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TMI Blog2015 (5) TMI 278X X X X Extracts X X X X X X X X Extracts X X X X ..... 148 for reassessment. Considering the aforesaid facts and circumstances of the case, we are of the opinion that the initiation of the reassessment proceedings is nothing but a mere change of opinion by the Assessing Officer and as per the catena of decision of this Hon'ble Court the impugned notice under section 148 of the Act to reopen the assessment even within a period of four years is not permissible, but deserves to be quashed and set aside. - Decided in favour of assessee. - SPECIAL CIVIL APPLICATION NO. 1118 of 2015 - - - Dated:- 29-4-2015 - MR. M.R. SHAH AND MR. S.H.VORA, JJ FOR THE APPELLANT : MR B S SOPARKAR, ADVOCATE FOR THE RESPONDENT : MR NITIN K MEHTA, ADVOCATE JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1. By way of this petition under Article 226 of the Constitution of India, the petitioner has prayed to quash and set aside the impugned notice under section 148 of the Income Tax Act (for short the Act ) dated 27.3.2014 issued by the respondent herein, by which the assessment for AY 2009-2010 is sought to be reopened in exercise of powers under section 147 of the Act. 2. That by impugned notice at Annexure A to the petition, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d. It is submitted that therefore, when the reassessment proceedings are initiated solely on change of opinion , the same is not permissible and therefore, the impugned notice to reopen the assessment for AY 2009-2010 is invalid and deserves to be quashed and set aside. 3.4 Shri Soparkar, learned advocate appearing on behalf of the petitioner has heavily relied upon the decision of the Division Bench of this Court in the case of Cliantha Research Ltd. Vs. Deputy Commissioner of Income Tax, Ahmedabad Circle - I reported in [2013] 35 taxmann.com 61 (Gujarat) as well as the decision of the Division Bench of this Court in case of Classic Network Ltd. Vs. Deputy Commissioner of Income Tax, Circle -1 reported in [2014] 45 taxmann.com 234 (Gujarat) in support of his above submissions and in support of his prayer to allow the present Special Civil Application and to quash and set aside the impugned notice of the reassessment proceedings. 4 Present petition is opposed by Shri Nitin Mehta, learned advocate appearing on behalf of the revenue. An Affidavit-inreply is filed opposing the present Special Civil Application and justifying the initiation of the reassessment proceedings. 4. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... chnical service or not. It is submitted that therefore, when they have reasoned to believe that the amount of income has escaped assessment and they have formed an opinion and by recording reasons when the reassessment proceedings have been initiated, the same is absolutely just and proper. It is submitted that in view of the above, it cannot be said that the reassessment proceedings have been initiated, which is on change of opinion by the Assessing Officer. 4.2 It is submitted that therefore, in the facts and circumstances of the case, none of the above decisions relied upon by Shri Soparkar, learned advocate appearing on behalf of the petitioner shall be applicable to the facts of the case on hand. 4.3 Making above submissions, it is requested to dismiss the present Special Civil Application with costs. 5 Heard learned advocates appearing on behalf of the respective parties at length. 5.1 At the outset, it is required to be noted that the reassessment proceedings have been initiated by the Assessing Officer and the assessment for AY 2009-2010 is sought to be reopened in exercise of powers under section 47 of the Act within a period of four years from the date of rele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quired to be deducted u/s 195 of the Act. Failure to do so resulted in wrong allowance of expenditure of ₹ 422.52 Iakh and consequent short levy of tax of ₹ 191.01 Iakh. 3. In view of the above {acted have reason to believe that the income chargeable to tax has escaped assessment. 5.2 Thus, from the aforesaid, it appears that the Assessing Officer has reopened the assessment for AY 2009-2010 on the ground that in view of the amended provisions w.e.f. 1976, the income was required to be treated as income accrued in India i.e. with respect to amount paid to 5 companies and one Bhupendra Singh and therefore, TDS was required to be deducted under section 195 of the Act and the petitioner asseessee failed to deduct the TDS on the aforesaid payment made to the 5 companies and Bhupendra Singh, which was required to be deducted under section 195 of the Act and therefore, the aforesaid expenditure was liable to be disallowed under section 40(a)(i) of the Act and therefore, failure to deduct the TDS on the payment made to the aforesaid 5 foreign companies and Bhupendra Singh had resulted into wrong allowance of expenditure of 422.52 lac and consequent short levy of tax of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t with respect to the amount paid to the aforesaid 5 companies as well as Bhupendra Singh, the income had accrued in India and there was a failure on the part of the assessee to deduct TDS on the aforesaid payment of expenditure and consequently, liable to be added into the income of the assessee by disallowing the expenditure under section 40(a)(i) of the Act. Now, subsequently, the reassessment proceedings have been initiated and/or the assessment for AY 2009-10 has been reopened by the impugned notice on the ground that in view of the amendment in section 195 of the Act, which had come into force w.e.f. 1.6.1976 (explanation to section 195(1) of the Act), the income of a non-resident shall be deemed to have accrued or arise in India under clause (v), clause (vi) and clause (vii) of sub section (1) of section 195 and shall be included in the total income of non resident whether or not; (1) the non resident has a residence or place of business connection in India; or (2) the non resident has rendered services in India and therefore, the amount paid to the aforesaid 5 companies and one Bhupendra Singh, who are non resident were deemed to have accrued in India and therefore, the TDS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and therefore, it cannot be said to be a change of opinion is concerned, the aforesaid cannot be accepted. As observed herein above, specific questions were asked by the Assessing Officer regarding the expenditure in foreign currency, which shall be inclusive of the amount paid to the aforesaid 5 companies and Bhupendra Singh and even the reasons for non-deduction of tax with supporting evidence and the petitioner assessee furnished necessary documents with supporting reasons why the tax at source has not been deducted and only thereafter, the Assessing Officer finalized the assessment proceedings. In the case of Cliantha Research Ltd (supra), the Division Bench of this Court has specifically observed and held that during the original assessment, assessee's claim was processed at length and after calling for detailed explanation from him, same was accepted, mere because a certain element or angle was not in mind of Assessing Officer while accepting such a claim, could not be a ground for issuing notice under section 148 for reassessment. 5.7 Considering the aforesaid facts and circumstances of the case, we are of the opinion that the initiation of the reassessment proceeding ..... X X X X Extracts X X X X X X X X Extracts X X X X
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