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TMI Blog2015 (8) TMI 571X X X X Extracts X X X X X X X X Extracts X X X X ..... been vitiated and therefore, the impugned reopening of the assessment cannot be sustained and the same deserves to be quashed and set aside. Now, so far as the submission of revenue that as now, the order of assessment/reassessment under section 143(3) r/w section 147 has been passed and therefore, the present petition may not be entertained is concerned, it is required to be noted that as such, the reassessment proceeding has been passed during the pendency of the present petition. Even otherwise, when the reopening of the assessment is found to be invalid and not justifiable and the same is solely based on the audit objection raised by the audit party, this is a fit case to exercise the powers under Article 226 of the Constitution of India. - Decided in favour of assessee. - Special Civil Application No. 3647 of 2015 - - - Dated:- 6-5-2015 - M. R. Shah And S. H. Vora, JJ. For the Appellant : Mr Vivek Chavda For Mr Sn Divatia, Adv. For the Respondents : Mr Pranav G Desai, Adv. JUDGMENT ( Per : Honourable Mr. Justice M. R. Shah ) 1. By way of this petition under Article 226 of the Constitution of India to quash and set aside the impugned notice dated 13. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvocate appearing on behalf of the petitioner that though in the objections raised by the petitioner against reopening of the assessment, it was specifically stated that reopening of the assessment is at the instance of the audit party and/or on the audit objections raised by the audit party only, the Assessing Officer while disposing off the objections has not dealt with the same at all. 3.2 It is further submitted that even in the present Special Civil Application though the petitioner has raised the specific ground on the aforesaid, in the affidavit in reply, the respondent has not dealt with the same. Making above submissions and relying upon the decision of the Division Bench in the case of Commissioner of Income-tax, Ahmedabad-IV vs. Shilp Gravures Ltd. reported in [2013] 40 taxmann.com 309 (Gujarat) as well as in the case of Rajrtan Metal Industries Ltd vs. Assistant Commissioner of Income Tax reported in [2014]49 taxmann.com 15 (Gujarat), it is requested to allow the present Special Civil Application and quash and set aside the impugned reopening of the assessment for AY 2010-11. 4. Present petition is opposed by Shri Pranav G. Desai, learned Advocate appearing on beh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... half of the petitioner shall not be applicable to the facts of the case on hand and/or shall not be of any assistance to the petitioner. 4.4 Relying upon the decision of the Hon ble Supreme Court in the case of Commissioner of Income Tax v. P.V.S. Beedies Pvt. Ltd. reported in 237 ITR 13 (SC) and decision of the Division Bench of this Court in the case of N.K. Industries Ltd. v. Income Tax Officer (OSD) reported in 362 ITR 502 (Guj), it is vehemently submitted by Shri Desai, learned Advocate appearing on behalf of the Revenue that as observed by the Hon ble Supreme Court in the aforesaid decision and the Division Bench of this Court, on the basis of the information given by the audit party and/or the objection raised by the audit party, reopening of the assessment is permissible. It is submitted that therefore even in case where the assessment is reopened on the basis of the objection raised by the audit party and on the information received by the Assessing Officer pursuant to the audit memo and/or the objections raised by the audit party, after forming an opinion, the reopening of assessment proceedings is permissible. Making above submissions and relying upon above decisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer while disposing off the objections has not dealt with the same. Even in the petition the said ground is raised, however the same has not been dealt with in the affidavit in reply. In the affidavit in reply it is the case on behalf of the Revenue that while recording the reasons for reopening of the assessment and/or while reopening of the assessment for AY 2010-11, the Assessing Officer has formed an opinion that the income of ₹ 3,06,16,999/- had escaped assessment. However, nothing has been mentioned with respect to any objections raised by the audit party and/or any audit objection. Be that as it may, to satisfy ourselves whether the reopening of the assessment proceedings is solely on the basis of the audit objection raised by the audit party and/or at the instance of the audit party only and/or whether there is any independent formation of opinion by the Assessing Officer that the income has escaped assessment, we called upon the Revenue to produce the relevant file/s and Shri Desai, learned Advocate appearing on behalf of the Revenue has produce the file/s before this Court for perusal. 5.3 From the file, it appears that the case was audited by the rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t that the nature of business is that of HIRING OF EQUIPMENTS/ MOTOR VEHICLES is established on the basis of copies of tender for allotment of contract. The reliance is also placed on CIT V. Madan Co. (2002) 254 ITR 445(MAD) which is applicable to the case under consideration, Here it was held that when the vehicles are not used for the purpose of the owner, it is covered under the word HIRE. In this case vehicles are not used for the purpose of the owner and hence it is appropriate to conclude that the same has been HIRED TO THIRD PARTY. Once the vehicles are established as having been given on hire, the higher Claim of depreciation can be claimed. However, the case was reopened u/s 147 of the Act, to safeguards of the revenue. 5.5 From the aforesaid, it appears that even while sending the proposal/proforma report to the higher authority to grant approval for reopening the assessment, the Assessing Officer continued to maintain that the audit objection raised by the audit party is not acceptable and only with a view to protect the revenue and/or safeguards the interest of the revenue, it was proposed to reopen the assessment under section 147 of the Act. There is no independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndependent opinion and/or may have a reason to believe independently that the income chargeable to tax has escaped assessment. However, in a case like this where even while sending the proposal to the higher authority to grant the approval for initiation of the reassessment proceedings, the Assessing Officer still maintain that audit objection raised by the audit party is not valid and/or correct. Therefore, as such it cannot be said that the Assessing Officer had independently formed an opinion and/or had reason to believe independently that the income chargeable to tax has escaped assessment. From the correspondence between the Assessing Officer and the higher authority it appears that though the Assessing Officer maintains that the audit objection raised by the audit party is not correct, however as the amount involved is very high as mentioned by the audit party and to safeguard the interest of the Revenue and the guidelines issued the reassessment proceedings have been initiated. Therefore, as such the formation of the opinion by the Assessing Officer that the income chargeable to tax has escaped assessment has been vitiated and therefore, the impugned reopening of the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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