TaxTMI 
TaxTMI 
2026 (7) TMI 433
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....ed 13.03.2019 for the Assessment Year (for short 'A.Y.') 2015-16 as well as order dated 27.09.2019 passed by the respondent, rejecting the objections filed by the petitioner. The same having been issued without valid reasons, and prayed for the following reliefs: "10. In the premises aforesaid, the petitioner prays that:- A) this Hon'ble Court be pleased to call for the records of the proceedings, look into them and be pleased to issue a writ of certiorari or any other appropriate writ, order or direction quashing the impugned 148 notice at Annexure-C and the order disposing the objections at Annexure-J. B) this Hon'ble Court be pleased to issue a writ of mandamus or any other appropriate writ, order or direction asking the respondent not to proceed further in pursuance of section 148 notice at Annexure-C and the order rejecting the objections at Annexure-J. C) Pending the hearing and final disposal of this application, this Hon'ble Court be pleased to stay any further proceedings in pursuance of section 148 notice at Annexure-C. D) This Hon'ble Court be pleased to grant any further or other relief as this Hon'ble Cou....
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....dverse observation or qualification with regard to valuation of closing stock. 5.5. The petitioner herein was issued Notice under Section-148 of the Act on 13.03.2019 (Annexure-C), for A.Y. 2015-16, stating that the respondent authority has reason to believe that income has escaped assessment and asking the petitioner to file its income tax return within 30 days from the receipt of the said notice. In response to the said Notice, the petitioner filed return of income on 10.04.2019 (Annexure-D), declaring the income as declared in return filed under Section-139 of the Act. On even date, the petitioner addressed a letter to the Assessing Officer informing him about filing of return and also asking for copy of reasons recorded in the order. The Assessing Officer supplied the copy of reasons recorded which are duly produced at Annexure-F. The petitioner herein filed objections against the reasons recorded for reopening of the assessment by communication dated 28.05.2019, which was submitted on 06.06.2019 (Annexure-G). 5.6. Thereafter, certain Notices under Section-142(1) of the Act are issued to the petitioner asking for certain information without disposing of the objections tak....
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.... said to be any escapement of income on the reasons recorded by the Assessing Officer. The reason states that the closing stock of the petitioner is required to be reduced, can never result into escapement of income. On the contrary, once the value of closing stock decreases, it directly reduces the taxable income, and hence assessment would have to be made at a lower figure than the existing one. 6.1. Placing reliance on the aforesaid submissions, it is submitted that in absence of any escapement of income, Notice issued under Section-148 of the Act by the Assessing Officer to reopen the assessment fails to fulfill the condition precedent of there being escapement of income for the concerned A.Y. 2015-16. It is submitted that, the Assessing Officer seeks to change the reason for reopening stating inflation of closing stock by an amount of Rs. 63,88,466/-, resultantly, sale or other income has been suppressed by that amount. It is submitted that the aforesaid is nothing but change of opinion. 6.2. It is submitted that the assessing officer invoked Clause-(b) to explanation-2 of section-147 of the act to issue notice under section-148 of the act. The same being misplaced, as i....
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....e. A.Y. 2015-16, the assessee calculated the closing work in progress at Rs. 13,71,58,102/- instead of Rs. 13,07,69,637, which has resulted in inflating the closing stock in work in progress by Rs. 63,88,466/-. 7.3. In the objections raised by the petitioner, the assessee has contended that inflating closing WIP would decrease the profit. However, the Assessing Officer while disposing of the objections negated the stand, observing that due to reason of inflating of closing stock, sale or other income has been suppressed by that amount. It is submitted that the aspect of suppression of sale and other income by the assessee- petitioner is manifestly present in the reasons recorded and in view thereof, no interference is called for in the impugned order passed by the Assessing Officer. 7.4. It is further submitted that the present is not a case of change of stand by the Assessing Officer in the order disposing of the objections. It is submitted that, in the instant case, during assessment proceedings under Section-143(3) of the Act of A.Y. 2016-17, on perusal of working of WIP for the year 2015-16, the aforesaid was noticed and in view thereof, the reasons are valid for reopenin....
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.... objection disposal order by taking all together a news stand, which was never the case of Assessing Officer at the time of recording the reasons. In the reasons recorded, it was never alleged by the Assessing Officer that the petitioner indulged in suppression of sales or any other income. On pointing out that reduction in closing stock of work-in-progress can never result into escapement of income and on the contrary, it results into decrease in income already assessed, held that reducing the value of closing WIP, the petitioner has suppressed the sale or other income. 9. At this stage, it is apposite to refer to the oral judgment dated 06.12.2017 passed in Special Civil Application No. 16171 of 2017, wherein, it is held that, the Assessing Officer, instead of dropping the assessment proceedings by order rejecting the objection, proceeded with the reassessment proceedings on a fresh ground, which did not find place in the reasons recorded in the show cause notice, was held to be impermissible. Relevant Paragraph nos. 7 to 12 read thus: "7. Besides, the facts of the present case are quite gross, inasmuch as, in the reasons recorded the Assessing Officer has based his b....
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....ent. Thus, the very intent and purpose behind submitting objections and passing a speaking order thereon is frustrated. 10. As is apparent on a plain reading of the reasons recorded, the very basis for reopening the assessment is that the petitioner had not filed any return of income disclosing such sale of the immovable property valued at Rs. 40,00,000/. The record of the case shows that earlier, pursuant to a notice under section 148 of the Act, the petitioner had, in fact, filed return on income disclosing the sale of such immovable property, and the Assessing Officer after duly applying his mind to the issue had accepted the return of income. Considering the fact that a return of income had been filed disclosing sale of the immovable property, the very foundation on which the reopening is based in the reasons recorded by the Assessing Officer for reopening the assessment, collapses. Therefore, on the reasons recorded, the Assessing Officer could not have formed the belief that income had escaped assessment, inasmuch as such belief had been formed on a factually incorrect premise. It is settled legal position, that the reopening of the assessment has to be maintainable ....