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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 ..... nafter referred to as the Act). In the writ petition, it is prayed for quashing of the impugned notices dated March 25, 2004 (assessment year 1997-98), March 30, 2005 (assess- ment year 1998-99) and March 8, 2004 (assessment years 1999-2000 and 2000-01) issued under section 148. Further orders are sought with respect to prohibiting the respondent from framing the reassessment under the provisions of section 147/148 of the Act. 2. The petitioner-company is engaged in the business of manufacturing of rice and also trades in pulses, rice, etc. It is also engaged in the export of rice, pulses, etc. For the assessment years in question, the petitioner had filed its return of income. The case was thereafter selected 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al to initiate proceedings under section 147 in the case of M/s. Satnam Overseas Ltd.-Assessment year 1998-99-Regarding. Kindly find enclosed herewith the prescribed pro forma in the abovementioned case. For the assessment year 1998-99, the assessment records of the assessee-company has been examined and it was observed that it had consumed 541565 quintals (value of Rs. 76.73 crores) of paddy for the production of rice during the year under consideration. Therefore, the average rate of paddy consumed works out to Rs. 1,416 perquintal. In the closing stock the assessee had shown rice and paddy together at a value of Rs. 103.27 crores. The closing stock of paddy was 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2005 wherein you have sought the reasons for issue of notice under section 148 of the Income-tax Act. As per the order sheet entry dated March 8, 2004, the reasons for issue of notice under section 148 are as under : "In the instant case, the return of income was filed on December 30, 1999. Subsequently, the same was assessed under section 143(3) on March 22, 2002 by the then Assessing Officer at income of Rs.132.02 lakhs. Perusal of the record revealed that in the order under section 143(3) dated March 22, 2002, the assessee was inadvertently allowed depreciation at 100 per cent. of the rates applicable in respect 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, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any in view of section 36(1)(va) or section 24(2)(x). The record also reveals that the assessee has been allowed excess relief in respect of deposits of employer's 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 deductions claimed under sections 80HHC and 80-IA. In view of the above facts, I have reason to believe that income has escaped assessment within the meaning of Explanation 2(c)(iii) of proviso to section 147 of the Income-tax Act, 1961, since, the income 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there cannot be a reassessment merely because the Assessing Officer failed to do what he ought to have done from obvious facts and material which were available before him. So far as the reasons given for the year 1998-99 of the average price of paddy/rice the same argument has been urged by the counsel. With respect to the reasons for the assessment years 1999-2000 and 2000-01, learned senior counsel contended that these aspects were very much considered by the Assessing Officer before passing the assessment order under section 143(3) of the Act. He took 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, lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing the relevant assessment years and also scrutinized by the Assessing Officer before passing the orders under section 143(3) is the basis for seeking reopening of the assessment. Further, the new logic, rationale and opinion which has been formed by the Assessing Officer for seeking reopening of the assessment is nothing but a change of opinion and a new approach to the existing facts and material which the Assessing Officer could well have done during the regular assessment proceedings of the relevant assessment years. Not only this, the rationale/logic/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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Assessing Officer such as valuation of stock and allowing of the claim of expenditure/contribution towards PF and ESI.Once all these aspects were considered and also ought to have been considered from the obvious material available on record which was duly done and brought to the notice of the Assessing Officer, we do not feel that there is any scope for reassessment proceedings under section 147 of the Act by issuing of notice under section 148 thereof. 8. We may for the purposes of the record state that it was sought to be canvassed for certain 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 petition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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