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TMI Blog2025 (2) TMI 309X X X X Extracts X X X X X X X X Extracts X X X X ..... es, the matters were taken up for hearing. 3. Heard learned advocate Ms. Shrunjal T. Shah for the petitioner and learned Senior Standing Counsel Ms. Maithili Mehta for the respondent. 4. By these two petitions under Articles 227 of the Constitution of India, the petitioner has challenged the order dated 30th March, 2021 passed by the respondent no. 1 under Section 263 of the Income Tax Act 1961 (For short 'The Act) for Assessment Years 2012-13 and 2014-15. 5. The petitioner filed return of income for Assessment Year 2012-13 on 29/9/2012 declaring total income of Rs. 2,82,34,740/-. The Assessing Officer passed Assessment Order under Section 143 (3) of the Act on 26-3-2015 accepting the return income as assessed income after complete scrutiny. 6. The petitioner filed return of income for Assessment Year 2014-15 on 31-12-2015 declaring total income of Rs. 5,37,42,938/-. The Assessing Officer passed Assessment Order under Section 143 (3) of the Act on 19-12-2016 accepting the return income as the assessed income. 7. It is the case of the petitioner that subsequently, because of the search in the Venus Group, notice for reopening under Section 148 of the Act was issued by the respo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the explanation 2 of Section 263 (1) of the Act as the said Assessment Order was passed without making inquiries or verification, which would have been made in respect of disallowance under Section 14A of the Act read with Rule 8D of the Rules as prescribed. 11. The petitioner preferred the appeals challenging the impugned order under section 263 before the tribunal. The petitioner, thereafter, has preferred these petitions on receipt of the notice dated 5/3/2022 issued under Section 142 (1) of the Act for making fresh assessment pursuant to the order passed under Section 263 of the Act as the assessment was getting time barred on 31/3/2022. 12. It is the case of the petitioner that the petitioner has withdrawn the appeals filed before the tribunal and the petitioner is desirous to pursue these petitions. 13. Learned advocate Ms. S.T. Shah submitted that the respondent no. 1 should not have assumed the jurisdiction to issue the notice under Section 263 of the Act as the Assessing Officer at the time of regular assessment proceedings has called for the details while issuing the notice under Section 142 (1) regarding the exempt income and working of disallowance under Section 14A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that that the Hon'ble Apex Court in case of Alagendran Finance Limited (supra) has in similar facts held that the Income Tax Commissioner - the respondent no. 1 could not have exercised the revisional jurisdiction only in relation to the issue of disallowance under Section 14A of the Act as the same was not subject of the reassessment proceedings and therefore, the period of limitation provided under sub-Section (2) of Section 263 of the Act would begin to run from the date of the order of assessment passed under Section 143 (3) of the Act and not from the order of re-assessment passed under Section 143 read with Section 147 of the Act. 16. It was further submitted that this Court in case of Nirma Chemicals Works Private Limited has held that the Assessing Officer is not required to record reasons for granting a claim of deduction or for making any disallowance in the Assessment Order as it would be an impossible burden on Assessing Officer considering the workload that he carries and period of limitation within which an order is required to be made. It was therefore submitted that only because the Assessing Officer has not recorded as to why the disallowance under Section 14A is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to consider all the issues other than which are forming a part of the reasons recorded for reopening. 22. It was therefore incumbent upon the Assessing Officer to make inquiries with regard to the disallowance under Section 14A of the Act at the time of having the assessment. With regard to the contention raised on behalf of the petitioner that during the course of the regular assessment, the inquiries were made by the Assessing Officer, reliance was placed on the observation made in the impugned order of the respondent no. 1, wherein it was observed as under:- "7. The assessee has contended that the issue u/s. 14A had already been examined in the original assessment proceedings and therefore, the order cannot be termed as erroneous and prejudicial to the interest of the revenue, warranting invocation of proceedings u/s. 263. However, in the instant case, it is seen that neither in the original assessment proceedings nor in the reassessment proceedings, the Assessing Officer has verified any facts pertaining to the exempt income earned during the year under consideration and its relation to the disallowance in accordance with the sec. 14A r.w. rule 8D and therefore never exami ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has furnished such information in the reply filed during the course of the assessment proceeding. 26. Therefore, it appears that during the course of the regular assessment, the Assessing Officer has accepted the explanation and reply filed by the petitioner and the return income was accepted. 27. This Court in case of Nirma Chemicals Pvt. Ltd while considering the deduction under Section 80 I of the Act vis-a-vis the revisional powers of the Commissioner under Section 126 of the Act, has held as under :- "20. The stand of the revenue that the assessment order was silent as regards eligibility or otherwise of Section 80I of the Act cannot thus be accepted. As noted hereinbefore the entire Section lays down a complete codified scheme in itself for deciding not only the eligibility but also for the computation of the relief to which the assessee is entitled. When the Section talks of profits and gains derived from an industrial undertaking the requirement is in relation to the industrial undertaking to which the Section applies and which fulfills all the conditions laid down in Sub-section (2) of Section 80I of the Act. It is not possible to read the provisions in any other manne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... note of the fact that even the Tribunal found that all the subsequent events were in respect of the matters other than the allowance of 'lease equalization fund'. The said finding of fact is binding on us. Doctrine of merger, therefore, in the fact situation obtaining herein cannot be said to have any application whatsoever. It is not a case where the subject matter of reassessment and subject matter of assessment were the same. They were not. 13. It may be of some interest to notice that a similar contention raised at the instance of an assessee was rejected by a 3-Judge Bench of this Court in Commissioner of Income-Tax v. Shri Arbuda Mills Ltd. [231 ITR 50]. This Court took note of the amendment made in Section 263 of the Act by the Finance Act, 1989 with retrospective effect from June 1, 1988, inserting Explanation (c) to Sub-section (1) of Section 263 of the Act stating: "The consequence of the said amendment made with retrospective effect is that the powers under section 263 of the Commissioner shall extend and shall be deemed always to have extended to such matters as had not been considered and decided in an appeal. Accordingly, even in respect of the aforesaid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he facts and circumstances of this case and, in particular, having regard to the fact that the Commissioner of Income Tax exercising its revisional jurisdiction reopened the order of assessment only in relation to lease equalization fund which being not the subject of the reassessment proceedings, the period of limitation provided for under Sub-section (2) of Section 263 of the Act would begin to run from the date of the order of assessment and not from the order of reassessment. The revisional jurisdiction having, thus, been invoked by the Commissioner of Income Tax beyond the period of limitation, it was wholly without jurisdiction rendering the entire proceeding a nullity." 30. The aforesaid decision of the Apex Court was considered by the different High Courts including this Court to hold that the revisional powers under Section 263 of the Act would be available from the date of limitation for exercise of powers under Section 263 of the Act would be from the date of the Assessment Order under Section 143 (3) of the Act when the issue sought to be revised are already considered during the regular assessment proceedings. 31. The Hon'ble Madras High Court in case of Indira Indus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned from 25.02.2015. 3(xx) Therefore, the Assessee before us was clearly entitled to succeed on the second point raised before the learned single Judge. To be noted, we have already negatived the first point regarding 'Change of Opinion'. 3(xxi) Learned Senior Standing Counsel for Revenue pressed into service MAK Data P. Ltd. Vs. Commissioner of Income Tax [(2013) 358 ITR 593 (SC)] to say that even agreed basis orders can be revisited and Malabar Industrial Co. Ltd. Vs. Commissioner of Income Tax [(2000) 243 ITR 83 (SC)] to say that Revenue in exercise of powers under Section 263 of IT Act can travel beyond the assessing officer in cases of non-application of mind. MAK Data Systems case deals with penalty under Section 271 (1) (c) of IT Act which operates in a different realm and Malabar Industrial Co. Ltd., does not rescue the Revenue as impugned notice is hit by the vice of lack of jurisdiction on account of being time barred. 3(xxii) One other reason given by the learned single Judge for dismissing the Assessee's writ petition is that the impugned notice is a show-cause notice and therefore, no harm would be caused to the Assessee. 3(xxiii) The principles and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t from the aforesaid notice dated 31-3-2002 (Annexure-7). This Court has no means to verify whether that sale of the unit for rupees one crore was the best possible offer or not, but a few facts are manifest which establish the bona fides of respondent No. 2. It was sold on the basis of a widely published advertisement. Respondent No. 2 had not sold the unit for Rs. 41 lacs on an earlier occasion, has been sold for rupees one crore on this occasion, and the entire amount was deposited simultaneously, which is in contra-distinction to the track-record of the petitioner to the effect that it had paid a total sum of Rs. 14.23 lacs until the institution of the writ petition. Learned Counsel for respondent No. 2 has rightly relied on the judgment of the Supreme Court in Haryana State Financial Corporation v. Jagdamba Oils Mills (supra), wherein it has been observed, quoting from the classic judgment of Lord Greene, M.R. in Associated Provincial Picture Houses Ltd. v. Wednesbury Corporation, reported in 1947. Vol. 2, All Eng. L.R. page 680, the Court cannot substitute its judgment for action of the administrative authority unless it is so unfair or unreasonable that no reasonable person ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the judgment of the Supreme Court in Gujarat State Financial Corporation v. Lotus Hotel Pvt. Ltd. (supra) and places reliance on the following observations of the judgment: "How a public sector corporation set up to give impetus to industrial development of the country, a promise of planned economy aimed at job expansion to liquidate the curse of unemployment, and larger production helping price stabilisation acts in a manner contrary to its raison d'etre and becomes counterproductive is aptly illustrated by the facts of this case." The reliance has been placed on these observations in a manner Completely torn out of the context. That writ petition was for the arbitrary refusal to release the sanctioned loan amount by the State Financial Corporation to the entrepreneur who had already acted on the basis of the sanction, incurred expenditure and liabilities. Therefore, the Court allowed the writ petition by applying the doctrine of promissory estoppel, The judgment is an authority for application of the principle of promissory estoppel. On the other hand, in the present case, it is a case of recovery in terms of Section 29 of the Act after the borrower had been given su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cordingly allowed. The impugned notices and impugned orders are hereby quashed and set-aside. Rule is made to the aforesaid extent. No order as to costs. ORDER IN CIVIL APPLICATIONS (For Amendment) :- These applications are filed for amendment of the petitions. The same are allowed in terms of para 4 of the applications. To be carried out forthwith. Present Civil Applications are disposed of accordingly. ------------------------ Notes: ORAL ORDER (PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA) Heard learned advocate Ms. Shrunjal T. Shah for the petitioner and learned advocate Ms. Maithili D. Mehta for the respondent. Order below Note for Speaking to Minutes in Special Civil Application No.5619 of 2022 and Special Civil Application No. 5621 of 2022: Through this note for speaking to minutes, it has been pointed out that in order dated 28.01.2025, inadvertently following mistakes have crept in : 1) In para no.7, it is recorded that "... Thereafter, the Assessment Order was passed under Section 143 (3) read with Section 147 of the Act by making addition of Rs. 7.50 crore for Assessment Year 2013-14 and for Rs.3 crore for Assessment Year 2014-15 under Section 68 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 14-15 and in both the years, the petitioner preferred an appeal before the CIT (Appeals) and therefore, as per the provision of principles of doctrine of merger, both the Assessment Orders for both the years would be merged into the order of CIT (Appeals), which was passed on 22nd August, 2019, whereby the addition made was deleted." Order below note for speaking to minutes in Civil Application No. 1 of 2025 in Special Civil Application No. 5619 of 2022 with Civil Application No. 1 of 2025 in Special Civil Application No. 5621 of 2022 Through this note, it has been pointed out that inadvertently in order dated 28.01.2025, it has been stated that the applications are allowed in terms of para 4 of the application instead of para no. 7 in Civil Application No. 1 of 2025 in Special Civil Application No. 5619 of 2022 and para no.5 of Civil Application No.1 of 2025 in Special Civil Application No. 5621 of 2022. Note for speaking to minutes is allowed. Order in Civil Applications (For Amendment) shall read as under: "ORDER IN CIVIL APPLICATIONS (For Amendment) :- These applications are filed for amendment of the petitions. The same are allowed in terms of para no.7 in Civil Appli ..... X X X X Extracts X X X X X X X X Extracts X X X X
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