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TMI Blog2015 (5) TMI 222X X X X Extracts X X X X X X X X Extracts X X X X ..... n as INEOS ABS (India) Ltd. (2012 (5) TMI 133 - Gujarat High Court), to the facts of the case on hand and as observed hereinabove, there does not appear to be failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, the initiation of the impugned reassessment proceedings which are initiated beyond the period of four years, are not permissible and the same cannot be sustained and on that ground alone, the impugned reassessment proceedings deserve to be quashed and set aside. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 187 of 2015 - - - Dated:- 7-4-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ FOR THE PETITIONER : MR RK PATEL, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.00. By way of this petition under Article 226 of the Constitution of India, the petitioner - assessee has prayed for appropriate writ, order and/or direction to quash and set aside the impugned notice issued under section 148 of the Income Tax Act, 1961 dated 23/1/2014 for the A.Y. 2009-2010, by which the Assessing Officer has reopened the assessment for the A. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Office has reopened the assessment for A.Y. 2009- 2010. At the request of the assessee, Assessing Officer, vide communication dated 22/7/2014 has served the assessee reasons recorded for reopening of the assessment for A.Y. 2009-2010. 2.04. To the aforesaid, the assessee raised objections which have been overruled / rejected by the Assessing Officer, vide communication dated 28/10/2014. Hence, the petitioner has preferred the present Special Civil Application under Article 226 of the Constitution of India requesting to quash and set aside the impugned reassessment proceedings for A.Y. 2009-2010. 3.00. Mr.R.K. Patel, learned advocate appearing on behalf of the petitioner - assessee has vehemently submitted that initiation of the impugned reassessment proceedings for A.Y. 2009-2010 which is beyond 4 years, is absolutely illegal, invalid and without jurisdiction. 3.01. Mr.R.K. Patel, learned advocate appearing on behalf of the petitioner - assessee has further submitted that in the present case, reassessment proceedings have been initiated after a period of four years. It is submitted that therefore, escapement of income must also be occasioned by a failure on the part o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - assessee has also heavily relied upon the decision of the Division Bench of this Court in the case of Lanxess ABS Limited Now known as INEOS ABS (India) Ltd. Versus Dy. Commissioner of Income Tax, rendered in Special Civil Application No.17530 of 2011 in support of his prayer to quash and set aside the impugned reassessment proceedings. By making above submissions and relying upon the above decisions, it is requested to allow the present Special Civil Application and quash and set aside the impugned reassessment proceedings. 4.00. Present petition is opposed by Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue. 4.01. An Affidavit-in-reply is filed on behalf of the respondent justifying the reopening of the assessment for the A.Y. 2009-2010 in exercise of powers under section 147 read with section 148 of the Income Tax Act. 4.02. Mr.M.R. Bhatt, learned counsel appearing on behalf of the revenue has vehemently submitted that as such the present petition is filed at premature stage, as only a notice under section 148 read with section 147 of the Income Tax Act has been issued. It is submitted that in the event the petitioner assessee is aggrieved by the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 147 read with section 148 of the Income Tax Act. 5.02. It is required to be noted that in the present case initiation of reassessment proceedings is beyond 4 years from the relevant assessment year. Therefore, unless and until it is observed and found that the income has escaped assessment due to the failure on the part of the assessee to disclose truly and fully all material facts for the assessment, the Assessing Officer is not authorized to make reassessment even in the event of his having reasonable belief that any income chargeable to tax has escaped assessment for any assessment year. 5.03. As per the first proviso to section 147, assessment can be reopened under section 147 after expiry of 4 years only if (1) assessee failed to make a return under section 139 or in response to the notice under section 142(1) or under section 148 and he failed to disclose truly and fully all material facts necessary for the assessment. Once the case of the assessee is covered by the first proviso to section 147, reassessment proceedings beyond the period of four years from the end of the relevant assessment year would be without jurisdiction and bad in law, if all material facts ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lusive method of accounting, the unutilized balance of Cenvat Credit relating to the relevant Previous Year amounting to 16,68,767/- (Closing Balance: R5.39,53,913/- less Opening Balance: ₹ 22,85,146/-) was required to be part of the closing stock in terms of 145. But the same was not considered for computation of income and the income was arrived at without including the unutilized cenvat credit. Non-observance of the provisions of Section 145A of the Act resulted in under-assessment of income of ₹ 16,68,767/-. In view of the above facts, I have reason to believe that income chargeable to tax has escaped assessment within the meaning of section 147 of the Act. As per the provisions of section 149(l)(b), the income chargeable to tax, which has escaped assessment for the AY 2009- 10 is likely to amount more than ₹ 1 lakh. The assessee has also not made full and true disclosure of all material facts necessary for his assessment 5.06. Thus, from the aforesaid it appears that the assessment for the A.Y. 2009-2010 is sought to be reopened on the ground that since the assessee followed exclusive method of accounting system and unutilized balance of Cenvat credit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment. Under the circumstances, now, the reasons to reopen the assessment can be said to be a mere change of opinion. Therefore, when there was no failure on the part of the assessee to disclose truly and fully all material facts necessary for assessment, condition precedent for initiation of reassessment proceedings under section 147 of the Income Tax Act beyond the period of four years are not satisfied. 5.10. Identical question came to be considered by the Division Bench of this Court in the case of decision of this Court in the case of Niko Resources Ltd. Versus Assistant Director of Income Tax, reported in (2014) 51 Taxman.com 568 (Gujarat) and while considering the scope and ambit of powers to be exercised under section 147 of the Income Tax Act by the Assessing Officer, while reopening the assessment beyond the period of 4 years, the Division Bench of this Court while considering its decisions in the case of Gujarat Lease Financing Limited (supra), has observed and held in paragraph Nos.16, 17 and 27 as under :- 16. The Assessing Officer is authorized to make reasses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... permissible after lapse of 4 years from the end of the relevant assessment year unless income chargeable to tax has escaped assessment on account of failure on the part of the assessee to disclose fully and truly all material facts necessary for the purpose of such assessment. The onus is on the assessee to reveal the primary facts and to draw the inferential facts would be the responsibility of the Assessing Officer. Once having revealed from the record that the assessee disclosed full and complete facts and on scrutiny, at the time of original assessment all these details are examined, no change of opinion is permissible merely because there was some error earlier on the part of the Assessing Officer himself or because he choose not to opine on the issue or even when he changes his mind and interprets the material or law otherwise than what was done by him. 5.11. Identical question came to be considered by the Division Bench of this Court in the case of Heavy Metal and Tubes Limited (supra) and in identical facts and circumstances of the case, the Division Bench quash and set aside the reassessment proceedings which were sought to be initiated on the very grounds on which the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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