Back
2012 Supreme(Mad) 2108
High Court of Judicature at Madras
M. JAICHANDREN
M/s. Doshi Housing Limited A Limited Company Incorporated under the Provisions of the Indian Companies Act, 1956, Represented by its Managing Director
Versus
The Assistant Commissioner of Income Tax
W.P.No.29069 of 2011 and M.P.No.1 of 2011 & W.P.No.29070 of 2011 and M.P.No.1 of 2011
Decided On : 27-04-2012
For the Petitioner:Jehangir D.J. Mistri Senior Advocate for R. Sivaraman, Advocate.
For the Respondent:J. Narayanasamy, Advocate.
The main legal point established in the judgment is that the re-opening of an assessment must be based on valid grounds and not on a mere change of opinion. Additionally, there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment in order for the re-opening to be valid.
Headnote:
Income Tax - Assessment Reopening - Section 148 of the Income Tax Act, 1961 - Section 80IB(10) - 143(1), 143(3), 147, 260A - The court quashed the impugned notice issued under Section 148 of the Income Tax Act, 1961, and the consequential proceedings rejecting the objections raised by the petitioner against the re-opening of the assessment for the assessment year 2006-2007 under Section 147 of the Act. The court held that the re-opening of the assessment was based on a mere change of opinion and that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment.
Fact of the Case:
The petitioner, a domestic private limited company, filed a writ petition seeking to quash the notice issued under Section 148 of the Income Tax Act, 1961, and the consequential proceedings rejecting the objections raised against the re-opening of the assessment for the assessment year 2006-2007 under Section 147 of the Act. The petitioner had previously filed appeals against the assessment order, and the question of entitlement to claim deduction under Section 80IB(10) of the Act was pending before a Division Bench of the Court.
Finding of the Court:
The court found that the re-opening of the assessment was based on a mere change of opinion and that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. The court held that the assumption of jurisdiction under Section 147 of the Income Tax Act, 1961, after the expiry of four years from the end of the relevant assessment year, was illegal and invalid.
Issues: The issues involved in the case were the validity of the notice issued under Section 148 of the Income Tax Act, 1961, and the consequential proceedings rejecting the objections raised by the petitioner against the re-opening of the assessment for the assessment year 2006-2007 under Section 147 of the Act.
Ratio Decidendi: The court's decision was based on the finding that the re-opening of the assessment was a mere change of opinion and that there was no failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment. The court also emphasized that the assumption of jurisdiction under Section 147 of the Act, after the expiry of four years from the end of the relevant assessment year, was illegal and invalid.
Final Decision: The court allowed the writ petition and quashed the impugned notice issued under Section 148 of the Income Tax Act, 1961, and the consequential proceedings rejecting the objections raised by the petitioner against the re-opening of the assessment for the assessment year 2006-2007 under Section 147 of the Act.
Heard the learned counsel appearing for the petitioner and the learned counsel appearing for the respondent.
2. This writ petition has been filed praying that this Court may be pleased to issue a Writ of Certiorari to call for and quash the impugned notice, dated 1.3.2011, issued under Section 148 of the Income Tax Act, 1961, (hereinafter referred to as `the Act') and the consequential proceedings, dated 25.11.2011, issued by the respondent, rejecting the objections raised by the petitioner, against the re-opening of the assessment, in respect of the assessment year 2006-2007, under Section 147 of the Act.
3. It has been stated that the petitioner is a domestic private limited company, engaged in the business of construction of residential/commercial complexes. The petitioner company had filed its return of income for the assessment year 2006-2007 admitting a total income of Rs.2,65,46,989/-. The return of income, filed by the petitioner company, had been processed, under Section 143(1) of the Act.
4. It had been further stated that the respondent, after scrutinizing the entire records, including the agreement, had completed the assessment, by an order, dated 5.12.2008, issued under Section 143(3) of the Act, disallowing the entire exemption relating to the deduction, under Section 80IB(10) of the Act. Aggrieved by the said order, the petitioner company had filed a first appeal, before the Commissioner of Income Tax (Appeals), who had confirmed the order of the respondent. Thereafter, the petitioner company had filed a further appeal, before the Income Tax Appellate Tribunal. The Income Tax Appellate Tribunal had passed an order, dated 31.3.2009, in ITA No.156/08-09, partly allowing the appeal. The Commissioner of Income Tax had filed an appeal against the said order, under Section 260A of the Act, before this Court, in T.C.No.1060 of 2010, and the said case is still pending on the file of this Court. As such, the question as to whether the petitioner company is entitled to claim deduction, under Section 80IB(10) of the Act, is to be decided by a Division Bench of this Court. While so, the respondent had issued a notice, under Section 148 of the Act, to the petitioner company, in respect of the assessment year 2006-2007. The said notice, dated 1.3.2011, had been received by the petitioner company, on 4.3.2011.
5. It has been further stated that, in response to the notice, dated 1.3.2011, issued by the respondent, under Section 148 of the Act, the petitioner company had filed a letter, dated 7.3.2011, requesting the respondent to furnish the reasons to believe that the income of the petitioner liable to tax, had escaped assessment, within the meaning of Section 147 of the Act.
6. It has been further stated that the respondent, by a letter, dated 17.3.2011, had furnished the reasons for the re-opening of the assessment, in respect of the assessment year 2006-2007. From the reasons given by the respondent it is clear that there is no fresh tangible material that had come into the possession of the respondent, warranting the re-opening of the concluded assessment. Thereafter, the petitioner company had submitted a detailed reply, dated 18.3.2011, requesting the respondent to drop the proceedings, as there was no reason to believe that the income liable to tax had escaped assessment.
7. The petitioner company had requested the respondent to decide the preliminary issue relating to the aspect of jurisdiction of the respondent to re-open the concluded assessment, under Section 148 of the Act. However, the respondent, without dealing with the issue relating to the jurisdiction, had passed the impugned order, dated 25.11.2011, holding that the proceedings, under Section 147 of the Act, had been initiated correctly and properly, and had issued a notice, under Section 143(2) of the Act, dated 25.11.2011, fixing the date of hearing as 5.12.2011. In such circumstances, the petitioner has preferred the present writ petition, befo
