2020 (1) TMI 222 - HC - Income Tax

Reopening of assessment u/s 148 - whether the impugned proceedings are barred by limitation - primary and material particulars as far as deduction u/s 80IA - HELD THAT - In the present case, the petitioner has, admittedly, not defaulted in the filing of a return of income. Thus, the only condition to be satisfied by the revenue would be the establishment of the fact that there has been a failure by the assessee to make a full and true disclosure of material particulars. Adverting to paragraph 8 of this order setting out the reasons for re-assessment, I note that items (i) and (ii), have, admittedly, been considered by the Commissioner of Income Tax in his order under Section 263 dated 26.03.2010 and thus, it does not lie in the mouth of the Department to state that material particulars in regard to those two issues were not available on record. As far as deduction under Section 80IA, is concerned, a perusal of the proceedings commencing from the filing of return of income by the petitioner would reveal that all material particulars in respect of the claim under Section 80IA were available on file. If at all the Officer was of the view that the materials had been incomplete or did not support the claim adequately, it was for the Authority to have taken action in that regard even at the first instance and not by way of re-assessment. It is also relevant to state that the reasons for re-assessment commence with the phrase 'upon an examination of the return of income and other enclosures' . Thus, the proceedings for re-assessment are initiated based wholly on the materials available on record only and this is an admitted position. Proceedings for re-assessment are barred by limitation. I draw support in this regard on a judgment of the Supreme Court in the case of Assistant Commissioner of Income Tax, Mumbai and Others Vs. ICICI Securities Primary Dealership Ltd 2012 (8) TMI 754 - SC ORDER wherein, the Bench holds that the extended period of limitation cannot be availed by the Department when all primary particulars were, admittedly, available on file. Grant of depreciation on imported car, I find that this issue has not been challenged and the re-assessment on this score is thus confirmed. The writ petition is allowed to the extent indicated above.

Summary

Issues:
Challenge to order rejecting objections for reassessment jurisdiction under Income Tax Act, 1961 for Assessment Year 2004-05.

Analysis:
1. The petitioner, engaged in power generation and distillery business, filed returns claiming deduction under Section 80IA of the Act. The Assessing Officer issued notices and a questionnaire regarding the claim, which was later rejected in the assessment order.

2. The order was appealed at various levels, including the Tribunal, where deduction under Section 80IA was granted. This decision was affirmed by the High Court and the Supreme Court in a prior case involving the same petitioner.

3. Subsequently, a show cause notice was issued under Section 263 seeking to revise the order giving effect to the Tribunal's decision. The Commissioner confirmed the revision on certain points and remanded the issue to the Assessing Authority.

4. A notice under Section 148 was issued for reassessment, citing reasons such as incorrect forms filed, lack of separate accounts for the deduction unit, and improper depreciation claims.

5. Objections were filed based on the Gkn Driveshafts case guidelines, emphasizing the need for a speaking order on objections before proceeding with assessment.

6. The Assessing Officer overruled the objections, leading to the present writ petition challenging the jurisdiction assumed.

7. The legal question raised was whether the reassessment proceedings were time-barred under Section 147 of the Act, which allows a four-year limitation period for reassessment, extendable under specific conditions.

8. The Court noted that the only condition for extended limitation was the failure to disclose material facts. As the petitioner had not defaulted in filing returns, the revenue had to establish a failure in disclosure.

9. The Court found that the reasons for reassessment were based on available records and that all material particulars for the deduction claim were on file. Citing the Calcutta Discount Co. Ltd. case, the Court concluded that the reassessment was barred by limitation.

10. Relying on the ICICI Securities case, the Court held that when primary particulars were available, the extended limitation could not be invoked. Consequently, the reassessment concerning the deduction claim was quashed.

11. However, the reassessment regarding depreciation on an imported car was confirmed as it was not challenged. The writ petition was partially allowed, with costs not imposed.