9911796707
TMI Blog2023 (8) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to petitioner and the same reads as under : The assessee has filed the e-return on 29.11.2016 declaring total income at Rs. 161,79,93,020/- computed under normal provision of the Act and Book Profit of Rs. 219,56,07,298/- u/s 115JB of the Act. This case was selected for scrutiny and assessment for A.Y. 2016-17 was completed on 21.12.2018 after scrutiny and assessed income of Rs. 176,32,00,710 under normal provision of the Act and Book profit at Rs. 225,45,68,489 u/s 115JB of the Act. 2. Subsequently on perusal of the records it was observed that the assessee had purchased 100% shares of M/s ETPL on 22nd September 2015 for a total purchase consideration of Rs. 187.35 crore and immediately thereafter on 29th September 2015, M/s ETPL merged with the assessee. Keeping in view the acquisition of all assets and liabilities of M/s ETPL, the amount paid in excess thereof was determined as Rs. 148.19 crore and the same was treated as goodwill and depreciation thereon of Rs. 38,15,17,889 was claimed by the assessee @25% treating it as intangible asset. Keeping in view the above mentioned provisions, the depreciation so claimed was not allowable. Further it was relevant to be mentione ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1st November 2018. A fresh notice dated 14th November 2018 under Section 142(1) of the Act was issued enquiring details of the amalgamation, satisfaction of conditions under Section 72A of the Act and specifically seeking details of valuation and other documentary evidences which resulted into goodwill. Petitioner was also handed over a list of reasons based on which petitioner's return for Assessment Year 2016-17 was selected for scrutiny under CASS. The list included details relating to amalgamation and required petitioner to address whether tax aspects related to intangible assets have been considered in the return of income. In response, petitioner, by letter dated 19th November 2018, filed the court orders approving amalgamation as well as the scheme for amalgamation and also explained the basis of recording of goodwill and claim of depreciation thereon. 6. By a letter dated 22nd November 2018 petitioner gave more detailed submissions on the valuation and reporting of assets acquired pursuant to the amalgamation including goodwill and claim for depreciation thereon. This was further reply to the notice dated 14th November 2018 and petitioner also cited decisions of the Hon'b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings and assessee has replied to it, it follows that the query raised was a subject of consideration of the A.O. while completing the assessment and it is not necessary that the Assessment Order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. Mr. Pardiwalla also submitted that even reading the reasons recorded for reopening clearly indicates that reopening is merely on the basis of change of opinion of the A.O. from that held earlier during the course of assessment proceedings and this change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. 11. Mr. Sharma submitted relying on Export Credit Guarantee Corporation of India Ltd. vs. Additional Commissioner of Income Tax (2013) 30 taxmann.com 211 BOM that when the A.O. has tangible material to come to the conclusion that there is an escapement of income from assessment, the power to reopen can be exercised. The reason to believe means a cause or justification. At the stage when the A.O. reopens an assessment, it is not necessary that the material before the court should conclusively prove or establ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd in as much as in the reasons for reopening it is stated "........... Keeping in view the above mentioned provisions ................". There are no provisions mentioned in the reasons above this portion. That also indicates non application of mind. 15. Further as regards the audit objections, in Paragraph No. 18 of the petition, petitioner states as under : "The Petitioner is under a bone fide belief that the Impugned Notice has been issued pursuant to objections raised by audit party during revenue audit to which the Respondent No. 1 had responded defending the Assessment Order as passed, and it was only on the insistence of the audit party that the Respondent No. 1 was compelled to replicate the audit objection in the form of reasons and issue the Impugned Notice. In the affidavit in reply filed through one Dr. Deepak Shukla affirmed on 12th April 2022 respondents do not deny the allegations of petitioner, but state in Paragraph No. 17 as under : 17. I say that para 18 of the petition pertains to objection in the form of reasons raised by audit party during revenue audit. In this case, the objections raised by the Audit was duly examined by the Assessing Officer with re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... held in Paragraph No. 8 of the said judgment which reads as under : 8. In reply, Petitioner, by its letter dated 07-09-2016, provided the details. Petitioner, in its statement giving details of disallowances made, also has stated that for AY 2012-13 and AY 2013-14, there was disallowance on account of depreciation of goodwill. Notwithstanding that the Assessing Officer has allowed depreciation of goodwill for AY 2014-15. As held by Apex Court in the case of Indian & Eastern Newspaper Society, New Delhi v. CIT (1979) 2 Taxman/197/119 ITR 996 even if it is an error that the Assessing Officer discovered, still an error discovered on a reconsideration of the same material does not given him power to reopen. When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the Assessing Officer, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings. Where on consideration of material on record ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Section 143(3) of the Act. The law with regard to reopening of assessment is fairly settled by decisions of Courts. The power of the Assessing Officers under Sections 147 and 148 of the Act to reopen an assessment is classified into two :- (a) Reopening of assessment within a period of 4 years from the end of the relevant assessment year and (b) Reopening of assessment beyond a period of 4 years from the end of the relevant assessment year. The common jurisdictional requirement for reopening of assessment both within and beyond a period of 4 years has to be on the basis of reason to believe that income chargeable to tax has escaped assessment and the reason for issuing a notice to reopen are recorded before issuing a notice. However, there is one additional jurisdictional requirement to be satisfied while seeking to reopen the assessment beyond the period of 4 years from the end of the relevant assessment year viz. that there must have been a failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment during the original assessment proceedings. Thus the primary requirement to reopen any assessment is a reason to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that income chargeable to tax has escaped assessment. At the stage of the issuing of the notice under Section 148 of the Act it is not necessary for the Assessing officer to establish beyond doubt that income indeed has escaped assessment. 14. We find that during the assessment proceedings the petitioner had by a letter dated 9 July 2010 pointed out that they were engaged in the business of financing trading and investment in shares and securities. Further, by a letter dated 8 September 2010 during the course of assessment proceedings on a specific query made by the Assessing Officer, the petitioner has disclosed in detail as to why its profit on sale of investments should not be taxed as business profits but charged to tax under the head capital gain. In support of its contention the petitioner had also relied upon CBDT Circular No.4/2007 dated 15 June 2007. (The reasons for reopening furnished by the Assessing Officer also places reliance upon CBDT Circular dated 15 June 2007). It would therefore, be noticed that the very ground on which the notice dated 28 March 2013 seeks to reopen the assessment for assessment year 2008-09 was considered by the Assessing Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... justification and/or reasons to believe that income chargeable to tax has escaped assessment. 21. Having considered the reasons to reopen and the query raised and the replies filed, we are satisfied that it is merely on the basis of change of opinion from that held earlier during the course of assessment proceedings that reopening of the assessment by the impugned notice is proposed. This change of opinion does not constitute justification and the reasons to believe that income chargeable to tax has escaped assessment. 22. We also note that in the affidavit in rejoinder dated 2nd May 2022, in Paragraph No.6, petitioner has averred as under : "the judgment relied upon by the Respondents in the case of Consolidated Photo & Finvest Ltd. v/s. ACIT (2006) 151 Taxman 41 (Delhi) has been subsequently disapproved by the judgment in the case of KLM Royal Dutch Airlines v/s. ADIT (2007) 292 ITR 49 (Delhi) and the judgment of the Full Bench in the case of CIT v/s. Usha International Ltd. (2012) 348 ITR 485 (Delhi) as also the said decision runs counter to the Full Bench decision of the Hon'ble Delhi High Court in the case of CIT v/s. Kelvinator India Limited (2002) 256 ITR 1 which has al ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
