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TMI Blog2025 (3) TMI 414X X X X Extracts X X X X X X X X Extracts X X X X ..... ished at the first instance to an assessee have to be looked into, and the same cannot be improvised subsequently. In any case, in the documents annexed to the affidavit in reply, the respondents have annexed reasons for reopening, which differ from those reproduced in the draft order. On a comparison of the reasons filed along with the reply and the reasons as reproduced in the draft assessment order, in the reasons annexed to the reply, there are 5 crucial paragraphs which are absent in the reasons reproduced in the draft order, namely paras 1, 2, 3, 4 and 5. It is a settled position that the reasons furnished to the assessee have only to be seen, and the officer cannot supply different reasons in the affidavit of reply. The reasons appearing in the draft assessment order and to the reply filed by the respondent do not disclose what are the facts which the Petitioner has not disclosed and which were necessary for the assessment. In the absence of this statement in the reasons recorded the impugned proceedings are required to be quashed and set aside, as being without jurisdiction. Admittedly, there is also no dispute that the issue of "guarantee fee" is pending before the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the consent of the learned counsel for the parties. 2. This Petition challenges re-assessment notice under Section 148 of the Income-tax Act, 1961 (the Act) dated 30 March 2021 for the assessment year (AY) 2014-2015 and the re-assessment order passed pursuant thereto dated 28 March 2022. Brief Facts : 3. The petitioner filed its return of income u/s 139(1) of the Act on 24 November 2014 which was subsequently revised on two occasions namely on 17 March 2016 and 25 March 2016 which was further modified on 29 November 2016. In the original return of income, the petitioner offered guarantee fees charged to its Associate Enterprise (AE) amounting to Rs. 152.66 crore by taking 1.5% of the guarantee amount as the basis. This figure of Rs. 152.66 crore was credited to the profit and loss account. However, in March 2016, the petitioner realized that they have offered guarantee fee more than what was required and therefore revised the return of income by offering Rs.34.07 crore. This was done by reducing Rs. 118.59 crore in revised return of income. The net effect was that the petitioner offered Rs.34.07 crore of income as guarantee fees. However, since the accounts for the financial y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otice under Section 148 of the Act came to be issued on 30 March 2021 for the assessment year 2014-15, calling upon the petitioner to deliver a return of income within 30 days from the service of the notice. The petitioner, vide letter dated 29 April 2021, requested the assessing officer to treat the original revised return filed in March 2016 as a return pursuant to the notice under Section 148 of the Act and further requested the reasons for reopening the assessment. 7. On 12 November 2021, a notice under Section 142(1) was issued without providing the reasons, calling upon the petitioner to file its return of income. The said notice was replied by the petitioner vide letter dated 18 November 2021 wherein the petitioner once again requested the revised return filed in March 2016 to be taken as return pursuant to Section 148 notice. The petitioner also enclosed a copy of the said return. 8. On 24 March 2022, the assessing officer issued a show cause cum draft assessment order and called upon the petitioner to reply to the same within one day, i.e. by 25 March 2022. In the draft order, for the first time, the reasons recorded were reproduced and furnished to the petitioner. 9. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... application is also pending as of today. 12. Meanwhile, to obviate limitation period for filing an appeal, the petitioner after filing the present petition has challenged the reassessment order by filing an appeal to the Commissioner of Income Tax (Appeals). 13. It is on the above backdrop that the petitioner is before this Court challenging the reassessment proceedings as per the pre-amended law. Submissions of the Petitioner : 14. Mr. Mistri, learned Senior Counsel for the petitioner submits that the impugned notice is issued after a period of 4 years from the end of the relevant assessment year and in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessment, the reassessment notice and the proceedings are bad in law. He further submits that the issue of "guarantee fees" is pending before the Tribunal and therefore even on this account the impugned proceedings are barred by the 3rd proviso to Section 147 of the Act. He further submitted that in the assessment order addition of Rs. 120.8 crore on account of "guarantee fee income" has been made and therefore there cannot be any case for the very same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also on 25-3-2016 that assessee had claimed a deduction of Rs. 118,58,58,621 under the head Guarantee fee reversal pertaining to FY 2013-14 but booked in FY 2015-16. No such deduction was claimed in the original return filed on 25-11-2014. At note No.16 attached to the computation of Income it is stated that the company had revised the guarantee fee charged to its subsidiaries for AY 2013-14, post finalisation of the books of accounts for the year. Accordingly, it was stated that the guarantee fee offered to tax excludes an amount of Rs.118,58,58,621 which has been accounted as reversal of guarantee income in the books of FY 2015-16. It is stated for tax purpose, the reversal has been given effect to in FY 2013-14 itself. The deduction claimed by the assessee in computation of income is not admissible due to following reasons; 1. Reversal of income accounted under guarantee fee in FY 2013-14 is reportedly done in the books for FY 2015-16. Hence if at all deduction is allowable based on audited books for the FY 2015-16, it is allowable only in AY 2016-17 relevant to FY 2015-16 that too subject to confirmation that it is written off in the books. 2. (ii) If the deduction is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isions of Section 147 as it existed at the relevant point are reproduced herein: 147. Income escaping assessment - If the Assessing Officer has reason to believe" that any income chargeable to tax has escaped assessment" for any assessment year, 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 (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year): Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns as reproduced in the draft assessment order, in the reasons annexed to the reply, there are 5 crucial paragraphs which are absent in the reasons reproduced in the draft order, namely paras 1, 2, 3, 4 and 5. It is a settled position that the reasons furnished to the assessee have only to be seen, and the officer cannot supply different reasons in the affidavit of reply. 22. Even otherwise, in the reasons annexed to the reply, the reasons itself state, 'it is seen from the return and computation of income....'. It further states that 'at note No.16 attached to the computation of income.....revised the guarantee fee...'. This indicates that the reasons are based on the documents forming part of the original assessment proceedings. There is no fresh tangible material that has been referred to in the reasons annexed to the reply, which would empower the assessing officer to reopen the case, more so after a period of 4 years. 23. The reasons appearing in the draft assessment order and to the reply filed by the respondent do not disclose what are the facts which the Petitioner has not disclosed and which were necessary for the assessment. In the absence of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or reopening the case. 29. Even otherwise, the petitioner vide letters dated 29 March 2021 and 18 November 2021 requested the respondent to treat the revised return filed in March 2016 as return filed pursuant to the notice under Section 148 of the Act and further a copy of the said return was also filed. In our view, this would amount of substantial compliance of the requirement of filing of return of income pursuant to the notice under Section 148 of the Act. The petitioner is justified in relying upon the decisions of Delhi High Court in the case of Principal Commissioner of Income-tax v. S.G. Portfolio (P.) Ltd. (2023) 151 taxmann.com 307 (Delhi) and Madras High Court in the case of Swapna Manuel v. Assistant Commissioner of Income-tax (2024) 160 taxmann.com 166 (Madras), in support of the contention that a letter filed by an assessee to treat the original return as return pursuant to 148 notice would amount to compliance of notice under Section 148 of the Act. 30. We note that the petitioner has filed an appeal after filing the present petition to obviate the limitation period and since, as held by us above, the reassessment proceedings are wholly without jurisdiction, we ex ..... X X X X Extracts X X X X X X X X Extracts X X X X
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