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2023 Supreme(P&H) 3365
IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH
RITU BAHRI, MANISHA BATRA, JJ.
FCB Interface Communications Pvt. Ltd. – Petitioner
Versus
Assistant Commissioner of Income Tax – Respondent
CWP-22306 of 2019 (O&M)
Decided On : 13-04-2023
Mr. Arijit and Mr. Abhivadya Sood, Advocates; For the Petitioner
Ms. Pridhi Jaswinder Sandhu, Junior Standing Counsel; For the Respondent
Headnote:(A) Income Tax Act, 1961 - Sections 143(1), 143(3), and 148 - Notice issued under Section 148 for reassessment after four years held invalid as it did not meet statutory conditions required for such action - Re-assessment proceedings based solely on a change of opinion are not permissible after statutory time limit. (Paras 5, 16)
(B) Reassessment - Conditions for reopening assessment - It is essential that the Assessing Officer has reasons to believe that income has escaped assessment, coupled with the taxpayer's failure to disclose necessary material facts. (Paras 5, 16)
Facts of the case:
The petitioner sought to quash a notice for reassessment issued after four years regarding an assessment for AY 2012-13, asserting that no income had escaped assessment and that all facts were duly disclosed during the original assessment process.
Findings of Court:
The petitioner was found to have disclosed all pertinent information, and the re-assessment notice was issued purely on the basis of a change of opinion, which does not satisfy the requirements under the Act for reopening assessments after four years.
Issues: Whether the notice for reassessment was valid given that it was issued beyond the four-year stipulation and without just cause for claiming escaped income.
Ratio Decidendi: The Court determined that the initiation of reassessment after four years cannot be supported merely by a change of opinion, emphasizing the necessity for the fulfillment of statutory criteria for such action.
Result: Writ petition allowed; initiation of reassessment proceedings set aside.
| Table of Content |
|---|
| 1. petitioner's factual background and assessment details. (Para 2 , 3 , 4) |
| 2. legal basis for challenging reassessment. (Para 5 , 6 , 7 , 8 , 10) |
| 3. arguments based on disclosure of facts. (Para 9 , 11) |
| 4. judicial precedents relevant to re-assessment. (Para 12 , 13 , 15) |
| 5. court's conclusion on the merits of case. (Para 14 , 16 , 17) |
JUDGMENT
Ritu Bahri, J.
CM-7276-CWP-2022
Application is allowed and Annexures P-10 to P-30 are taken on record.
CWP-22306-2019
2. The petitioner is seeking writ of certiorari for quashing notice dated 30.03.2019 (Annexure P-1) issued under Section 148 of the INCOME TAX ACT , 1961 and order dated 10.07.2019 (Annexure P-2) disposing of the objections passed by the respondents in relation to assessment year 2012-13.
3. The petitioner company is engaged in the business of advertising and marketing communications. The petitioner filed its return for the assessment year 2012-13 on 28.09.2012 under Section 139(1) of the INCOME TAX ACT , 1961 (Annexure P-3). The petitioner's case was selected for scrutiny and during the proceedings several information/documents were sought from the petitioner by issuing notice under Section 143(2). The petitioner gave its written submission dated 20.02.2015 (Annexure P-4) alongwith relevant extracts of ledger account as well as sample invoices with respect to claim of 'Computer Supplies and related expenses', which formed part of the head 'Other Expenses'. The assessment proceedings were completed under Section 143(3) vide order dated 05.03.2015 (Annexure P-5).
4. After a period of 4 years i.e. on 30.03.2019, the respondents issued notice under Section 148 informing the petitioner that some income had escaped for the assessment and directed it to file a return. The petitioner, thereafter, filed return in response to notice under Section 148 electronically on 26.04.2019 (Annexure P-6). Vide letter dated 02.05.2019 (Annexure P-7), the petitioner was communicated the reasons for re-opening the assessment for the assessment year 2012-13. Pursuant to the said letter (Annexure P-7), the petitioner filed its objections dated 06.06.2019 as per the procedure laid down in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC) (Annexure P-8). The objections were rejected vide order dated 10.07.2019 (Annexure P-2) and, thereafter, proceedings for re-assessment had been initiated by way of notice under Section 143(2) dated 10.07.2019 (Annexure P-9) and in this backdrop, the present writ petition has been filed.
5. Learned counsel for the petitioner is seeking quashing of the impugned notice for reassessment on the ground that as per Section 143(3) of the Act, following two conditions are required to be satisfied for re-assessment:-
"1. the Assessing Officer must have reasons to believe that income chargeable to tax has escaped assessment; and
2. he must also have a reason to believe that such escapement occurred by reason of failure on the part of the assessee either:-
i. to make a return of income under Section 139 or in response to notice issued under sub-section (1) of section 142 or section 148; or
ii to disclose fully and truly all material facts necessary for his assessment for that purpose."
6. Learned counsel for the petitioner submits that re-opening of the assessment under Section 143(3) can only be done after the above said two conditions are fulfilled.
7. Learned counsel for the petitioner has argued that the scrutiny proceedings were finalized vide order dated 05.03.2015 (Annexure P-5) and a period of 4 years expired on 05.03.2019 and notice for re-assessment was issued on 30.03.2019 (Annexure P-1) i.e. beyond a period of 4 years. He has further argued that in the present case, there is no income which escaped assessment and no income escaped on the part of the failure of the assessee. Hence, proceedings initiated after 4 years are liable to be quashed. He has referred to the Division Bench judgment passed by this Court in CWP No. 6765 of 2013 titled as State
