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TMI Blog2021 (8) TMI 380X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee while communicating the reasons for initiating proceedings under Section 147 - The reasons furnished for reopening of assessment in proceeding dated 14.07.2016 states that any specified security or sweat equity shares (Section 115WB(1)(d) (Difference between the fair market value on the vesting date and amount recovered from or paid by the employee) and contribution to an approved superannuation fund for employees (in excess of one lakh rupees in respect to each) only a sum of ₹ 106,72,53,396/- was offered to FBT against the total amount of ₹ 243,69,22,379/- claimed as Stock Compensation Expenses in the previous year relevant to Asst Year 2010- 11. The subsequent paragraph would state that as such the under computation of fringe benefits to the extent of ₹ 136,96,68,983/- (₹ 243,69,22,379 ₹ 106,72,53,396) in Asst Year 2009-10 is brought to notice. Typographical error committed by the Assessing Authority by not including the three lines, which was mentioned in the impugned order in the reasons furnished in the proceeding dated 14.07.2016, has not caused any prejudice to the interest of the petitioner/assessee and the subject was categoric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shall be considered as a new material for the purpose of reopening of assessment. Each provision under Chapter XIV procedure cannot be separated as far as the Income Tax Act is concerned. Each Section has got linkage with one another as far as the procedures to be followed by the authorities competent are concerned as well as the rights of an assessee to defend their case. Thus, a balancing procedures as contemplated, are to be followed scrupulously by the competent authorities. Sources through which the materials are taken cannot be questioned by the assessee. Section 147/148 provides much wider scope for the purpose of reopening of the assessment. Thus, in the presence of any new materials made available then the Assessing Officer, is duty bound to exercise his power of reopening of assessment by following procedures contemplated. Thus, the very contention raised in this regard, does not merit consideration. This being the scope of the reopening proceedings under Section 115WG, the petitioner/assessee has to participate in the reopening proceedings by availing the opportunities to be provided for the purpose of completion of proceedings. The disputed facts raised by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment, which is impermissible, in view of the principles laid down by the Courts across the country. 5. To substantiate the said contention, the learned counsel for the petitioner/assessee had drawn the attention of this Court, with reference to the intimation issued under Section 115WE of the Act, by the Deputy Commissioner of Income Tax on 28.03.2011. The total Fringe Benefits, is stated as ₹ 1,41,95,47,123/-. The notice under Section 115WE(2) of the Income Tax Act was issued in proceedings dated 23.08.2010 and scrutiny assessment proceedings was undertaken for the assessment year 2009-10 and the Deputy Commissioner of Income Tax / Assessing Officer called for certain particulars and documents in vide letter dated 22.02.2011. The petitioner/assessee in vide letter dated 03.03.2011, furnished all the details including the Auditor's Report and Financial Statements, which contained the details regarding the Fringe Benefits. Thereafter, in letter dated 29.07.2011, the Assessing Officer requested the petitioner/assessee to produce the details and documents, as per the annexure enclosed. 6. The details sought for is relating to Fringe Benefit Tax (FBT) scrutiny asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessment order. Thus, on the same issue, reopening of assessment is impermissible and such a course would be a 'change of opinion' and would not fall under the scope of the jurisdiction conferred under Section 115WH of the Act. 11. In order to substantiate the said contention/ground, the learned counsel for the petitioner/assessee had drawn the attention of this Court with reference to the objections/details submitted by the petitioner/assessee in response to the letter dated 29.07.2011, wherein the details of Expenditure Chargeable to FBT Vs. Expenditure Debited to Profit and Loss Account, are furnished. Relying on the said statement, the petitioner/assessee contended that all those details were furnished and the said details were further available in the Tax Audit Report for the year ended 31.03.2009 dated 29.09.2009. 12. Regarding the second ground raised, it is contended that the reasons recorded by the Assessing Officer, who initiated reopening proceedings as well as the reasons considered by the Officer, who subsequently considered the objections, are not one and the same. 13. The learned counsel for the petitioner/assessee compared the recordings made in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rted the said portion which caused prejudice to the interest of the petitioner/assessee and the petitioner/assessee was deprived of an opportunity to furnish their objections for the said portion recorded. 16. Finally, the learned counsel for the petitioner/assessee contended that the Audit objection cannot be a ground for reopening of an assessment. The scope of Audit objection is to verify the details furnished and the said Audit objection cannot form a ground for the purpose of reopening the assessment and therefore, on this ground also the writ petition is to be allowed. 17. The learned counsel for the petitioner/assessee contended that the procedures as well as the spirit of Section 147 for reopening of the Assessment, under Chapter XIV of the Income Tax Act, has to be followed, for the purpose of deciding the case under Section 115WG and 115WH of the Income Tax Act. Section 147 is in pari materia with Section 115WG and in this regard the Courts have held that the procedures, as it is to be followed. 18. The judgments relied on in this regard are not disputed by the respondents. The language implied in Section 147 of the Income Tax Act, is almost similar in Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e officer, who is present before this Court [Mr.Ashok Kumar Upadhyay, Inspector of Income Tax, O/o.Central Circle-1(1), Chenral Range-1, Investigation Wing, Chennai-34] was able to show that one Mr.Shiva Srinivas, Deputy Commissioner of Income Tax, Large Taxpayer Unit-I, Chennai, originally reopened the assessment and recorded the reasons for reopening of assessment on 24.03.2016. The recorded reasons were communicated to the petitioner/assessee in vide proceedings dated 14.07.2016, by Ms.R.Helen Ruby Jesindha, Deputy Commissioner of Income Tax, Large Taxpayer Unit-I, Chennai. The Impugned order dated 20.11.2017 was issued by Shri. R.Muthu Kumar, Deputy Commissioner of Income Tax, Large Taxpayer Unit-1, Chennai. 24. While communicating the reasons, the said Deputy Commissioner of Income Tax, typed two paragraphs as one and while doing so, omitted the last three lines of the 1st paragraph which reads as The details of payment for the amount of ₹ 10672.53 lakh which was required to be examined, was not furnished. The difference of ₹ 136,96,68,983/- was also not reconciled . 25. Further, while passing the impugned order, the subsequent authority, Shri.R.Muthu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment year concerned. 30. Explanation to Section 115WG stipulates certain deemed cases where fringe benefits are chargeable to tax escaped assessment. 31. Section 115WG unambiguously stipulates that if any fringe benefits chargeable to tax have escaped assessment and if the assessment officer has reason to believe, it would be sufficient for reopening of the assessment for any assessment year, however, subject to the provisions of Sections 115, 150 and 153, which is limitation. The Section further continues by contemplating that reopening of assessment could be done for any other fringe benefits chargeable to tax, which have escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, for the assessment year concerned. Therefore, the circumstances provided for reopening of assessment regarding the fringe benefits are that if fringe benefits chargeable to tax escaped assessment and any other fringe benefits chargeable to tax which have escaped assessment, but comes to the notice of the assessing officer during the course of the proceedings under Section 115WG. The scope of Section 115WG is to be interpreted construct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WL denotes application of other provisions of the Income Tax Act. The said section reads that save as otherwise provided in this Chapter XIII, all other provisions of this Act, shall, as far as may be, apply in relation to fringe benefits also. 38. Therefore, the opportunity to be provided for reopening of assessment under Section 147 of Income Tax Act, has to be extended to Section 115WG also, while reopening the assessment for the purpose of fringe benefits escaping assessment. 39. Let us consider whether such opportunity is provided to the petitioner/assessee in the present case or not. Admittedly, the return of income was filed on 29.09.2009. The final assessment order under Section 115WE for assessment year 2009-10 was passed in proceedings dated 16.12.2011. Thereafter, notice under Section 115WH for reopening of assessment was issued on 28.03.2016 and the reasons were also furnished to the petitioner/assessee by the Assessing Officer on 14.07.2016 and the petitioner/assessee availed of the opportunity and submitted its detailed objections on 08.08.2016 and the said objections were disposed of by the Assessing Authority/1st respondent in proceedings dated 20.11.201 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he under computation of fringe benefits to the extent of ₹ 136,96,68,983/- (₹ 243,69,22,379 ₹ 106,72,53,396) in Asst Year 2009-10 is brought to notice. 43. Admittedly, the said three lines incorporated in the impugned order disposing of the objections in the proceeding dated 20.11.2017, were not found in the order furnishing reasons to the reopening of assessment dated 14.07.2016. However, this Court has to find out whether the typographical mistake admittedly committed by the Authority while recording the extract recorded by the erstwhile Assessing Authority caused any prejudice to the interest of the assessee or not. 44. In this regard, the reasons furnished for reopening of assessment in proceeding dated 14.07.2016 states that any specified security or sweat equity shares (Section 115WB(1)(d) (Difference between the fair market value on the vesting date and amount recovered from or paid by the employee) and contribution to an approved superannuation fund for employees (in excess of one lakh rupees in respect to each) only a sum of ₹ 106,72,53,396/- was offered to FBT against the total amount of ₹ 243,69,22,379/- claimed as Stock Compensatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gorically dealt with by the Assessing Authority through out the proceedings and the petitioner/assessee also had the knowledge about the said facts and circumstances and raised objections. 50. This apart, the another ground which has been raised that the said amount of ₹ 106,72,53,396/- was very much mentioned in the Tax Audit Report dated 29.09.2009, this Court is of the opinion that the mere information by the assessee in the Audit Report cannot be a ground to quash the entire initiation of proceedings. Section 115WG provides wider scope for reassessment of fringe benefits chargeable to tax escaped assessment. Therefore, the scope provided for reopening of assessment of any fringe benefits escaped assessment of tax, cannot be narrowed down by the Courts. 51. Even in cases where during the course of proceedings, if the Assessing Officer finds any other fringe benefits chargeable to tax, which had escaped assessment and which has come to his notice, shall also be assessed and appropriate orders shall be passed by the Authority. This being the scope of the reassessment proceedings contemplated under Section 115WG, the very ground raised that it is a 'change of opinio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies. 55. Under these circumstances, sources through which the materials are taken cannot be questioned by the assessee. Section 147/148 provides much wider scope for the purpose of reopening of the assessment. Thus, in the presence of any new materials made available then the Assessing Officer, is duty bound to exercise his power of reopening of assessment by following procedures contemplated. Thus, the very contention raised in this regard, does not merit consideration. 56. This being the scope of the reopening proceedings under Section 115WG, the petitioner/assessee has to participate in the reopening proceedings by availing the opportunities to be provided for the purpose of completion of proceedings. The disputed facts raised by the petitioner/assessee need not be adjudicated by the writ Court under Article 226 of the Constitution of India. Such an adjudication has to be undertaken through original records and evidences made available. 57. Accordingly, the petitioner/assessee has not established any acceptable ground for the purpose of considering the relief sought for in the writ petition. Thus, the writ petition is dismissed and there shall be no order as to costs. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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