submission that the reasons to believe which are stated are pretentious and based on incomprehensible allegations. The law is settled on the point that the reasons recorded must be valid and relevant, providing the foundation for assumption of jurisdiction to the AO, and this is th....
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....manufacturing expenses were shown as Rs. 3.84 crore as against the total receipt of Rs. 370.79 crore. He states that upon calculation, the manufacturing expenses came around 8.86 % of the total receipts, however, in the ITR for the AY 2014-15 relating to FY 2013-14, the manufacturing expenses were claimed at Rs. 82.45 crore, which is 24.25% of the total receipts of Rs. 340.25 crore. As per him, the assessee has claimed excessive expenses under the head of manufacturing expenses to the tune of 15.39 % of the total receipt which is Rs. 52.37 crore. 31. It is his submission that the power of survey under Section 133A of the Act is an extraordinary power meant for inspection and discovery of facts and material. It was also found on 27.03.2019 that the manufacturing expenses of the assessee are lower in comparison to the claim in the ITR. He submits that since the documents were found during the course of survey proceedings at a later stage, they are fresh material and were not in the knowledge of the AO while completing the original assessment under Section 143(3) of the Act on 04.11.2011. He states that this fresh material was duly considered and examined by the AO whereafter, base....
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.... Thus, he states that the respondent/Revenue had neither acted arbitrarily nor contrary to the settled provisions of law. 36. Mr. Sunil Agarwal states that the reliance by the petitioner on the case of Calcutta Discount Co. Ltd. (Supra) is misplaced as the decision in that case also holds as under :- " ... if there were infact some reasonable grounds for thinking that there had been any non-disclosure as regards any primary fact, which could have a material bearing on the question of "under-assessment", that would be sufficient to give jurisdiction to the Income-tax Officer to issue the notices under section 34. Whether these grounds were adequate or not jar arriving at the conclusion that there was a non-disclosure of material facts would not be open for the court's investigation. In other words, all that is necessary to give this special jurisdiction is that the Income-tax Officer had when he assumed jurisdiction some prima facie grounds for thinking that there had been some non- disclosure of material facts. Clearly it is the duty of the assessee who wants the court to hold that jurisdiction was lacking, to establish that the Income-tax Officer had no material at....
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....expenses are bifurcated into manufacturing expenses at Rs. 62.08 crore and other expenses at Rs. 20.80 crore. Thus, in P&L, the amount of Rs. 82.89 crore, mentioned above, is not attributed to manufacturing expenses alone but the same also include other expenses as well, whereas the amount picked from Trial Balance or Provisional P&L account found during the survey denotes manufacturing expenses alone. Therefore, even if the manufacturing expenses of both the years are compared, there is a huge difference. 41. As per him, the AO is not under an obligation to prove that the amount of escapement worked out by him is entirely correct. Instead, to arrive at the correct figure, he needs to proceed with the assessment proceedings and draw his final conclusion. Reliance has been placed by him on the judgment in the case of GKN Drive Shaft (India) Limited v. ITO, 259 ITR 19 (SC) wherein the decision does not envisage the procedure of raising objection by the assessee and disposal thereof by the AO as an alternative of assessment proceedings. 42. He states that the contention of the petitioner that this is a fishing and roving enquiry, is without any merit as the AO has recorded speci....
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....tion in these writ petitions is whether the respondents are justified in issuing the impugned notice under Section 148 of the Act for two AYs 2014-15 and 2015-16 initiating the reassessment proceedings against the petitioner herein. The primary ground on which the reassessment has been decided is on two grounds, viz that the survey was conducted at the petitioner's premises wherein fresh material was found suggesting excessive claim of expenses under the head of manufacturing expenses. Additionally, the petitioner/ assessee did not furnish the Form 10DA electronically. 45. It is considered position that the assessment for AY 2014-15 has resulted in an assessment order dated 04.11.2016 under Section 143(3) of the Act assessing the income at Rs. 17,47,55,280/-. Similarly, the income was assessed at Rs. 22,06,27,070/- for the AY 2015-16 in terms of the order dated 27.11.2017. Primarily, the submission of Mr Salil Aggarwal, learned Senior Counsel for the petitioner, is that at the time of initial assessment, the petitioner/assessee has provided the breakup of the manufacturing expenses, which was the part of the audited financial statement in Schedule - 25 and wherein the claim ....
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....his Court relying on Kelvinator of India Limited (Supra) has held as under :- "13. It is, therefore, clear from the aforesaid position that: (1) Reassessment proceedings can be validly initiated in case return of income is processed under Section 143(1) and no scrutiny assessment is undertaken. In such cases there is no change of opinion; (2) Reassessment proceedings will be invalid in case the assessment order itself records that the issue was raised and is decided in favour of the assessee. Reassessment proceedings in the said cases will be hit by principle of -change of opinion. (3) Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not record....