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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 ..... tion under Section 10A and 10AA of the Act. 3. The petitioner/assessee filed its return of fringe benefits on 29.09.2009, for the Assessment Year 2009-10, which was processed under Section 115WE(1) of the Income Tax Act on 28.03.2011. The case of the petitioner/assessee was selected for scrutiny and notice under Section 115WE(2) of the Act was issued on 23.08.2010 and details were called for by the 1st respondent on 29.07.2011. Detailed submissions were made by the petitioner/assessee before the respondent from time to time, including the Financial Statements furnished on 03.03.2011, the Audit report and the Tax Audit Report for year ended 31.03.2009, etc. 4. In this context, the learned counsel for the petitioner/assessee emphatically contended that the very initiation of the proceedings itself is untenable, as the authority acted beyond the scope of the jurisdiction conferred under the Act. Firstly, it is stated that reopening of assessment is a 'change of opinion'; secondly, the reasons were not fully furnished and there are discrepancies even in furnishing the reasons recorded for reopening of assessment; and thirdly, the Audit objection is taken as a ground for the p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8. This being the case of the petitioner, a notice under Section 115WH of the Income Tax Act, 1961 was issued for reopening of assessment on 28.03.2016, wherein the Assessing Officer has stated that he has reasons to believe that the petitioner/assessee's fringe benefit chargeable to tax for the assessment year 2009-10 has escaped assessment within the meaning of 115WG of the Income Tax Act, 1961. 9. The writ petitioner/assessee, in response, requested the Assessing Officer, to provide the reasons recorded for reopening of assessment on fringe benefits. The assessing officer in vide proceedings dated 14.07.2016, furnished the reasons. On receipt of the same, the petitioner/assessee submitted its detailed objections on head-wise and item-wise and the said objections were rejected by the Respondent/Assessing Officer in proceedings dated 20.11.2017. Challenging the said disposal order, the writ petition is filed. 10. The learned counsel for the petitioner/assessee raised an objection that the details regarding the fringe benefits, tax computation and other relevant materials were already submitted before the original assessing authority, who inturn considered elaborately and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,379 429,68,72,261 673,37,94,639 15. The initial paragraph recorded is not disputed. However, in the last but one paragraph, which starts as "On this being pointed out.....", it is stated as follows: "..... The details of payment for the amount of Rs. 10672.53 lakh which was required to be examined, was not furnished. The difference of Rs. 136,96,68,983/- was also not reconciled." It is contended that the above said portion of the findings were not available in the reasons recorded by the erstwhile officer for reopening of the assessment. Therefore, the petitioner/assessee was deprived of defending their case on the material which is newly furnished in the impugned order disposing of the objections. In other words, it is stated that the above mentioned portion was not available in the recording of reasons made by the erstwhile Assessing Officer and the current Assessing Officer, inserted 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 objec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... akin to that of the procedures contemplated under Section 147 of the Act. Therefore, once the Assessing Officer has reason to believe that any fringe benefits chargeable to tax have escaped assessment for any assessment year, is sufficient for reopening of the assessment and it is for the petitioner/assessee to submit the documents, materials, information and participate in the proceedings of reassessment, enabling the authority to form further opinion and pass an order of assessment/reassessment. 22. Contrarily, by making certain comparison with reference to statements, the petitioner's case need not be considered, as the said contention or typographical mistake made by the authority would not cause any prejudice to the interest of the petitioner. 23. The Income Tax department, placed the original files before this Court, in respect to the impugned order passed. The 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned. 29. Section 115WG enumerates that if the Assessing Officer has reason to believe that any fringe benefits chargeable to tax have escaped assessment for any assessment year, he may, subject to the provisions of sections 115WH, 150 and 153, assess or reassess such fringe benefits and also 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. 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 sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... during the course of proceedings under Section 115WG, then also he is empowered to proceed for assessment / reassessment and pass appropriate assessment/reassessment order. 36. However, in all these circumstances, the assessee is entitled for an opportunity to defend his case in the manner known to law. Denial of opportunity, is in violation of principles of natural justice. The Hon'ble Supreme Court of India in the case of GKN Driveshafts (India) Ltd., Vs. Income Tax Officer and others, reported in (2003) 259 ITR 019 (SC), ruled that the assessee is entitled for an opportunity. Therefore, the Assessing Authority is bound to provide opportunity to the assessee before passing final order of assessment/reassessment. 37. Section 115WH denotes issue of notice where fringe benefits have escaped assessment. Section 115WL 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 Rs. 106,72,53,396/- was offered to FBT against the total amount of Rs. 243,69,22,379/- claimed as Stock Compensation Expenses in the previous year relevant to Asst Year 2010-11. It appears that out of Rs. 67337.85 lakh, only 67337.85 lakh pertained to Indian Employees and the liability to Fringe Benefit Tax was restricted by you only to that extent. Hence, the balance amount of Rs. 56665.42 lakh did not relate to Indian employees but related to foreign employees associated with the activities of your company. .... As such the under computation of fringe benefits to the extent of Rs. 136,96,68,983/- (Rs. 243,69,22,379 - Rs. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion in the amount of fringe benefits on account of grant of ESOP to the employees of the assessee. 48. The said recording is relatable to the under computation of fringe benefits to the extent of Rs. 136,96,68,983/- (Rs. 243,69,22,379 - Rs. 106,72,53,396), stated in the order dated 14.07.2016, communicating the reasons for reopening. 49. Perusal of all these materials would reveal that the 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 categorically 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 Rs. 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the decisions taken in accordance with the provisions of the Income Tax Act. Thus, during the course of audit objections, if any materials are identified, undoubtedly, such materials shall be considered as a new material for the purpose of reopening of assessment. 54. 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. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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