High Court Of Gujarat
Inducto Ispat Alloys Ltd. vs. Assistant Commissioner Of Income Tax
Section 147, proviso
Asst. Year 2002-03
D.A. Mehta & S.R. Brahmbhatt, JJ.
Special Civil Appln. No. 14611 of 2008
17th March, 2009
Counsel Appeared :
Tushar P. Hemani with Ms. Paurami Sheth, for the Petitioner : M.R. Bhatt with Mrs. Mauna M. Bhatt, for the Respondent
JUDGMENT
D.A. MEHTA, J. :
Having heard learned counsel appearing for the respective parties, the petition is taken up for final hearing and disposal today. Rule. Learned counsel for respondent authority is directed to waive service.
2. The assessment year in question is 2002-03. On 31st Oct., 2002, the petitioner filed return of income showing total income at Rs. nil. After scrutiny, assessment came to be framed under s. 143 (3) of the IT Act, 1961 (the Act) determining the total income at Rs. 2,80,96,870 on 31st March, 2005.
3. Vide notice dt. 27th March, 2008 issued under s. 148 of the Act, the respondent authority has initiated reassessment proceedings. The reasons recorded as supplied by the respondent authority vide communication dt. 5th May, 2008 read as under : The reasons for reopening of assessment is as hereunder : “Perusal of assessment records revealed that assessee had paid lease rent of Rs. 11,68,740 on gas cylinders in the relevant year. Whereas at the same time assessee had also sold its own cylinders and worked out short-term capital gain of Rs. 3,13,530. As such assessee had wrongly claimed lease rent of Rs. 11,68,740 as a result of which income chargeable to tax has escaped assessment”. The case of the petitioner is that the impugned notice under s. 148 of the Act has been issued beyond the statutory period of four years as provided in s. 147 of the Act and hence under the proviso thereto the burden is on the Revenue to show that the petitioner has either failed to furnish return of income, or comply with the statutory notice referred in the provisions, or failed to disclose fully and truly all material facts relevant for the assessment of the assessment year in question. That in the present case as can be seen from the assessment order dt. 31 March, 2005 (Annex. B), relevant details had been called for vide show-cause notice issued on 23rd Feb., 2005 and the petitioner had submitted the necessary explanation under cover of letter dt. 22nd March, 2005. That therefore, there was no failure or omission on the part of the petitioner, the other two conditions not being applicable in the facts of the case.
On behalf of the respondent authority attention was invited to the affidavit-in-reply dt. 3rd March, 2009 to emphasise the fact that the petitioner had approached at the notice stage and alternative statutory remedy was available in case the assessment framed was adverse to the petitioner. The petition, therefore, should not be entertained. That the impugned notice has been issued after obtaining approval from the higher authority as required by the provisions of the Act and thus, is within the period of limitation. Learned counsel therefore submitted that the petition be rejected directing the petitioner to avail of the statutory alternative remedy. The position in law is well settled. Under s. 147 of the Act, the AO is empowered to reopen a completed assessment if the AO has reason to believe that any income for a particular assessment year which is chargeable to tax for the said year has escaped assessment. The said section further provides that such power can be exercised within a period of four years from the end of the relevant assessment year. In the present case, the assessment year being 2002-03, the period of four years expired on 31st March, 2007 and the impugned notice has been issued on 27th March, 2008 i.e. beyond a period of four years. The case is therefore governed by the provisions of the proviso to s. 147 of the Act. Under the proviso, a completed assessment can be disturbed for the purposes of reassessment if the assessee has committed any of the defaults mentioned therein. Admittedly, the first two conditions of the three conditions cannot be available to the respondent authority leaving only the third condition as being available. The respondent has therefore to show that there was omission or failure on the part of the petitioner to furnish full and true particulars of income.
In the present case as the reasons recorded indicate the AO is of the opinion that the lease rent of Rs. 11,68,740 paid by the petitioner for gas cylinders during the relevant accounting period has wrongly been claimed because according to the AO during the same accounting period gas cylinders owned by the petitioner were sold off working out short-term capital gain of Rs. 3,13,630. Whether the lease rent was wrongly claimed or not is an issue on which the AO had applied his mind at the time of framing original assessment on 31st March, 2005 by calling for necessary information vide communication dt. 23rd Feb., 2005 and after considering the explanation dt. 22nd March, 2005, accepted the stand of the assessee that the lease rent was allowable as business expenditure. In the aforesaid facts and circumstances of the case, it is apparent that not only there is no failure or omission on part of the petitioner, the AO having considered the said issue before framing the original assessment, the action of the respondent authority in issuing the impugned notice under s. 148 of the Act is nothing else but change of opinion on the same set of facts. In the circumstances, the action of the respondent authority cannot be sustained. The impugned notice dt. 27th March, 2008 (Annex. A) issued under s. 148 of the Act is quashed and set aside for the reasons stated hereinbefore. The petition is allowed accordingly in the aforesaid terms. Rule made absolute with no order as to costs.
[Citation : 320 ITR 458]
