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TMI Blog2009 (12) TMI 543X X X X Extracts X X X X X X X X Extracts X X X X ..... ected for scrutiny and queries were raised from time to time by the Assessing Officer during the course of the assessment proceedings which were duly replied to by the petitioner to the satisfaction of the Assessing Officer. On providing the necessary details, clarification and information to the Assessing Officer, the assessment with respect to these assessment years were completed under section 143(3) of the Act. The assessments were completed as per section 115JA of the Act. 3. The respondent thereafter issued the impugned show-cause notices under section 147/148 of the Act dated March 25, 2004, March 30, 2005 and March 8, 2004. On asking for the reasons for initiation of reassessment under section 147 of the Act, the petitioner was supplied the following reasons : "M/s. Satnam Overseas Ltd.-Assessment year 1997-98The return of income in this case was filed by the assessee on November 30, 1997 and the same was processed under section 143(1)(a) on July 31, 1998. Subsequently, the case assessed under section 143(3) on December 30, 1999, at income of Rs. 4,14,35,318 under section 115JA, the income returned by the assessee. Perusal of the case record re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shown at Rs. 76,053 quintals meaning thereby that the value of closing stock of 76053 quintals of paddy at 1416 per quintal works out to Rs. 1,076 crores. Therefore, closing stock of rice worked out Rs. 92.51 crores(9,103.27 crores-10.76 crores). The quantity of rice in the closing stock was shown at 225481 quintals. Therefore, the per quintal value of rice in the closing stock worked out to Rs. 4,102 (92.51 crores/225481). During the year consideration, the assessee-company has shown sale of 1287924 quintals of rice value at Rs. 260.16 crores meaning thereby that the average selling rate of rice was Rs. 2,019 per quintal. Therefore, there is a large difference between the average selling rate 920190 and average closing rate Rs. 4102 during the year under con- sideration. The assessment records of the assessee-company for the assessment year 1999-2000 has also been examined from where it was observed that the assessee-company had sold 1516110 quintals of rice at a value of Rs. 293.75 crores which means that the average selling rate of rice per quintal is Rs. 1,937 only (Rs. 293.75 crores/1516110 quintals). It is very surprising that again the assessment year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of such assets also which were acquired by the assessee and put to use for business purposes for less than 180 days. As per the Income-tax Rules, the depreciation of such assets is allowed at 50 per cent. of the corresponding rates applicable. This resulted in excess depreciation being allowed to the assessee and consequential effect of income chargeable to tax escaping assessment. Further, it is also seen that the assessee was inadvertently allowed deduction on account of deposits made in respect of employees contribution towards the PF and ESI schemes, which were deposited beyond the due date stipulated for the purpose in the respective statutes. However, as per the Income-tax Act, the same will be deemed to be income of the assessee-company in view of section 36(1)(va) read with section 24(2)(x). The record also reveals that the assessment has been allowed excess claim in respect of deposits of employees contribution to PF and ESI which should have been added back to the income of the assessee. The abovementioned inadvertent allowance in turn resulted in excess allowance of deductions claimed under sections 80HHC and 80-IA. In view of the above facts, I have r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me as per return filed by the assessee has been made the subject of exces-sive relief under the Act. Issue notice under section 148 of the Income-tax Act, 1961." Yours faithfully (B. K. Gupta) Addl. Commissioner of Income-tax Range-7, New Delhi." 4. The learned senior counsel for the petitioner Mr. C. S. Aggarwal, senior advocate by referring to the reasons has urged that the reasons given for reopening of the assessments are unsustainable on account of the following reasons : (i) The assessment proceedings for the concerned years were duly completed under section 143(3) of the Act after detailed scrutiny by the Assessing Officer and which included raising of queries and giving satis-factory replies thereto by the assessee-company for the different assess-ment years, consequently, he urged that a reference to the aforesaid rea-sons given for seeking reassessment clearly only amounts to a change of opinion on the facts which were already existing, in the knowledge of and duly considered by the Assessing Officer and seeking reassessment is impermissible in law because on a mere change of opinion proceedings under section 147/148 cannot be initiated. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us through the various letters written to the Assessing Officer during the relevant assessment years pertaining to the claim of deductions under sections 80HHC and 80-IA as also the fact that now it is well settled law that even if there is delay in payment of contribution towards the PF and ESI schemes, if the same are deposited along with returns for the relevant assessment year, then, there is no default on the part of the assessee for claiming the deductions for payment made under the PF and ESI schemes. We may at this stage note that the counsel for the Revenue did not dispute this proposition of law. Mr. C. S. Aggarwal, learned counsel further argued that in view of the admitted fact that payments were made before the due date of filing returns and were thus permissible deductions under section 43B of the Act. The counsel furtherurged that it is not as if that issue has come up for the first time before the Assessing Officer and in a similar manner in the pre-ceding year the Assessing Officer has considered the allowability with respect to these claims made with regard to PF/ESI. Finally, the counsel has contended that the tax audit report is the basic document which was befo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gic/reasons given that sale price of stocks during the entire assessment year would remain constant is something which indeed confounds us. It cannot stand to reason that the price of sale of paddy/rice/pulses remained constant throughout the year so that on the basis of an average price of the closing stock the sale price for the entire year comprising of 12 months, 48 weeks and 365 days can be ascertained in that the same would have remained fixed throughout this period. Even assuming that this logic is correct, it was surely an exercise which the Assessing Officer could have done on the basis of materials which he is now presently seeking to do because the same very materials were available to him in the relevant assessment years and merely because the Assessing Officer feels that he has failed to do what he ought to have done cannot be a valid ground for seeking initiation of reassessment under section 147/148 of the Act. 7. So far as the issue of claiming depreciation on tarpaulin is concerned the learned senior counsel has referred to the correspondence specifically entered into in this behalf in the relevant assessment year 1999-2000 and particularly the letter dated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtain years by the counsel for the petitioner with regard to the date of issuing of the notice under section 147/148 of the Act and the date of the reasons recorded for reopening of the assessment and the date of seeking permission to reopen the assessment by the Assessing Officer from the higher authorities that the reasons for reopening of the assess-ment were subsequent to the date of the notice issued for reopening of the assessment and, therefore, the notices issued under section 147/148 must fail as reasons have been recorded subsequently. We are not going into this aspect of the matter because we have agreed with the writ petitioner and granted relief on other grounds as stated above that there was no valid basis for seeking reassessment under section 147/148 of the Act. 9. Therefore, we allow the present writ petition and quash the impugned notices dated March 25, 2004, March 30, 2005 and March 8, 2004 under section 148 of the Act and also direct that the respondents are prohibited from framing any reassessment under the provisions of section 147/148 of the Act on the basis of the reasons recorded as above stated and the impugned notice. The petitions are allowed wi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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