SCA/3797/2000 1/8 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION No.3797 of 2000 For Approval and Signature: HONOURABLE MR. JUSTICE K. A. PUJ AND HONOURABLE MR.JUSTICE BANKIM N. MEHTA ========================================================= = 1 Whether Reporters of Local Papers may be allowed to see the judgment? 2 To be referred to the Reporter or not? 3 Whether Their Lordships wish to see the fair copy of the judgment? 4 Whether this case involves a substantial question of law as to the interpretation of the Constitution of India, 1950 or any order made thereunder? 5 Whether it is to be circulated to the Civil Judge? ========================================================= = PRIYANKA CARBON & CHEMICAL INDUSTRIES PVT. LTD. - Petitioner Versus DEPUTY COMMISSIONER OF INCOME TAX - Respondent ========================================================= = Appearance : MR SN SOPARKAR, Learned Senior Advocate with Ms. VAIBHAVI PARIKH, Learned Advocate for Petitioner. MR MANISH R BHATT for Respondent. ========================================================= = CORAM : HONOURABLE MR. JUSTICE K. A. PUJ and SCA/3797/2000 2/8 JUDGMENT HONOURABLE MR. JUSTICE BANKIM N. MEHTA Date : 24/07/2008 ORAL JUDGMENT (Per : HONOURABLE MR. JUSTICE K. A. PUJ) 1. The petitioner has filed this petition under Article 226 of the Constitution of India challenging notice dated 28.12.1999 for reopening of assessment under Section 147 read with Section 148 of the Income Tax Act, 1961 [“the Act” for short] for assessment year 1993-94 and notice dated 11.01.2000 for assessment year 1992-93 issued by the respondent. 2. The petition was admitted by this Court on 12.07.2000 and interim relief in terms of paragraph 7(B) of the petition has been granted whereby implementation, execution and operation of the impugned notices were stayed. The Court has also stayed further proceedings pursuant to the said notices. 3. It is the case of the petitioner that the petitioner is a company regularly assessed under the Act. For SCA/3797/2000 3/8 JUDGMENT assessment years 1992-93 and 1993-94, the petitioner had filed its returns of income, which were taken in scrutiny assessment under Section 143(3) of the Act. The assessment for both the assessment years were framed by the Assessing Officer on 25.03.1995 and various additions were made by the Assessing Officer. The petitioner challenged the said orders in appeal and vide appellate order dated 28.12.1995, the said additions have been deleted. 4. It is also the case of the petitioner that the impugned notices were issued by the respondent after expiry of period of four years from the end of relevant assessment years, i.e. 31.03.1993 and 31.03.1994. On receipt of the said notices, the petitioner addressed two letters dated 16.02.2000 requesting the respondent to furnish reasons recorded prior to issuance of notices under Section 148 of the Act. However, the said reasons were not supplied to the petitioner. 5. Ms.Vaibhavi Parikh, learned advocate appearing for Mr.S.N.Soparkar, learned Senior Advocate for the petitioner, has submitted that the action of the SCA/3797/2000 4/8 JUDGMENT respondent in sending notices for reassessment is patently bad, illegal, arbitrary, contrary to law. She has further submitted that the impugned notices are issued beyond the period of four years from the end of relevant assessment year and, hence, the said notices could not be implemented. She has further submitted that for both the years, original assessments were framed under sub-section (3) of Section 143 of the Act. Proviso to Section 147 of the Act prescribes that where an assessment under sub-section (3) of Section 143 has been made for the relevant assessment year, no action can be taken under Section 147 of the Act after expiry of four years from the end of relevant assessment year unless specified conditions are satisfied. She has further submitted that one of the conditions is that if an assessee has failed to disclose fully and truly all material facts necessary for the assessment then said period of limitation does not apply. She has further submitted that there is nothing to show that there is failure on the part of the petitioner to give fully and truly all material facts of relevant assessment. She has, therefore, submitted that the impugned notices issued by the respondent are without jurisdiction SCA/3797/2000 5/8 JUDGMENT and are required to be quashed and set aside. 6. She has further submitted that this Court as well as the Apex Court have taken a consistent view and repeatedly held that if there is no failure on the part of the assessee to supply all material facts fully and truly and if the notices are issued beyond four years' period from the end of relevant year, such notices are held to be invalid and accordingly, such notices are required to be quashed and set aside by the Court. 7. Mr.Manish R. Bhatt, learned Senior Standing Counsel appearing for the Revenue, has submitted that affidavit-in-reply is filed on behalf of the Revenue and along with the affidavit, reasons recorded by the Assessing Officer before issuance of notices under Section 148 of the Act are produced on record. He has further submitted that as per Explanation 2, Clause (2) to Section 147, “the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely: (c) where as assessment has been made, but, SCA/3797/2000 6/8 JUDGMENT (i) income chargeable to tax has been under- assessed; or (ii) such income has been assessed at too low rate; or (iii) such income has been made the subject of excessive relief under this Act; or (iv) excessive loss or depreciation allowance under this Act has been computed.” He has submitted that in the present case, the assessee has been granted excess deduction under Section 80-I of the Act; the closing stock has been undervalued and excess deduction on account of expenses such as interest has also been granted. He, therefore, submitted that the case squarely falls within the ambit of Section 147 of the Act and, therefore, notices under Section 148 of the Act are correctly issued by the respondent. 8. He has further submitted that pursuant to the notices, assessment will be finalized after giving due opportunity to the assessee and if the assessee SCA/3797/2000 7/8 JUDGMENT has any grievance, an alternative remedy is available and, hence, on this ground also, the petition deserves to be dismissed. 9. Having heard the learned advocate for the petitioner and learned Senior Standing Counsel appearing for the Revenue and having gone through the petition, affidavit-in-reply as well as affidavit-in-rejoinder and more particularly reasons recorded by the Assessing Officer before issuance of notice, we are of the view that there is no omission or failure on the part of the assessee to disclose all material facts truly and fully. The assessment for both the years have been completed under sub-section (3) of Section 143 of the Act. All necessary details were made available with the Assessing Officer at the time of finalizing the regular assessment pursuant to the notices issued under Sections 143(3), 142(1) as well as Section 143(2) of the Act and on that basis, assessments were finalized. Hence, it cannot be said that there was any omission or failure on the part of the assessee to disclose all material facts truly and fully at the time of original assessment. Even a bare perusal of the reasons recorded makes it clear that the factual data was SCA/3797/2000 8/8 JUDGMENT available with the Assessing Officer at the time of assessment. On these very materials, if he takes a different view subsequently, that too, after expiry of four years' period from the end of relevant assessment years, that would not confer any jurisdiction upon the respondent to issue notices under Section 148 of the Act. 10. Having regard to the facts and circumstances of the case and considering the case law on the subject as well as statutory provisions, we are of the view that the impugned notices issued by the Assessing Officer are without jurisdiction, more particularly when the notices are issued after a period of four years from the end of the relevant assessment year. Therefore, both the impugned notices are quashed. This petition is allowed. Rule is made absolute without any order as to costs. [K.A. Puj, J.] [Bankim N. Mehta, J.] Rajendra