Quashed

Cmi Fpe Limited. v. the Union of India through the Secretary and 2 Ors.

Bombay HC23 Dec 2021WP/3496/2019

Case brief

AI extract

What is this about?

This writ petition challenges a notice of reassessment and order rejecting objections issued under the Income-tax Act for AY 2012-13. The Court held that reopening beyond four years requires a finding of failure to disclose material facts. Finding the AO's reasons amounted to a change of opinion and indicating escapement, the notice and order were quashed.

What did the court decide?

The notice dated 13/3/2019 and the order dated 25/11/2019 are quashed and set aside.

Cmi Fpe Limited. Vs the Union of India through the Secretary… — Cheque Dishonour | Bombay HC (2021)

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.3496 OF 2019

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CMI FPE Limited
Vs.

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...Petitioner

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The Union of India through the
Secretary Ministry of Finance and Ors....Respondents

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Mr. Prakash Shah a/w. Mr. Durgaprasad Poojari i/b Prompt Legal for
Petitioner.

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Mr. Suresh Kumar for Respondents.

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CORAM:K. R. SHRIRAM &
AMIT B. BORKAR, JJ.
DATED:23 DECEMBER 2021.

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P. C. :

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Petitioner is challenging the notice of reassessment dated 13/3/2019 for Assessment Year 2012-2013 and order dated 25/11/2019 rejecting its objections.

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Mr. Shah submits that the reasons consists of two issues based

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on change of opinion and those are difference between total bills raised by the assessee and sales booked in the books of account and according to the Assessing Officer when the bills are already raised, amount is accrued to the assessee and therefore it had to be offered to tax, which the assessee

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has not done and the same which was claimed by way of warranty provision was not allowable looking to the past history of actual expenses in relation to such warranty. Mr. Shah submits that these two issues along with one more issue was the subject matter of consideration for Assessment Year 2011-2012 and notice for reopening had been issued for that Assessment Year as well. Mr. Shah submits that said notice for Assessment Year 2011-2012 was also quashed by order dated 8/3/2019 in Writ Petition No. 294/2019.

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Moreover we have considered the reasons recorded for reopening and we are of the view that it is nothing but change of opinion.

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Even the order of objection is based on erroneous understanding of legal provision in as much as here is a case where reopening is proposed beyond 4 years and therefore reasons should indicate that there was failure on the part of assessee to fully and truly disclose material facts. This is one of the principal conditions before the Assessing Officer could assume jurisdiction and if this condition is not met the notice issued would be without jurisdiction and will require to be quashed.

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In the order rejecting objections, the Assessing Officer says

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that it is not required to satisfy that for issuance of notice beyond period of 4 years there must be failure on the part of assessee to disclose material fact. According to the Assessing Officer he should only have a reason to believe that there is escapement of income and it would confer jurisdiction to reopen the assessment. In our view on this ground alone petition has to be allowed. Notice as well as order impugned in the petition are hereby quashed and set aside.

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6. Petition disposed.

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(AMIT B. BORKAR, J.)

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 ( K. R. SHRIRAM, J.)

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Digitally signed by RAJESHWARISUBODH RAJESHWARISUBODHKARVE KARVE Date: 2022.01.03 12:13:07 +0530

Cmi Fpe Limited. v. the Union of India through the Secretary and 2 Ors.

Case brief

What is this about?

What did the court decide?

Cmi Fpe Limited. v. the Union of India through the Secretary and 2 Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Statutes considered

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