The Madras High Court allowed a writ petition challenging the jurisdiction of the Assessing Officer to reopen an assessment for the year 2014-15. The court held that no suppression of facts occurred as evidenced by the completed assessment order.
The impugned order of the Assessing Officer was quashed and the writ petition was allowed.
This page shows the compact analysis of this judgement. The full analysis — procedural history, issue-by-issue holdings with ratio and obiter, advocates, and paragraph-level evidence for every claim — is being added to the record in batches and will appear here when this judgement has been through it.
W.P.(MD) No.5273 of 2022
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
DATED : 12.06.2024
CORAM
THE HON'BLE MR.JUSTICE C.SARAVANAN
W.P.(MD)No.5273 of 2022 and W.M.P.(MD)Nos.4290 and 4292 of 2022
M/s.Essar Sign Industries, No.31, Annamalaiyar Street, Aruna Nagar, Puthur, Trichy – 620 017.
... Petitioner
Vs.
Prayer : Writ Petition filed under Article 226 of Constitution of India for issuance of a Writ of Certiorari, to call for the records of the Petitioner on the file of first respondent and quash the impugned notice issued under Section 148 of the Act, dated 30.03.2021 in DIN and Notice No.ITBA/AST/S/148/2020-21/1031900750(1) in PAN: AABFE3066D and the consequential order disposing off objection in DIN
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W.P.(MD) No.5273 of 2022
No.ITBA/AST/F/17/2021-22/1038831110(1) dated 18.01.2022 passed by the second respondent for the Assessment Year 2014-15.
For Petitioner : Mr.SP.Chidambaram For Respondents : Mr.N.Dilipkumar Senior Standing Counsel
ORDER
The petitioner is before this Court against the impugned order dated
18.01.2022 overruling the objection of the petitioner against re-opening of the assessment that was completed on 25.11.2016 under Section 143(3) of the Income Tax Act, 1961.
2 . After the assessment was completed on 25.11.2016 under Section 143(3) of the Income Tax Act, 1961, the petitioner was issued with the impugned notice dated 30.03.2021 under Section 148 of the Income Tax Act, 1961 to re-open the assessment. The petitioner filed a return of income on 22.11.2021 and thereafter, furnished with the reasons for reopening of the assessment, vide communication dated 20.12.2021. The reasons for re-opening of the assessment reads as under:-
''The assessee has claimed in the P&L account, interest of Rs.17,34,710/- to partners' capital account
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W.P.(MD) No.5273 of 2022
of Rs.98,95,000/-. However, for the partner's current account of Rs.89,30,727/- shown on asset side, no interest was charged. Hence proportionate interest of Rs.15,65,662/-(17,34,710x89,30,727/9895000) is chargeable for the debit balance. (li) Commission on sale of UDS of Rs.41,25,000/- claimed as expenditure is unreasonable and excessive compared to the turnover of Rs.74,28,079/-''
3 . The petitioner's objection dated 11.01.2022 has been rejected,
which has now culminated in the impugned order dated 18.01.2022. The petitioner assails the impugned order on the ground that the second respondent has no jurisdiction to reopen the assessment, as the assessment order that was passed on 25.11.2016 has clearly recorded that the petitioner's representative appeared and filed copies of Return of Income, Profit and Loss Account, Balance Sheet, Books of Accounts, Bank Account Statements, TDS Returns etc. for the year ending on 31.03.2014.
4 . It is noticed that the assessment order itself also records that the
case was selected for scrutiny under CASS for the reasons mentioned that large commission payment against low net profit has been noticed and therefore, notice under Section 143(2) of the Income Tax Act, 1961 dated 18.09.2015 was issued and a further notice under Section 142(1) of the
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W.P.(MD) No.5273 of 2022
Income Tax Act, 1961, dated 29.04.2016 was also issued to the petitioner.
The same reason has been given for reopening of the assessment.
5 . A reading of the above said assessment order and the reasons
given for re-opening the assessment indicates that there is no case made out for reopening the assessment, as there is no suppression of fact by the petitioner before the assessment was completed under Section 143(3) of the Income Tax Act, 1961, on 25.11.2016. Therefore, the present Writ Petition deserves to be allowed and is accordingly, allowed. No costs. Consequently, connected Miscellaneous Petitions are closed.
Index : Yes/ No 12.06.2024 Neutral Citation: Yes / No Speaking Order / Non-Speaking Order smn2
To
2.The Assessing Officer, Income Tax Department, National Faceless Assessment Centre, New Delhi.
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W.P.(MD) No.5273 of 2022
C.SARAVANAN, J.
smn2
W.P.(MD) No.5273 of 2022
12.06.2024
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2 issues framed by the court
Whether the Assessing Officer had jurisdiction to reopen an assessment under Section 148 of the Income Tax Act, 1961 when the representative had appeared and furnished documents during the completed a
Whether there was suppression of facts by the assessee that justified the reopening of the assessment.
5 provisions across 2 enactments
M/s. Essar Sign Industries
The Income Tax Officer, Ward 1(1), Trichy
The Assessing Officer, Income Tax Department, National Faceless Assessment Centre, Delhi
C. Saravanan
As recorded by the court registry
Judgements on the same questions, provisions and authorities, from every court
