9911796707
TMI Blog2024 (3) TMI 1078X X X X Extracts X X X X X X X X Extracts X X X X ..... essment. 3. Petitioner is a company incorporated under the Companies Act, 1956, engaged in the business of manufacture and distribution of lubricating oils, greases, brake fluids and speciality products. 4. Petitioner filed its return of income ("ROI") for the AY 2013-14 on 22nd November 2013, declaring a total income of Rs.703,48,65,376/- as per the regular provisions of the Act. In the said ROI, the dividend declared, distributed or paid during the year was reflected at Rs.346,19,28,344/- and DDT thereon as paid under Section 115-O of the Act was reflected at Rs. 57,49,83,024/-. Although disallowance under Section 40(a)(i)/(ia) of the Act in the tax audit report was reflected at Rs.52,11,62,899/-, the actual amount of disallowance was only Rs.49,63,20,587/- as the difference already stood disallowed as transfer price adjustment. Since the amount which formed part of excess provision written back in the tax audit report already formed part of the amount towards service tax and excise duty refund forming part of the miscellaneous income in the financial statements, the addition under Section 40(1) of the Act was restricted to the difference in the two. It is Petitioner's further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under : "2. On verification of case records, it is seen from the Balance sheet as on 31st March 2013, Profit and loss account for year ended 31st March 2013, the cash flow statement, computation of income and audited report in Form No. 3CD that during the year relevant to the A.Y 2013-14 that assessee company paid dividend to the extent of Rs. 370,92,08,940/-. However, it is verified from the Annexure-U of clause 29 of 3CD report that assessee company paid Tax on distribution of profit (Dividend Distribution Tax) on distributed profit (Dividend) of Rs. 346,19,28,344/- to the extent of Rs. 57,49,83,024/- instead of total distributed profit of Rs. 370,92,08,940/-. It means the assessee company has not paid tax on distributed profit of Rs. 24,72,80,596/- (Rs. 370,92,08,940/- less Rs. 346,19,28,344/-). As per sub-section (1) and (3) of section 115-O of the Income Tax Act, 1961, notwithstanding any things contained in any other provision of this Act and subject to the provisions of this section, in addition to the income tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of div ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted by the assessee. Assessee company claimed deductions on amount of Rs. 42,01,72,321/- without furnishing any supporting details of payment of TDS. Hence, the same may be disallowed." (emphasis supplied) 9. Petitioner filed its objections vide letter dated 7th September 2021. The objections of Petitioner were rejected by the Department by order dated 21st December 2021. It is this order along with notice dated 27th March 2021 alleging that income has escaped assessment which is the subject matter of challenge in the present petition. 10. Mr. Pardiwalla, learned counsel for Petitioner, submitted that jurisdictional preconditions have not been fulfilled in the present case, as the belief found by the AO is based on an audit objection without fulfilling an objective criteria. Mr. Pardiwalla submitted, Petitioner had disclosed every detail and document sought by the AO and the original assessment order was passed on the basis of relevant material. There was no failure to disclose any information to the AO and hence, the assessment cannot be reopened on the basis of any such allegation of nondisclosure. 11. Mr. Pardiwalla, also made submissions on the merits of the case. He sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Petition. 14. The parties have explained and advanced arguments on the merits of the matter. However, we do not find it necessary to delve into the details of the merits of the assessment since at the outset, in the writ jurisdiction, our examination is limited to the aspects relating to the satisfaction of jurisdictional preconditions to justify reopening of assessment on the ground of income having escaped assessment. The assessment for the AY 2013-14 is admittedly sought to be reopened beyond a period of four years from the end of the relevant assessment year. Further assessment under Section 143(3) of the Act has been completed. Where the assessment is sought to be reopened after the expiry of four years, the proviso to Section 147 of the Act stipulates a requirement that there must be a failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment for that year. We have considered it appropriate to emphasize this aspect because much of the submissions on behalf of the parties in these proceedings has focused on the merits of the assessment. In the writ jurisdiction, at this stage, the test to be applied is whether there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pement of income, the Assessing Officer must examine the information in the context of the facts of the case and only on satisfaction leading to a reasonable belief that income chargeable to tax has escaped assessment, that reopening notice is to be issued." 18. Thus, we have no hesitation in holding that there was no failure on the part of Petitioner to disclose fully and truly the material facts, nor there was any tangible material with the AO, which could have otherwise justified the reopening of assessment by issuing the notice impugned. 19. In the present case, the notice to reopen assessment does not even remotely make any mention of any tangible material has come to the notice of the AO after passing original assessment order to conclude that there was an escapement of assessment. The AO has failed to aver what material fact that Petitioner has failed to disclose fully and truly. It is clearly the very information which was before the AO as provided by Petitioner on the basis of which, a different view is being taken. In the present case, there is a full and true disclosure by Petitioner, and information on those transactions have been accepted under the heads claimed by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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