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TMI Blog2021 (1) TMI 486X X X X Extracts X X X X X X X X Extracts X X X X ..... t-applicant, the question of taxing the same does not arise at all. As relying on ALIDHRA TAXSPIN ENGINEERS 1 [ 2017 (5) TMI 1684 - GUJARAT HIGH COURT] no hesitation in arriving at the conclusion that the re-opening of the assessment is not justified. - Decided in favour of assessee. - R/Special Civil Application No. 20607 of 2018 - - - Dated:- 7-1-2021 - Honourable Mr. Justice J.B. Pardiwala And Honourable Mr. Justice Ilesh J. Vora For the Petitioner(s) : Mr Tushar Hemani, Sr. Advocate With Ms Vaibhavi Parikh For the Respondent(s) : Mrs Kalpana K Raval ORAL JUDGMENT (PER : HONOURABLE MR. JUSTICE J.B.PARDIWALA) 1. By this writ-application under Article 226 of the Constitution of India, the writ-applicant has prayed for the following reliefs : (a) quash and set aside the impugned notice at Annexure-A to this petition; (b) pending the admission, hearing and final disposal of this petition, to stay the implementation and operation of the notice at Annexure-A to this petition and stay the further proceedings for the Assessment Year 2011-12; (c) any other and further relief deemed just and proper be granted in the interest of justice; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he department that M/s.Vijya Laxmi Exports paid ₹ 12,74,351=00 as interest on the partners capital and ₹ 44,97,148=00 as remuneration to its partners, but at the same time, claimed excess deduction of ₹ 57,71,499=00 under Section 10AA of the Act 1961 which was liable to be taxed in the hands of the partners. According to the department, the income of ₹ 57,71,499=00 was required to be taxed in the hands of the partners. According to the Revenue, the writ-applicant, being one of the partners of the firm M/s.Vijya Laxmi Exports, has a share capital of 30 per cent. 7. Having regard to what has been stated above, it is the case of the Revenue that the writ-applicant had received interest on capital of rs.3,82,305=00 and ₹ 13,49,145=00 respectively as remuneration from the partnership firm and the said amount had not been offered or disclosed for the purpose of taxation. 8. In such circumstances referred to above, the department has thought fit to re-open the assessment proceedings beyond the period of four years on the ground that the amount of ₹ 17,31,450=00 had escaped assessment within the meaning of Section 147 of the Act 1961 for failure on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without there being any failure on the part of the petitioner to disclose fully and truly all material facts necessary for his assessment, therefore, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act, is invalid. 3. Having regard to the submission advanced by the learned counsel for the petitioner, issue Notice returnable on 5th February, 2019. By way of ad-interim relief, the respondent is permitted to proceed further pursuant to the impugned notice; he, however, shall not pass the final order without the prior permission of this Court. Direct service is permitted today. 12. Mr.Tushar Hemani, the learned senior counsel assisted by Ms.Vaibhavi Parikh and Mr.Parimal Parmar, the learned counsel appearing for the writ-applicant, submitted that the Revenue is not justified in re-open the assessment proceedings on the grounds as assigned in the reasons. He would submit that from the computation of total income, tax audit report and annual accounts of the partnership firm, no interest or remuneration had been paid by the firm to its partners. The case of the writ-applicant for the year under consideration was taken up for scrutiny ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of the fact that the decision to re-open the assessment is substantially on the ground that the writ-applicant failed to offer 'interest on capital' and 'remuneration' as income alleged to have been received from the partnership firm, namely M/s.Vijya Laxmi Exports. 20. It is the settled position of law that the condition precedent for the purpose of resorting to re-opening of the assessment is that the Assessing Officer should be satisfied based on some cogent or tangible material, that the case is one of escapement of income chargeable to tax. In the absence of escapement of any income chargeable to tax, it is not open for the department to re-open the case of the assessee. 21. Mr.Hemani is right in his submission that mere incorporation of interest on partners capital and remuneration does not necessarily mean or should be construed as mandatory. There has to be some material on record to indicate that the writ-applicant had actually received any 'interest on capital' or 'remuneration' from the partnership firm. Where no such income has been earned by the writ-applicant, the question of taxing the same does not arise at all. 22. At ..... X X X X Extracts X X X X X X X X Extracts X X X X
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