TaxTMI 
TaxTMI 
2026 (10) TMI 1198
X X X X Extracts X X X X
X X X X Extracts X X X X
....r 15 Writ Petition was not infructuous 15-16 The writ petition does not involve disputed questions of facts 16-17 Notice has to be judged according to law as it existed on the date of notice 17 Mandate of the provisions of law under consideration - 17-19 Sections 147, 148 & 149 The reassessment proceeding was instituted after 19 three years but before ten years had elapsed The notice under section 148 must therefore explicitly state that the Assessing Officer has in his possession "books of account or other documents or evidence" and reveal the same 19-20 Audit objection 20 Details of audit objection 20-22 Audit objection is not "books of account or other 22 documents or evidence" "Information" should disclose escapement of income 23 during initial assessment Change of opinion 23 The case of Commissioner of Income Tax, Delhi vs. 23-24 Kelvinator of India Limited Audit objection is not document under section 149(1)(b) 24 Audit objection was only an opinion 25 Role of Assessing Officer on receipt of audit objection 25 The cas....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Remedies Limited. Petitioner's submissions 2. Firstly, the learned Counsel for the petitioner submits that the reassessment proceeding is without jurisdiction and therefore, the writ petition was maintainable against the impugned order and notices for reassessment passed under sections 148A(d), 148A(b) and 148 of the Income Tax Act, 1961 (the Income Tax Act). The judgment of the Supreme Court in Red Chilli International Sales vs. Income-tax Officer [2023] 146 taxmann.com 224 (SC) is relied upon to show that such a challenge was maintainable. 2.(i) Secondly, it is submitted that the proceeding under section 148 and 148A(b) of the Income Tax Act could not have been initiated by the respondent unless the requirement of section 149(1)(b) was fulfilled, i.e., the respondent had in his possession "books of account or other documents or evidence" which revealed that income chargeable to tax represented in the form of asset, expenditure in respect of a transaction or in relation to an event or occasion; or an entry or entries in the books of account, had escaped assessment amounts to or is likely to amount to fifty lakh rupees or more and relies on the judgment of the Madras High ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty and he was not inclined to accept the petitioner's submission. It is further submitted that the issue regarding subsidy received by the petitioner in Sikkim has achieved finality in their favour in view of the judgment of the Supreme Court in Commissioner of Income Tax, Jammu & Another vs. Shree Balaji Alloys (2018) 13 SCC 373. Respondent's submissions 3. The learned Deputy Solicitor General of India submits that the present writ petition involves disputed questions of facts and therefore, is outside the ambit of writ jurisdiction. 3.(i) It is submitted that the writ petition has become infructuous since the impugned notice dated 04.08.2022 had been adjudicated upon and assessment order has been passed against which appeal has been preferred by the petitioner under section 246A of the Income Tax Act. 3.(ii) It is further submitted that the present case falls under section 149(1)(b) and not under section 149(1)(a). According to the respondent, the Excise duty refund deposited in the bank account of the assessee were assets in view of Explanation to section 149(1)(b) and such Excise duty refund reflected in the bank account of the assessee would be evidence in possessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section 147. Order under Sub-section 148A(d) having being passed on 27.04.2022, the respondent proposed to assess or reassess such income or recompute the loss or the depreciation allowance or any other allowance or deduction for the assessment year 2015-16 and requiring the petitioner to furnish within 30 days from service of the notice a return in the prescribed form of the Assessment Year 2015-16. 4.(vi) The petitioner responded to this notice dated 27.04.2022 vide its letter dated 23.05.2022 stating that the notice under section 148 was bad in law. However, without prejudice to their rights and contentions, they filed their return of income for the year 2015-16 under protest in compliance to notice under section 148. 4.(vii) On 04.08.2022, the respondent issued notice under section 143(2) read with section 147 of the Income Tax Act acknowledging the return of income filed by the petitioner and pointing out that, "There are under charge of AMT and under statement of income as a result of accepting assessee's claim of Excise refund of Rs. 22,99,92,702/- as Capital Receipts.", on which further clarification was required asking the petitioner to submit any evidence on which t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....148A, requiring him to furnish within such period as may be specified in such notice, a return of his income or the income of any other person in respect of which he is assessable under this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of Section 148A to the effect that it is a fit case to issue a notice under this section. Explanation 1.-Fo....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ullion, jewellery or other valuable article or thing or books of account or documents are seized or requisitioned in case of any other person. Explanation 3.-For the purposes of this section, specified authority means the specified authority referred to in Section 151." "148-A. Conducting inquiry, providing opportunity before issue of notice under Section 148.-The Assessing Officer shall, before issuing any notice under Section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant....
X X X X Extracts X X X X
X X X X Extracts X X X X
....le to tax, represented in the form of" (i) an asset; (ii) expenditure in respect of a transaction or in relation to an event or occasion; or (iii) an entry or entries in the books of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more : Provided that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under Section 148 or Section 153A or Section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or Section 153A or Section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under Section 153A, or Section 153C read with Section 153-A, is required to be issued in relation to a search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132-A, on or before the 31st da....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... The learned Counsel for the petitioner counters this argument by submitting that as the writ petition has challenged the very jurisdiction of the respondent for issuance of notice under section 148 and if this Court comes to the conclusion that the respondent did not have the jurisdiction to issue the impugned notice, the subsequent proceedings would in any case not survive. The learned counsel also submitted that the appeal filed by the petitioner against the assessment order has been filed without prejudice to their rights and contentions before this Court in the pending writ petition. 5.(iii) I am of the view that the impugned notices under section 148 were challenged by the petitioner before this Court on the ground that the same were issued without jurisdiction. Adjudication of the proceedings during the pendency of the writ petition cannot render the writ petition infructuous if the petitioner establishes that the impugned notices were issued without jurisdiction. If it is so then the question of further proceedings resulting in final assessment by the respondent would not arise. If the notice under section 148 is held to be without jurisdiction then consequently the sub....
X X X X Extracts X X X X
X X X X Extracts X X X X
....quired to serve on the assessee a notice, along with a copy of the order passed, if required, under clause (d) of section 148A requiring him to furnish within a specified period a return of his income. Section 149 5.(ix) Section 149(1)(a) mandates that no reassessment proceedings can be initiated if three years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b). Section 149(1)(b) mandates that no notice under section 148 shall be issued for the relevant assessment year if three years but not more than ten years have elapsed from the end of the relevant assessment year unless the Assessing Officer has in his possession "books of account or other documents or evidence" which reveal that income chargeable to tax, represented in the form of asset, expenditure in respect of a transaction or in relation to an event or occasion, or entry or entries in the books of account which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more for that year. Therefore, unless the Assessing Officer has in his possession "books of account or other documents or evidence" as mandated by 149(1)(b), no notice under section ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....sment within the meaning of section 147. The notice, therefore, does not specify that the Assessing Officer had in his possession "books of account or other documents or evidence". Details of Audit objections 5.(xii)(b) The respondent has placed on record the relevant audit objection raised by the office of the Director General of Audit (Central) Kolkata, Revenue Audit Direct Taxes (ITRA Wing). It is dated 2.12.2021. It observed that: (i) the return was filed electronically on 26.11.2015 declaring total income of rupees Nil after claiming a deduction of Rs. 403,84,19,795/- under section 80IE (as per 10CCB submitted by the petitioner). (ii) the petitioner computed his deemed income under section 115JB Rs. 401,12,93,947/- which was allowed by the Assessing Officer. (iii) the petitioner received an amount of Rs. 22,99,92,702/- as Excise duty refund during the previous year 2014-15 relevant to the Assessment Year 2015-16, in P/L Account, the petitioner deducted Excise Duty from the total sales to the tune of 5% of total sales, however, the same varies with the classification of the medicines. (iv) the Excise Duty return and notifications applic....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nge of opinion 5.(xii)(f) A mere change of opinion on the basis of the audit objection cannot give the jurisdiction to the Assessing Officer to reopen an assessment already completed. Otherwise, there was no requirement for amendment in section 147 by the Direct Tax Laws (Amendment) Act, 1987. The case of Commissioner of Income Tax, Delhi vs. Kelvinator of India Limited 5.(xii)(g) In Commissioner of Income Tax, Delhi vs. Kelvinator of India Limited (2010) 2 SCC 723, the Supreme Court examined whether the concept of "change of opinion" stands obliterated, w.e.f., 1.4.1989, i.e., after substitution of section 147 of the Income Tax Act, 1961 by the Direct Tax Laws (Amendment) Act, 1987. The Supreme Court opined that section 147 with effect from 1.4.1989 gives a go by to the twin conditions required earlier and now jurisdiction to reopen the assessment is conferred upon the Assessing Officer only when he has reason to believe that income has escaped assessment. 5.(xii)(h) Therefore, I am of the view that the impugned notice under section 148 dated 27.04.2022 and the order dated 27.04.2022 under section 148A(d) are not tenable as the respondent could not have assumed jurisdi....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... initial assessment and thereafter, reassessment under section 148. The assessee had filed its return of income for the assessment year 2017-2018 and 2018-2019. The same was selected for scrutiny and assessment was completed under section 143(3) accepting the return income. Subsequently, the Assessing Officer issued notice under section 148A(b) on the basis of audit objections which suggested that creation of goodwill by assessee was a mere book entry and the claim of depreciation was clearly in violation of the explicit provisions of the Income Tax Act. The Assessing Officer passed orders for the assessment years under section 148A(d) rejecting the explanation tendered by the assessee which was challenged in a writ petition. The Division Bench of the High Court of Gujarat held that: "8. On perusal of the above observations given in the impugned orders, it is apparent that the Assessing Officer has not taken into consideration the reply filed by the assessee stating in no uncertain terms that the assessee has claimed the depreciation from Assessment Year 2015-16 and the same has been accepted during the course of the regular assessment for the Assessment Years 2015-16 and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....without considering the facts that the audit objection contained various factual mistake which is pointed out by the petitioner to the effect that the depreciation on the goodwill was being granted from the Assessment Year 2015-16 onwards to the petitioner and therefore, there is no question of escapement of income for the year under consideration by holding that the petitioner wrongly claimed the depreciation for the Assessment Year 2018-2019. The impugned order is therefore, contrary to the record and liable to be quashed and set aside. 13. In view of the foregoing reasons, both these petitions succeed and impugned notice issued under Section 148A(b) of the Act dated 10-2-2024 as well as impugned order passed under Section 148A(d) of the Act dated 30-3-2024 and the impugned notice issued under Section 148 of the Act dated 30-3-2024 are hereby quashed and set aside. Rule is made absolute to the aforesaid extent. No order as to costs." 5.(xii)(m) The judgment of the Division Bench of the Gujarat High Court in Songwon Speciality Chemicals India (P.) Ltd. (supra) was challenged before the Supreme Court. The Supreme Court dismissed the Special Leave Petition filed by the R....
X X X X Extracts X X X X
X X X X Extracts X X X X
....mation with respect to the amounts and did not withhold any document. Further, the Assessing Officer had also specifically asked the petitioner to submit relevant details on the said amounts through the questionnaire attached to the notice under section 142 of the Act. The petitioner replied to the questions put by the Assessing Officer by submitting the employment agreement with the managing director Amar Raj Singh and the consulting agreement with the shareholder Sandeep Kohli, stating that the said amounts were in the nature of "joining bonus" and "professional fees". As such, the Assessing Officer was very much aware of the said amounts/transactions, and was also in possession of the relevant documents, though he failed to return any specific finding with regard to the same in the assessment order. If that be so, it must necessarily be inferred that the said amounts of Rs. 8.90 crores had already been subjected to assessment. 53. We note that as contended by Mr. Shivakumar for the petitioner, the Supreme Court in Dy./Asst. CIT v. Financial Software and Systems Pvt. Ltd. [(2022) 447 ITR 370 (SC); (2022) 19 SCC 519; 2022 SCC OnLine SC 1411.] had held that when specific q....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt proceedings and a final decision in terms of an assessment order. We are of the view that the mere fact that objections were raised by the audit party cannot change or expand the nature of the power vested in the Assessing Officer to assess/reassess the income of the assessee to a power to review an already concluded assessment. 57. A similar issue had come up for consideration before a co-ordinate Bench of this court in Springer Healthcare Ltd. v. Asst. CIT [(2025) 480 ITR 712 (Delhi); 2025 SCC OnLine Del 4481.]. The court, after discussing the relevant provisions, held as under (page 726 of 480 ITR): "21. In the present case, the fact that the petitioner had received an aggregate amount of Rs. 1,44,34,773 during the previous year relevant to the assessment year 2017-18, which was not surrendered to tax, was not only within the Assessing Officer's knowledge, but was subject matter of examination as to whether the said amount was now held to be chargeable to tax under the Act. Concededly, all relevant facts regarding the aspect of taxability of the aforesaid amount were examined by the Assessing Officer. There is no additional material that has been discove....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice: Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of section 148A to the effect that it is a fit case to issue a notice under this section. Explanation 1.-For the purposes of this section and section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information in the case of the assessee for the relevant assessment year in accordance with the risk management strategy formulated by the Board from time to time; (ii) any audit objection to the effect that the assessment in the case of the assessee for the relevant assessment year has not been made in accordance with the provisions of this Act; or' 25. It is clear from the above that in terms of clause ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nder section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified author....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of the audit objection. Clause (b) of section 148A of the Act requires the Assessing Officer to provide the assessee with the basis of the information, which suggests that the income chargeable to tax has escaped assessment, in order to enable the assessee to respond to the said notice. 30. This clearly, establishes that the purpose of an audit objection cannot be considered as a command to issue a notice under section 148A of the Act irrespective of what such information is. On the contrary, it requires the Assessing Officer to furnish the information to the assessee and elicit the assessee's response. Thereafter, the Assessing Officer is required "in terms of clause (d) of section 148A of the Act" to take an informed decision whether it is a fit case for issuance of notice under section 148 of the Act 'on the basis of the material available on record including the reply of the assessee'. Obviously, if the Assessing Officer is satisfied with the reply furnished by the assessee and the material on record, the Assessing Officer is bound to hold that it is not a fit case for issuance of notice under section 148 of the Act. 31. In a case such as this, the Assessi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....essment already made is reopened. It is, therefore, not a review but reassessment based on concrete evidence. Audit objection for the purposes of section 148 would definitely be "information" but it would not be on its own, sufficient to give jurisdiction to the Assessing Officer to issue the notice under section 148 unless he has the requisite new material, i.e, "books of account or other documents or evidence". Impugned notice under section 148A(b) issued on 19.03.2022 5.(xiv) The notice under section 148A(b) issued on 19.03.2022 stated that: "Assessee while computing the deemed income u/s 115JB deducted excise duty refund treating as capital receipt of Rs.22,99,702/- (as per 3CD any amount of profit chargeable to tax under section 41 and computation thereof - NIL). However, the same was not reflected in profit and loss account as income which resulted in under determination Book profit to the tune Rs. 22,99,92,702/- with consequent under charge of tax u/s 115JB to the tune of Rs. 4,82,07,620/- (tax 18.5% SC 10% with 3% Education cess). Further, in the instant case, the assessee received an amount of Rs. 22,99,92,702/- as Excise duty refund during the prev....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... objection without any new material. Consequently, I am in agreement with the contention of the petitioner that the reassessment proceeding was barred by limitation. Admittedly, the impunged notices and order were issued after three years beyond the period of limitation without any "books of account or other documents or evidence". Consequently, it is also clear that they were issued without jurisdiction. Excise Duty treated as capital receipts 5.(xix) The petitioner also contends that they had correctly treated the Excise duty as capital receipts and that the audit objection was in any case contrary to a settled proposition of law. I shall now examine this final issue. 5.(xx) In the returns filed by the petitioner, Excise duty was declared as income credited to profit and loss account, which is exempt. The petitioner also furnished statement of total income to the Assessing Officer before the initial assessment. This fact was not contested by the respondent. In the statement of income so furnished, the petitioner had claimed exemption in respect of Central Excise Refund in the form of re-credit received by it under the industrial policy of the Central Government for estab....
X X X X Extracts X X X X
X X X X Extracts X X X X
....Court dismissed the appeals filed by the Revenue on the ground that the issue raised in the appeals were covered against the Revenue by the decision of the Court in CIT vs. Ponni Sugars & Chemicals Ltd. (2008) 9 SCC 337 or in the alternative, in CIT vs. Meghalaya Steels Ltd. (2016) 6 SCC 747. The judgments relied upon by the respondent 5.(xxvi) The judgments relied upon by the respondent are distinguishable in the facts of the present case. In GKN Driveshafts (supra), the Supreme Court was examining assessment proceedings for assessment years 1992-93 to 1994-95, 1997-98 and 1998-99. The Supreme Court clarified that when a notice under section 148 of the Income Tax Act was issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices as the Assessing Officer was bound to furnish reasons within a reasonable time. This was the mandate of law as it existed then which is different now as the provisions have been amended. 5.(xxvii) In P.V.S. Beedies (supra), the Supreme Court was once again examining reopening of assessment for the accounting years 1974-1975 and 1975-1976. The Supreme Court opined that information....
X X X X Extracts X X X X
X X X X Extracts X X X X
...." which was not available with the Assessing Officer at the time of initial assessment, which would reflect that income chargeable had escaped assessment. The provisions relating to reassessment proceedings, as discussed above, does not permit the reassessment proceedings to be initiated because the initial scrutiny was only a limited scrutiny. I am, therefore, of the opinion that this ground raised by the respondent is liable to be rejected. 5.(xxxi) The respondent also contends that the present case falls under section 149(1)(b) and not under section 149(1)(a). On a perusal of section 149, I am of the opinion that section 149(1)(a) and section 149(1)(b) must be read together and not in isolation. That would be clear from the words "unless the case falls under clause (b)" appearing in section 149(1)(a). 5.(xxxii) The respondent also contends that Excise duty refund deposited in the Bank Account of the petitioner were "assets" in view of Explanation to section 149(1) and therefore, this reflected in the Bank Account would be evidence in possession of the Assessing Officer. This submission although innovative discounts an important consideration, i.e., when was the evidence av....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shares in case of amalgamation scheme, is an asset eligible for depreciation under section 32 of the Income Tax Act. The audit objection was of the view that the respondent's reply was not tenable as the Supreme Court had given decision on the eligibility of claiming depreciation on goodwill, however, valuation of goodwill was not challenged. The audit objection maintained a view that the Supreme Court did not interfere with the factual finding with the tax authorities. The audit objection also opined that the claim for depreciation on goodwill had been challenged in the case of M/s United Breweries Ltd. vs. ACIT ITAT [2016] 76 taxmann.com 103 (Bangalore - Trib), wherein the Bangalore Bench of the Tribunal had held otherwise. 8.(vi) On 01.03.2024, after three years of the assessment, petitioner was served with a notice under section 148A(b) alleging that income chargeable to tax for the assessment year 2017-18 had escaped assessment within the meaning of section 147 and therefore, issued a show cause notice. It was stated that Revenue Audit Party had raised objection on six points on the basis of which the amount of escapement was Rs.1037.56 crores, which was more than fifty la....
X X X X Extracts X X X X
X X X X Extracts X X X X
....section (d) of section 148A of the Income Tax Act has been passed dated 29.03.2022. 9.(v) On 27.03.2023, assessment order was issued by the respondent under section 147. The assessment order records that the return of income was filed by the petitioner on 29.11.2018 declaring total income at NIL and current year loss of Rs. 1,58,76,72,077/-. The return was processed under section 143(1) of the Income Tax Act. The case was selected for Scrutiny under CASS. The assessment of the case was completed under section 143(3), read with section 144B of the Income Tax Act with the addition for Disallowance under section 14A of the Income Tax Act amounting to Rs. 51,22,784/- and assessed at NIL income and current year loss of Rs. 1,58,25,49,293/-. 9.(vi) On 1.08.2024, after three years of completion of the original assessment and one year after completion of the first re-assessment, a show cause notice under section 148A(b) was issued to re-open the case of the petitioner on the ground that income chargeable to tax for the assessment year 2018-19 has escaped assessment within the meaning of section 147. The notice also stated that the Director General of Audit (Central), Kolkata, was con....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itioner filed a preliminary response to the notice under section 143(2). 9.(xiv) On 30.06.2025, scrutiny notice under section 143(2) read with section 147 was issued. 9.(xv) On 14.07.2025, petitioner filed preliminary response to the said notice. 9.(xvi) On 22.07.2025, scrutiny notice under section 142(1) was issued to the petitioner. 9.(xvii) On 11.08.2025, the petitioner filed their response requesting them to await direction of this Court in the writ petition filed challenging the assessment proceedings. 9.(xviii) On 12.08.2025, writ petition was filed by the petitioner challenging: (a) Impugned Notice dated 27.08.2024 under section 148 of the Income Tax Act, 1961 and (b) Impugned Order dated 27.08.2024 under section 148A(d) of the Income Tax Act, 1961 Petitioner's submissions 10. The petitioner raises five contentions. Firstly, the reassessment proceedings were without jurisdiction. The second contention raised by the petitioner is that the reassessment proceedings are barred by limitation. In W.P.(C) No. 13 of 2024, the assessment year was 2017-18 and the notice under section 148A(b) is dated 01.03.2024 which is beyond three years but wit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....hich in the relevant assessment year, one ‗Y' limited amalgamated with assessee company. In accordance with a scheme of amalgamation of ‗Y' limited with assessee, assets and liabilities of ‗Y' limited were transferred to and vested with the assessing company. According to the assessee, excess consideration paid by it over the value of net assets acquired of ‗Y' limited should be considered as Goodwill arising on amalgamation. The assessee's claim for depreciation on Goodwill was rejected by the Assessing Officer on ground that Goodwill was not an asset falling under Explanation 3 to section 32(1). On appeal, the Supreme Court held that Explanation 3 to section 32(1) states that expression ‗asset' shall mean an intangible asset, being know how patents, copyrights, trademarks, licences, franchises or other business or commercial rights of similar nature, a reading of the words ‗any other business or commercial rights of similar nature' in clause (b) of Explanation 3 indicates that Goodwill would fall under the expression ‗any other business or commercial rights of a similar nature'. The principle of ejusdem generis would strictly apply while ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....come. (vi) the expression "other documents or evidence" is of wide amplitude and is not restrictively defined. Therefore, any official, credible and documentary material in possession of the Assessing Officer which reveals escapement, qualifies under this provision. (vii) Audit paragraph is a formal written record issued by a constitutional authority based on examination of accounts and records. Hence, it squarely qualifies as a document. (viii) the audit memo is not a mere opinion but contains: factual findings, identification of discrepancies, quantification of escapement. Therefore, it also constitutes evidence. (ix) Audit objection recognized as "information" by statute itself. The legislature itself in the Explanation to Section 148, recognizes: audit objection as "information suggesting escapement of income". If audit objection is statutorily recognized as information, then when it is in written form supported by records it necessarily qualifies as "documentary evidence" u/s 149(1)(b). (x) "other documents or evidence" must be interpreted broadly. The legislature has deliberately used the expression:" books of account or other docu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under Section 139: Provided that no notice under this section shall be issued unless there is information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment in the case of the assessee for the relevant assessment year and the Assessing Officer has obtained prior approval of the specified authority to issue such notice. Provided further that no such approval shall be required where the Assessing Officer, with the prior approval of the specified authority, has passed an order under clause (d) of Section 148A to the effect that it is a fit case to issue a notice under this section. Provided also that any return of income, required to be furnished by an assessee under this section and furnished beyond the period allowed shall not be deemed to be a return under section 139. Explanation 1.-For the purposes of this section and Section 148A, the information with the Assessing Officer which suggests that the income chargeable to tax has escaped assessment means,- (i) any information i....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pecified authority means the specified authority referred to in Section 151." "148-A. Conducting inquiry, providing opportunity before issue of notice under Section 148.-The Assessing Officer shall, before issuing any notice under Section 148,- (a) conduct any enquiry, if required, with the prior approval of specified authority, with respect to the information which suggests that the income chargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ooks of account, which has escaped assessment amounts to or is likely to amount to fifty lakh rupees or more : Provided that no notice under Section 148 shall be issued at any time in a case for the relevant assessment year beginning on or before 1st day of April, 2021, if a notice under Section 148 or Section 153A or Section 153C could not have been issued at that time on account of being beyond the time limit specified under the provisions of clause (b) of sub-section (1) of this section or Section 153A or Section 153C, as the case may be, as they stood immediately before the commencement of the Finance Act, 2021: Provided further that the provisions of this sub-section shall not apply in a case, where a notice under Section 153A, or Section 153C read with Section 153-A, is required to be issued in relation to a search initiated under Section 132 or books of account, other documents or any assets requisitioned under Section 132-A, on or before the 31st day of March, 2021: Provided also that for cases referred to in clauses (i), (iii) and (iv) of Explanation 2 to Section 148, where,- (a) a search is initiated under Section 132; or ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....otwithstanding anything contained in sub-section (1), where the income chargeable to tax represented in the form of an asset or expenditure in relation to an event or occasion of the value referred to in clause (b) of sub-section (1), has escaped the assessment and the investment in such asset or expenditure in relation to such event or occasion has been made or incurred, in more than one previous years relevant to the assessment years within the period referred to in clause (b) of sub-section (1), a notice under Section 148 shall be issued for every such assessment year for assessment, reassessment or recomputation, as the case may be. (2) The provisions of sub-section (1) as to the issue of notice shall be subject to the provisions of Section 151." 13.(i) The issue of alternative remedy has already been examined in WP(C) No. 39 of 2022 and my opinion thereof would bind the parties in both these writ petition as well. 13.(ii) I am unable to agree with the submission of the learned Deputy Solicitor General that merely because the issues raised in the reopening had not been addressed in the earlier assessment it cannot be called a change of opinion. I am of the view t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....) The expression ‗other documents or evidence', as contended by the learned Deputy Solicitor General is of wide amplitude and any official, credible and documentary material in possession of the Assessing Officer which would reveal escapement qualifies as such. However, I am of the view that audit paragraph cannot qualify into this category as it is ordinarily a communication or an opinion pointing out an alleged error in the assessment. I am of the view that the audit objection although raised by a Constitutional authority based on examination of accounts and records is still an opinion. This opinion would be of great relevance for the respondents. Based on the opinion, if the respondents applied their mind and procured "books of account or other documents or evidence", then the respondents could have the necessary jurisdiction to issue the notice under section 148. Merely because the Explanation to section 148 recognises audit objection as "information", it does not automatically qualify as "books of account or other documents or evidence". 13.(vii) As rightly contended by the learned Deputy Solicitor General, the legislative intent behind section 149(1)(b) is to enable ....