IMPORTANT POINT
Reopening of assessments under Section 148 requires new tangible material; a mere change of opinion does not suffice.

ORDER :

Niral R. Mehta, J.

1. Heard learned advocate Mr. Manish J. Shah for the petitioner and learned advocate Mr. Karan Sanghani for learned advocate Ms. Kalpana K. Raval for the respondent.

2. Rule returnable forthwith. Learned advocate Mr. Sanghani waives service of notice of Rule for the respondent.

3. By this petition under Article 226 of the Constitution of India, the petitioner has prayed for quashing and setting aside the notice dated 30th March 2019 issued by the respondent – Assessing Officer under Section 148 of the Income Tax Act, 1961 (for short, “the Act”) for the Assessment Year 2012-13.

4. The brief facts of the case are that the petitioner – company filed its return of income on 27th November 2012 for the Assessment Year 2012-13 declaring total income at Rs.10,86,70,260/- under the normal provisions of the Act and book profit of Rs.10,79,13,516/- under Section 115JB of the Act.

4.1 Along with the return of income, the petitioner also filed balance-sheet and profit and loss account. The case of the petitioner was taken up for scrutiny assessment and notices under Section 142(1) / 143(2) of the Act were issued which were complied with by the petitioner giving reply in detail.

4.2 During the course of regular assessment, the petitioner filed reply dated 15th February 2016 wherein justification of various expenses amounting to Rs.30,75,80,968/- framed in the computation of income with documentary evidence was submitted. It was contended that such expenses were claimed as stated in the Audit Report in Form No.3CD and it comprises of depreciation under Section 32 of the Act of Rs.21,44,61,679/-, claim under Section 43B of the Act of Rs.27,99,737/- and claim admissible under Section 40a of the Act of Rs.39,05,807/- as TDS has been paid for the year under consideration and claim admissible under Section 35(2AB) of the Act of Rs.2,03,40,140/- along with remarks.

4.3 Considering such explanation, the assessment order under Section 143(3) of the Act was passed on 26th February 2016 by the then Assessing Officer by making disallowance of Rs.4,52,97,160/- to the return income by assessing total income of Rs.15,39,67,420/-.

4.4 Thereafter, notice under Section 148 of the Act was issued on 30th March 2019. The petitioner filed return of income pursuant to the notice and requested for supply of reasons recorded vide letter dated 27th June 2019, which was provided by the respondent – Assessing Officer. The reasons recorded read as under :

“The scrutiny of records revealed that the assessee company had claimed deduction of foreign exchange loss of Rs.1,20,50,206/- pertaining to indigenous assets and the same was allowed. These losses claimed as deduction in respect of foreign currency loans for acquisition of assets. The assets acquired utilizing these loans were indigenous assets. Since the assets acquired were the indigenous assets under section 43A is not applicable. For application of Section 43A, the assets acquired should be from outside India in foreign currency. In the present case the asset is acquired from within India and therefore Section 43A is not applicable. As the foreign currency loan is utilized for acquisition of indigenous assets, the change in liability due to forex fluctuation would not be allowable as revenue expenditure. The unrealized/realized exchange loss pertaining to indigenous assets is capital in nature. This is sustained by Hon'ble Supreme Court Decision in the case Sutlej Cotton Mills Ltd Vs. Commissioner of Income Tax, West Bengal, 116 ITR 1 wherein the Apex Court held as under. Whether the loss suffered by the assessee was a trading loss or not would depend on the answer to the question, whether the loss was in respect of a trading asset or a capital asset. In the former case, it would be a trading loss but not so in the latter. The test may also be formulated in another way by asking the question whether the loss was in respect of circulating or in respect of fixed capital.

Further observation made in