2013 (3) TMI 329 - HC - Income Tax

Re opening of assessment - non-eligibility of deduction u/s 80IA - Held that - As decided in assessees own case in NTPC LTD. Versus DCIT & OTHERS 2013 (1) TMI 219 - DELHI HIGH COURT the entire process of generation of electricity, both by the gas turbine unit and the steam turbine unit, has been explained by the petitioner in great detail in the assessment proceedings which has been taken notice of by the AO. Also in this case it was not as if it was a fact or a figure hidden in some books of accounts which the AO could have, with due diligence, discovered but had not done so. Therefore, this is not a case where the assessee/ petitioner can be said to have failed to disclose fully and truly all material facts necessary for assessment. Petitioner had paid tax on the generation income by grossing up the rate of tax instead of grossing up the income. The rate of grossed up tax is 62.60162% as against the normal rate of 38.50% 35% tax 10% surcharge - By virtue of either method, the total tax payable by NTPC, as per the assessment order would come to same. Therefore, this is a clear case where no income has escaped assessment - in favour of assessee.

Summary

Issues:
1. Reopening of concluded assessments under Section 147 of the Income Tax Act, 1961 through notices issued under Section 148.
2. Consideration of the proviso to Section 147 for assessments beyond four years.
3. Full and true disclosure of material particulars for assessment.
4. Change of opinion impermissibility in law for reopening assessments.
5. Application for approval before the Committee On Disputes affecting re-assessment orders.
6. Grossing up issue in the assessments.

Analysis:

1. The judgment pertains to writ petitions challenging the reopening of concluded assessments under Section 147 of the Income Tax Act, 1961 through notices issued under Section 148. The petitions relate to assessment years 1999-2000, 2001-02, 2002-03, and 2003-04, with notices issued on 03.02.2006.

2. For the assessment year 1999-2000, the proviso to Section 147 regarding reopening after four years is considered. A detailed judgment in a previous case (WP(C) 14562/2006) concluded that there was no failure to disclose material particulars, rendering the proposed reopening impermissible beyond four years due to a mere change of opinion.

3. The court emphasized the full and true disclosure of material facts necessary for assessment, highlighting that the revenue's attempt to change its opinion was impermissible in law. This aspect was crucial in determining the validity of the notices issued under Section 148.

4. The judgment addressed the argument that the present petitions were distinct from the earlier case, emphasizing that the issue of change of opinion was relevant for both assessments beyond and within four years. The material facts and reasons for reopening assessments were found to be identical, leading to the quashing of the impugned notices.

5. An additional point raised concerned an application for approval before the Committee On Disputes, affecting the legality of the re-assessment orders. The argument was based on the relevant date of dispatch of the orders post-application submission, aligning with the Supreme Court's decision in ONGC Vs. Collector of Central Excise.

6. Despite the additional points raised, the court found it unnecessary to delve into those aspects as the present writ petitions were entirely covered by the previous decision in WP(C) 14562/2006. The judgment also addressed and resolved the grossing up issue raised in the assessments, ultimately allowing the writ petitions and quashing the impugned notices and proceedings.

This comprehensive analysis of the judgment highlights the various legal issues, arguments presented, and the court's reasoning leading to the decision to quash the notices and proceedings in question.