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TMI Blog2014 (11) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act - the AO did follow the due procedure and recorded sufficient reasons – All the contentions of assessee kept open to be raised before AO - Decided against assessee. - WRIT APPEAL NO.5789/2013(T-IT) - - - Dated:- 29-4-2014 - MR. DILIP B.BHOSALE AND MR. B MANOHAR, JJ. FOR THE APPELLANT : SRI.NAGESWAR RAO, ADV FOR P.D.S.LEGAL ADVOCATE SOLICITORS FOR THE RESPONDENT : SRI.E.I.SANMATHI, ADVOCATE JUDGEMENT Dilip B. Bhosale J.- This writ appeal is placed before us for admission. We have heard learned counsel for the parties and with their assistance gone through everything to which our attention was drawn. 2. The appeal is directed against the order dated August 13, 2013, passed by learned single judge in W. P. No. 36150 of 2013 rejecting the writ petition filed by the appellant at the stage of admission. The writ petition was instituted by the appellant challenging the notice dated March 6, 2012, issued by the Deputy Commissioner of Income-tax, Circle-11 (5) (for short the Assessing Officer ) to the appellant-assessee under section 148 of the Income-tax Act, 1961 (for short the Act ). The assessee also challenged the notices dated January 3, 201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pepe Jeans, GAAP, etc. In the present appeal, we are concerned with assessment year 2006-07. During the assessment year, the assessee had filed return of income on November 27, 2007, showing their total income nil. Computation of income showing the net profit from business was ₹ 45,37,37,724. Out of this amount, the assessee had claimed an amount of ₹ 41,38,13,599 as deduction under section 10B of the Act. Further computation, by applying the provisions of the Act relates to the total profit from the business of ₹ 82,12,014 which had been set off with the carry forward business loss for the assessment year 2005-06. The return of income was processed under section 143(1) on September 22, 2007. 5.1. Thereafter, a survey under section 133A was conducted at the business premises of the assessee on November 5, 2009. Simultaneously, a survey was also conducted on the same day at the premises of M/s. Fibers and Fabrics International P. Ltd. which is a sister concern of the assesseecompany by the jurisdictional Assessing Officer. It was noticed that both the concerns were operated from the very same business premises situated at Industrial Area, Peenya, Bangalore. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (deduction under section 10B) Turnover FFIPL FFIPL (deduction under section 80HHC) 2003-04 ₹ 63.1 crores ₹ 2,25,30,978 2004-05 ₹ 166.1 crores ₹ 4,43,43,079 2005-06 ₹ 1.93 crores (jobwork) Company incorporated and no deduction claimed ₹ 237.08 crores As per Income-tax Act, 1961, deduction under section 80HHC ended. 2006-07 ₹ 155.4 crores ₹ 41.3 crores ₹ 150.9 crores 2007-08 ₹ 291.9 crores ₹ 51.04 crores ₹ 20.24 crores 2008-09 ₹ 339.2 crores ₹ 128.39 crores ₹ 1.89 crores 2009-10 ₹ 428.42 crores ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fically mentions that the assessee should be able to fulfil all the conditions to become eligible for deduction under that section. But it is noted here that there is a reconstruction of business of FFIPL under the new name of JKPL and also transfer of old plant and machinery form FFIPL to JKPL. Thus, the assessee company fails to fulfil the conditions required to claim the deduction under section 10B. Hence, it is not eligible for the claim of deduction of ₹ 41,38,13,599 under section 10B. 7. This order, according to the learned counsel appearing for the assessee, is without jurisdiction. He submitted that it is based on the statements made under section 131 by Sri Sreedhar and Sri Nagesh which were retracted by them subsequently. It was urged that a notice under section 148 of the Act issued on the basis of the retracted statements is bad in law. Similar submissions were advanced by the learned counsel appearing for the assessee before learned single judge, which, in our opinion have been dealt with in accordance with law. As a matter of fact, we do not find any reasons to interfere with the order passed by learned single judge for more than one reason. Firstly, the lea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion, there is a rational and intelligible nexus between the reasons and the belief . . . 6. The next submission of the learned counsel for the petitioner that job work done by FFIPL for the petitioner, by itself and nothing more, cannot deprive the petitioner from claiming deduction under section 10B of the Act, is a pure question of fact that has to be decided based upon an enquiry. It is well settled law that it is for the authorities to lift the veil and ascertain the true nature of transaction that has taken place as between FFIPL and the petitioner, who claim to be sisterorganizations, carrying on identical business. It is useful to notice that FFIPL could not make any further claims for deduction under section 10B of the Income-tax Act after the period specified therein, whence the petitioner company was incorporated and two years thereafter purchased the machinery of FFIPL disclosing the value of the old machinery was less than 20 per cent. It is elsewhere said that tax planning may be legitimate provided it is within the framework of law. However, colourable devices cannot be part of tax planning. 7. The reasons assigned by the Deputy Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w of the reasons recorded by the Assessing Officer in the order dated January 3, 2013, and the order dated August 2, 2013, impugned in W. P. No. 36150 of 2013, from which the present writ appeal arises. As observed earlier, on the face of it, the reasons recorded by the Assessing Officer, in our opinion, are sufficient to issue notice under section 148 of the Act. In any case, as tried to be contended on behalf of the appellant-assessee it would not be possible in writ jurisdiction under article 226 of the Constitution of India to reassess the entire material to reach a conclusion other than the one recorded by the learned single judge in both the orders, impugned in the present appeal. 11. The Supreme Court in Calcutta Discount Co. Ltd. (supra) held that the condition precedent to exercise of jurisdiction under section 34 of the Income-tax Act (old Income-tax Act, 1922) did not exceed and the Incometax Officer had, therefore, no jurisdiction to issue the impugned notices under section 34 in respect of the years 1942-43, 1943-44 and 1944-45 after the expiry of four years. In the facts of the present case, in our opinion, this judgment is of no avail to the appellant-assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he formation of the belief. In GKN Driveshafts (India) Ltd., the Supreme Court, while dealing with the notice issued under section 148 of the Act, made the following observations, which read thus : By the order under challenge, a Division Bench of the High Court at Delhi (see [2002] 257 ITR 702) dismissed the writ petition filed by the appellant challenging the validity of notices issued under sections 148 and 143(2) of the Income-tax Act, 1961. The High Court took the view that the appellant could have taken all the objections in its reply to the notices and that, at that stage, the writ petition was premature. Accordingly, the writ petition was dismissed on January 31, 2002. Aggrieved by that order, the appellant is in appeal before us. Mr. M. L. Verma, learned senior counsel appearing for the appellant, submits that the impugned notices relate to seven assessment years ; that during the pendency of these appeals. In respect of two assessment years, viz., 1995-96 and 1996-97, assessment has been completed against which appeals have been filed. Notices relating to the other five assessment years, viz., 1992-93, 1993-94, 1994-95, 1997-98 and 1998-99, are now ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icle 226 of the Constitution when he had adequate remedy open to him by an appeal to the Commissioner of Income-tax (Appeals). The remedy under the statute, however, must be effective and not a mere formality with no substantial relief. In Ram and Shyam Co. v. State of Haryana [1985] 3 SCC 267, this court has noticed that if an appeal is from Caesar to Caesar s wife the existence of alternative remedy would be a mirage and an exercise in futility. In the instant case, neither has the assessee-writ petitioner described the available alternate remedy under the Act as ineffectual and non-efficacious while invoking the writ jurisdiction of the High Court nor has the High Court ascribed cogent and satisfactory reasons to have exercised its jurisdiction in the facts of instant case. 12. Thus, in view of the law laid down by the Supreme Court, the only remedy open to the appellant-assessee, in the facts and circumstances of the case and more particularly in view of the detailed reasons recorded by the Assessing Officer dated August 2, 2013, while dealing with all objections/contentions urged on behalf of the appellant-assessee including the question of jurisdiction to issue notice u ..... X X X X Extracts X X X X X X X X Extracts X X X X
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