Quashed

Nelco Ltd. (Earlier Known as Tatanet Services Ltd. ) v. Assistant Commissioner and Ors.

Bombay HC19 Jan 2022WP/7342/2021

Case brief

AI extract

What is this about?

The High Court of Bombay, in a writ petition, quashed a notice issued under Section 148 and an order rejecting objections under Section 147 of the Income Tax Act, 1961. The court held that the reassessment proceedings were based solely on a change of opinion and violated the mandated waiting period after objections were filed.

What did the court decide?

The notice under Section 148 dated 20-3-2020 and the order rejecting objections dated 24-9-2021 are set aside.

Nelco Ltd. (Earlier Known as Tatanet Services Ltd. ) Vs Assistant… — Income Tax | Bombay HC (2022)

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PURTI PRASAD PARAB

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Digitally signed by PURTI PRASAD PARAB Date: 2022.01.20 16:11:56 +0530

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IN THE HIGH COURT OF JUDICATURE AT BOMBAY CIVIL APPELLATE JURISDICTION

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WRIT PETITION NO. 7342 OF 2021

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Nelco Limited
(Earlier known as Tatanet Services
Limited)….Petitioner

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 V/s.
Assistant Commissioner of Income Tax
11(3)(1), Mumbai and Ors. …Respondents

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----

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Mr. Paras S. Savla a/w Mr. Harsh R. Shah for Petitioner.
Mr. Suresh Kumar for Respondents.

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 ----

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 CORAM : K.R. SHRIRAM &

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 R.N. LADDHA, JJ.
 DATED : 19th JANUARY, 2022

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P.C. :

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1.Petitioner’s case was selected for scrutiny and the assessment

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order under Section 143(3) of the Act was passed on 22nd February, 2016.
Petitioner received a notice dated 20th March, 2020 under Section 148 of the
Income Tax Act, 1961 (the Act) for A.Y. 2013-14 stating that revenue has
reasons to believe that petitioner’s income chargeable to tax for A.Y. 2013-
14 has escaped assessment. Petitioner was later given a notice under
Section 143(2) read with Section 147 of the Act dated 22nd December, 2020
in which the reasons recorded for re-opening was reproduced. Therefore,
as more than four years had passed after the relevant assessment year and
the assessment order under Section 143(3) of the Act has been passed the
proviso to Section 147 of the Act shall apply. Respondent will have to also

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Purti Parab

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show apart from some tangible material, that there was failure on the part
of petitioner to fully and truly disclose all material facts required for the
assessment.

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2.Petitioner filed its objections to the re-opening and order
rejecting objections dated 24th September, 2021 was passed.

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In fact, in complete breach of the directions given in Asian
Paints Ltd. vs. Deputy Commissioner of Income Tax1 an assessment order
came to be passed on 29th September, 2021 within five days. This court in
Asian Paints Ltd. (supra) held that if the Assessing Officer does not accept
the objections filed, he shall not proceed further in the matter within a
period of four weeks from the date of service of the said order of the
objections on the assessee. This court had also directed that all Income Tax
Officers concerned shall follow the proceedings strictly in all such cased of
re-opening of assessment. Therefore, respondent are in breach of the order
of this court. The assessment order dated 29th September, 2021 is set aside
on this ground alone.

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Petitioner is impugning the notice dated 20th March, 2020
issued under Section 148 of the Act along with order on objections dated
24th September, 2021.

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3.We have considered the reasons recorded for re-opening and
there is nothing in the reasons to indicate that there was failure on the part

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1 [2008] 296 ITR 90 (Bombay)

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Purti Parab

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of petitioner to disclose fully and truly any material facts. The entire basis
for re-opening is change of opinion of the concerned Assessing Officer.
Mr.Savla has taken us through documents annexed to the petition and it is
quite obvious that petitioner had made available all details and documents
relating to the issue raised in the reasons for re-opening. As per the
Jurisdictional Assessing Officer (JAO) petitioner had entered into a
transaction with a related party being Nelco Limited. The Tax Auditor and
Transfer Pricing Auditor reported the transaction with Nelco Limited of
Rs.18,85,15,000/-. Perusal of creditors details submitted ‘during the course
of assessment proceeding’ showed that the transaction entered into with
Nelco Limited during the year were Rs.27,62,01,700/- and therefore there is
escapement of income. It is therefore clear that relying on the same set of
documents and facts already considered before the original assessment
proceeding re-opening is proposed to take a view different from the view
already taken earlier. Courts have repeatedly held that change of mind
cannot be the basis for re-opening.

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4.Mr. Suresh Kumar submitted that this issue under consideration

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was never examined by the Assessing Officer during the regular assessment
as noted in the reasons. The fact is that query was raised by the Assessing
Officer on this issue by a letter dated 14th August, 2015 and reply giving all
the details were provided by petitioner by a letter dated 6th November, 2015,

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27th January, 2016 etc. Courts have repeatedly held that once a query is

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Purti Parab

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raised and that has been explained by the assessee, even if there is no
discussion on that aspect in the assessment order still the Assessing Officer
is deemed to have consider these points and applied his mind.

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5.All these only indicate one thing that re-opening is proposed on
the basis of change of opinion.

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6.In the circumstances, the impugned notice dated 20th March,
2020 is quashed and set aside. Consequently, the order passed rejecting the
objections dated 24th September, 2021 also is set aside.

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7.Petition disposed.

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(R.N. LADDHA, J.)(K.R. SHRIRAM, J.)

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Purti Parab

Nelco Ltd. (Earlier Known as Tatanet Services Ltd. ) v. Assistant Commissioner and Ors.

Case brief

What is this about?

What did the court decide?

Nelco Ltd. (Earlier Known as Tatanet Services Ltd. ) v. Assistant Commissioner and Ors.

Case brief

What is this about?

What did the court decide?

What the court decided

A compact analysis

Issues for consideration

Cases cited

Statutes considered

Parties & counsel

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