Re-opening of assessment under Section 148 requires tangible material indicating escapement of income; mere change of opinion is insufficient.

ORDER :

Bhargav D. Karia, J.

1. Heard learned Senior Advocate Mr. Tushar Hemani with learned Advocate Ms. V.K. Parikh for the petitioner and learned Senior Standing Counsel Mr. Varun K. Patel for the respondents.

2. Rule returnable forthwith. Mr. Varun K. Patel, learned Senior Standing Counsel waives service of notice of rule on behalf of the respondents.

3. With the consent of learned advocates for both the sides, the matter is taking up for hearing as the issue of jurisdiction of the respondent is raised for issuance of notice dated 27.03.2021 under section 148 of the Income Tax Act, 1961 (for short ‘the Act’) for re-opening of the assessment for Assessment Year 2017-18.

4. The brief case of the facts are as under:

4.1 The petitioner filed return of income for AY 2017-18 declaring total income of Rs.39,69,64,650/- on 31.10.2017 and thereafter filed revised return of income on 09.02.2019 declaring total income of Rs.83,33,75,590/-.

4.2 The case of the petitioner was selected for scrutiny and after considering the reply of the petitioner in response to the notice issued under section 142(1) of the Act; the assessment order under section 143(a) of the Act was passed on 09.12.2019, except in the return income of Rs.2,96,81,980/- as per the computation of income submitted by the petitioner.

4.3 The petitioner thereafter was served with the impugned notice dated 27.03.2021 for re-opening of the assessment. The petitioner filed return of income in response to the said impugned notice on 21.04.2021 and requested for reasons recorded for re-opening.

4.4 The respondent submitted the reasons recorded on 19.05.2021 which reads as under:

“2. Brief details of information collected/received by the AO: From the Statement of Total Income, it is seen that the assessee has claimed Rs.17,37,80,816/- on account of “Any other amount allowable as deduction”. Further, the assessee has made lease payment towards principal plus interest of Rs.17,37,80,816/- on loan taken from CISCO and claimed the same as revenue expenditure. The amount of repayment of Rs.17,37,80,816/- as principal amount of any loan is not a revenue expenditure and is not allowable under any of the provisions of the Act from income of an assessee.

2.1 It is seen from Note No.25 “Financial Charges” of the Annual Report that the assessee company has debited Rs.37,80,000/- on account of applicable net gain/loss on Foreign Currency Transaction and Translation and claimed Rs.6,90,80,060/- being unrealized profit & loss from foreign exchange in its computation of income.

2.2 It is seen from Note No.3 of the Annual report that the assessee company has created goodwill of Rs.11,00,000/- on slump sale and claimed depreciation on the same in its ITR and Tax Audit Report. The Tax Auditor has reported in tax audit report that the assessee has made addition in block of intangible assets to the tune of Rs.4,29,94,061/- which is inclusive of amount of goodwill of Rs.11,02,868/-.

3. Analysis of information collected/received: From the detailed discussion made in Para-2 above, it can be seen that the assessee has claimed an amount of Rs.17,37,80,816/- under the head any other amount allowable as deduction. On further verification of the details and breakup of the said amount, it is seen that the said amount intends repayment of lease payment of loan taken from CISCO and interest.

3.1 From the statement of income and as stated above, the assessee has claimed an amount of Rs.37,80,00,000/- on account of foreign currency transactions and also claimed an amount of Rs.6,90,80,060/- being unrealized profit and loss from foreign exchange.

3.2 The assessee has made addition in block of intangible assets to the tune of Rs.4,29,94,061/- which is inclusive of amount of goodwill of Rs.11,02,868/-. The de