JUDGMENT :

(Prayer: Writ Petition filed under Article 226 of the Constitution of India praying to issue a Writ of Certiorari, calling of records of the respondent herein pertaining to notice dated 10.03.2016 for AY 2009-2010 and consequential communication No.Misc/Corp.Cir 6(2)/2014-15 dated 26.9.2016, issued by the respondent and quash the same.)

1. The reopening of assessment made under Section 147/148 of the Income Tax Act, 1961 [hereinafter referred to as the ‘Act’] is under challenge in the present writ petition.

2. The petitioner is a company incorporated under the Companies Act, 1956. The petitioner has been in the business of manufacturing of automobile parts and is a leading supplier to Companies such as Hyundai for over fifteen years. On 28.09.2009, the petitioner filed its return for the Assessment Year 2009-10. Notice under Section 142(1) of the Act was issued on 14.11.2011 along with the questionnaire. The petitioner furnished all the material information’s and disclosed such information truly and fully. The case was referred to the Transfer Pricing Officer on 06.12.2012, which was cleared by the Transfer Pricing Officer and no adjustments were made. Finally, an order of assessment for the Assessment Year 2009-10 was passed, accepting the income declared by the petitioner and consequently, the tax assessed was also paid.

3. While so, a notice under Section 148 of the Act was issued, reopening the assessment, stating that the income chargeable to tax for Assessment Year 2009-10 has escaped assessment. The petitioner requested for reasons and reasons were furnished by the respondents. The petitioner submitted its objections in detail and the order impugned, disposing of the objections was communicated to the writ petitioner. Thus, the petitioner is constrained to move the present writ petition.

4. The learned counsel for the petitioner relied on the 12th Annual Report of the petitioner, wherein the Directors have opted for AS 11 (Accounting Standards) Amendment Rules, 2009, for accounting the difference arising on reporting of long term foreign currency monetary items effect of Exchange loss on ECB loans. As a result, there is a change in Accounting Policy, which is within in the statutory regulations. The said Annual Report further provides Profits and Loss Account as on 31.03.2009, wherein the details of unsecured loan is also stated clearly with reference to Export Import Bank of Korea and Korea Exchange Bank, Bahrain Branch. The total outstanding was stated as Rs.46,99,00,080/- and further, in the said report, the petitioner has clearly mentioned in the notes as follows:

“Note:

1. Additions to Plant & Machinery includes ECB Loans “Exchange Loss” of Rs.46,99,80,000 minus previous year’s Gain of Rs.9,18,72,530 in accordance with AS 11 Amendment Rules 2009 adjustments/Deletion of Rs.4,16,36,806 shown above, includes assets discarded of valueRs.2,13,70,551.”

5. Therefore, the initiation of reopening proceedings beyond the period of four years in the case of the writ petitioner is directly in violation of the proviso clause to Section 147 of the Act.

6. The 12th Annual Report dated 07.09.2009 further speaks about Foreign Exchange Translation, Foreign Currency Transactions, and also Fixed Assets Deletion. The findings in the Annual Report verbatim is the reasons furnished for reopening of assessment. Under the head of Foreign Currency Transactions, the petitioner has stated as follows:

“Foreign Currency Transactions:

The Company has opted for accounting the difference arising on reporting of long term foreign currency monetary items in line with Companies (Accounting Standards) Amendment rules, 2009 on Accounting Standard 11 (AS 11) notified by Ministry of Corporate Affairs, Government of India on 31st March, 2009. Accordingly, the effect of exchange losses aggregating Rs.4699.80 Lakhs on ECB’s are added to the cost of dep