2024:BHC-OS:1712-DB Digitally signed by SHAMBHAVI S NH ILA EM SB HHAVI

1/10 412-oswp-243-2022.doc NILESH SHIVGAN SHIVGAN Date:

2024.01.31

19:4 5:30 IN THE HIGH COURT OF JUDICATURE AT BOMBAY +0530 ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.243 OF 2022 Everest Kanto Cylinder Ltd.

A Public Limited Company, incorporated under the provisions of The Companies Act, 2013 (erstwhile 1956), Having its registered office at

204, Raheja Centre, 214, Free Press Journal Marg, Nariman Point, Mumbai 400 021, Maharashtra PAN No.AAACE0836F …Petitioners Versus

1. Union of India Ministry of law, Ayakar Bhavan, M.K.Road, Mumbai-400 020.

2. Deputy/Assistant Commissioner of Income Tax-3(4), Mumbai World Trade Centre-1, Cuffe Parade, Mumbai, Maharashtra-400005 Email: Mumbai.dcit3.4@incometax.gov.in

3. Assistant Commissioner of Income Tax, LTU Circle-1, Mumbai Having his office at Maharishi Karve Road, Churchgate, Mumbai, Maharashtra-400020 Email: Mumbai.dcit.ltul@incometax.gov.in 4. Assistant Commissioner of Income Tax, LTU Circle-2, Mumbai Having his office at World Trade Centre-1, Cuffe Parade, Mumbai, Maharashtra 400005.

Email: Mumbai.dcit.ltu2@incometax.gov.in ..Respondents Mr. P. J. Pardiwalla, Senior Advocate, with Ms. Aarti Sathe, i/b Ms.

Aasavari Kadam, for Petitioner.

Mr. Suresh Kumar, for Respondents-Revenue.

CORAM: K. R. SHRIRAM &

DR.NEELA GOKHALE, JJ.

DATED: 29th January 2024 Oral Judgment:- (Per K.R.Shriram, J.)

1. Rule. Rule made returnable forthwith. By consent, taken up for final hearing.

2. Petitioner has impugned notice dated 27^th March 2021 issued under Section 148 of the Income Tax Act, 1961 (“Act”) and also the order dated 30^th November 2021 rejecting Petitioner’s objections.

3. Petitioner had filed its return of income on 30^th November 2015 for Assessment Year (“AY”) 2015-16 declaring loss of Rs.84,81,34,368/- under normal provision of the Act and book loss of Rs.75,29,01,959/- under Section 115JB of the Act. The case was selected for scrutiny and assessment order for AY 2015-16 under Section 143(3) of the Act was passed on 25^th December 2018 with assessed loss under the normal provisions of the Act at Rs.82,62,66,577/- and book loss under Section 115JB of the Act at Rs.74,88,93,282/-.

4. Subsequently, Petitioner received the impugned notice dated 27^th March 2021 under Section 148 of the Act alleging escapement of the income assessable to tax for AY 2015-16. The reasons were recorded in a communication dated 17^th November 2021 and the reasons read as under:

"2. Subsequently on perusal of the records it was observed that the assessee had debited certain expenditure which was not allowable as per different provisions under Income Tax Act:

a. Form 3CD (Annexure V) showed delayed remittance of Employees contribution to Employees Provident Fund on one occasion viz.

Rs.3,47,819/- (Due date 20 Sep. 2014, Actual date 01 Oct 2014).

b. Rs.65,00,000/- has been debited under the head Consultancy for project. It should be part of the Capital Work in progress of the project and not part of the P&L as it is not in the nature of revenue expense.

c. Rs.11,08,024/- has been debited under Registrar and Share Transfer agent fees. It was to be treated as capital expenditure instead of revenuè expenditure.

Thus, allowance of above three expenses resulted in aggregate under assessment of Rs.79,55,843/- (3,47,819+65,00,000+11,08,024).

2.1 Therefore I am of the view that income to the extent of amount of Rs.79,55,843/-, as explained above, has escaped assessment.

2.2 Further, it was observed that the Independent auditor had expressed its Qualified opinion on the Investment of Rs.69,25,07,000/- (Equity shares: Note-18 of Financials) in the assessees fully owned subsidiary in China M/s EKC Industries (Tianjin) C. Ltd. It mentioned that the investee company had significant accumulated losses and its value had substantially eroded and also that they were unable to comment upon its impact on the assessees financials, in the absence of appropriate evidences.

Note-17 also ind