ASPECT TECHNOLOGY CENTER (INDIA) PRIVATE LIMITED V. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX

WP/5457/2022

AI Insights

The case involves Aspect Technology Center (India) Private Limited, which challenged the proceedings initiated by the Income Tax Department under Section 147 read with Section 148 of the Income Tax Act for the Assessment Year 2013-2014. The petitioner argued that the notice for reassessment was barred by limitation and lacked jurisdiction as the necessary conditions under the Act were not fulfilled. The court examined whether the conditions for reopening the assessment were met, particularly focusing on the requirement of disclosing all material facts, which is crucial for extending the period for reassessment beyond the normal four years.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 752613 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 15-06-2023
• Assessment Year: misc
• Other Referred Cases: Hindustan Lever Ltd. v. R.B. Wadkar, Mphasis Ltd. v. Dy. Commissioner of Income Tax and Others
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: K V ARAVIND; M DILIP
• Assessee Lawyers: TANMAYEE RAJKUMAR; MANASA ANANTHAN
• Keywords: Income Tax; Jurisdiction; Limitation; Notice; Re-assessment
• Section: 147; 148; 139; 142

Judgement Text

" - 1 - NC: 2023:KHC:20710 WP No. 5457 of 2022 IN THE HIGH COURT OF KARNATAKA AT BENGALURU DATED THIS THE 15TH DAY OF JUNE, 2023 BEFORE THE HON'BLE MR JUSTICE S SUNIL DUTT YADAV WRIT PETITION NO. 5457 OF 2022 (T-IT) BETWEEN: 1. ASPECT TECHNOLOGY CENTER (INDIA) PRIVATE LIMITED EMBASSY STAR, 2ND FLOOR, 8 PALACE ROAD, BANGALORE NORTH, BANGALORE-560 052 REPRESENTED BY ITS MR.KOTAMRAJU GAURAV RAO, REPRESENTED HEREIN BY OUR DIRECTOR. … PETITIONER (BY SRI. TANMAYEE RAJKUMAR., ADVOCATE A/W SMT. MANASA ANANTHAN, ADVOCATE) AND: 1. ADDITIONAL/JOINT/DEPUTY/ASSISTANT COMMISSIONER OF INCOME TAX INCOME TAX OFFICER, NATIONAL FACELESS ASSESSMENT CENTRE ROOM NO.401, 2ND FLOOR, E-RAMP JAWAHARLAL NEHRU STADIUM, DELHI-110 003. 2. ASSISTANT COMMISSIONER OF INCOME-TAX CIRCLE 1(1) (1), BMTC BUILDING, 80FT. ROAD, 6TH BLOCK, KORAMANGALA, BANGALORE-560 095. Digitally signed by B K MAHENDRAKUMAR Location: High Court of Karnataka - 2 - NC: 2023:KHC:20710 WP No. 5457 of 2022 3. PRINCIPAL COMMISSIONER OF INCOME TAX-1 BMTC BUILDING, 80 FT. ROAD, 6TH BLOCK, KORAMANGALA, BANGALORE-560 095. … RESPONDENTS (BY SRI. K.V. ARAVIND, ADVOCATE A/W SRI M. DILIP, ADVOCATE) THIS WRIT PETITION IS FILED UNDER ARTICLE 226 OF THE CONSTITUTION OF INDIA, PRAYING TO DECLARING THAT THE IMPUGNED PROCEEDINGS INITIATED BY THE R2 UNDER SECTION 147 READ WITH SECTION 148 OF THE ACT AND CONTINUED BY THE R1 ARE BARRED BY LIMITATION AND OPPOSED TO THE SAID PROVISIONS AND THEREOF WITHOUT JURISDICTION AND ETC. THIS WRIT PETITION COMING ON FOR PRELIMINARY HEARING IN 'B' GROUP, THIS DAY, THE COURT MADE THE FOLLOWING: ORDER The petitioner has sought for declaration that the proceedings initiated by respondent No.2 under Section 147 read with Section 148 of the Income Tax Ac ('the Act' for short) and continued by the respondent No.1 are barred by limitation and opposed to law and the petitioner has challenged the notice at Annexure-'F' dated 31.03.2021 issued under Section 148 of the Act for the Assessment Year 2013-2014 and has also sought for setting aside of the order dated 02.03.2022 at - 3 - NC: 2023:KHC:20710 WP No. 5457 of 2022 Annexure-'M' passed by respondent No.1 disposing of the petitioner's objections as to the Officer's jurisdiction. 2. Learned counsel appearing for the petitioner submits that the return was filed for the Assessment Year 2013-2014 and for the purpose of initiating re-assessment proceedings under the un-amended Section 147 of the Act, the period normally available was four years from the end of relevant Assessment Year, which in the present case would end on 31.03.2018. 3. It is submitted that in the present case, as the notice under Section 148 was issued on 31.03.2021, the Proviso to Section 147 of the un-amended Act requires to be satisfied and unless the Authority were to demonstrate that there is failure to disclose fully and truly all material facts, the power under Section 147 cannot be invoked. It is submitted that upon request of the assessee, the reasons for reopening communicated to the petitioner found at Annexure-H do not fulfill the jurisdictional requirement as per the Proviso to Section 147 of the Act. - 4 - NC: 2023:KHC:20710 WP No. 5457 of 2022 4. It is further contended that the Assessing Officer has referred to the material placed before it and has also recorded that there is a mistake in short computation of 'income' including interest and accordingly, no grounds are made out for reopening on the basis of reasons contained at Annexure-H. 5. Reliance is placed by the petitioner on the judgment of Bombay High Court in the case of Hindustan Lever Ltd. v. R.B. Wadkar reported in [2004] 137 TAXMAN 479 (BOM.) and has also relied on the decision of Division Bench of this Court in the case of ITA Nos.406/2007 c/w 407/2007 disposed off on 19.09.2011. 6. Heard both sides. 7. It is clear that, as the notice is issued on 31.03.2021 as regards the Assessment Year 2013-2014 and the extended period of four years to six years is sought, the requirement of Proviso under Section 147 of - 5 - NC: 2023:KHC:20710 WP No. 5457 of 2022 the Act is a jurisdictional requirement. The Proviso to Section 147 reads as hereunder:- \"Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year:\": 8. In the present case, a perusal of the reasons for re-opening communicated to the petitioner would reveal that the Assessing Authority was of the view that receipt of re-assets would be chargeable under Section 28(iv) of the Act. 9. It must be noticed that there is no finding recorded regarding the \"failure to disclose fully and truly - 6 - NC: 2023:KHC:20710 WP No. 5457 of 2022 all material facts\". Though there is reference in the said reasons relating to this very amount in the earlier material available before the Assessing Officer as noticed, however, without entering into such aspect as to whether the material having been mentioned in the earlier proceedings would be sufficient or not and on the only ground that there is absence of finding that the assessee has failed to disclose fully and truly all material facts, the notice under Section 148 of the Act dated 31.03.2021 is required to be set aside and also the preliminary order at Annexure-'M' dated 02.03.2022 is required to be set aside and accordingly, they are set aside. 10. The Co-ordinate Bench of this Court in the case of Mphasis Ltd., v. Dy. Commissioner of Income Tax and Others passed in W.P.No.55355/2017 has observed at para 3(b) as follows:- \"(b) in the notice dated 01.09.2017 at Annexure K the 2nd respondent has assigned the reasons for resorting to re-opening of the assessment, relevant part of which reads as under: - 7 - NC: 2023:KHC:20710 WP No. 5457 of 2022 \"From the above discussion, is clear that asessee was liable to deduct TDS but failed to do so before making payments for onsite services and selling commission to the AEs. Hence, it is required to disallow the said expenses u/s. 40(a)(i) of the IT Act. Therefore I have reason to believe that Rs.722,02,48,792/- has escaped assessment within the meaning of section 147 of the IT Act\". The text of the reasons nowhere states that there is failure on the part of the petitioner to disclose the alleged non- deduction of TDS; what is stated is that the petitioner had failed to deduct the TDS; the Proviso employs the expression \"by reason of the failure on the part of the assessee... to disclose fully and truly all material facts\": the expression implies some guilt in mind howsoever little it may be, attributable to the assessee; in other words, a failure to deduct the TDS per se does not fit into the said expression as rightly contended by the counsel for the petitioner;\" 11. Accordingly, the Co-ordinate Bench has observed that, in effect, the finding that there is failure on the part of assessee to disclose fully and truly all material facts is a jurisdictional requirement for exercise of power under Section 148 of the Act. Such view requires - 8 - NC: 2023:KHC:20710 WP No. 5457 of 2022 acceptance, in the present factual matrix and in the absence of such finding found in the reasons communicated to the petitioner, such power could not have been exercised at all by the Assessing Authority. 12. As the petition is being disposed off on this jurisdictional point, the other contention raised by the assessee including that there has been disclosure at an earlier point of time and accordingly, the proceedings of re-assessment cannot be initiated on a different view on the same facts, is a contention that is not entered into. Accordingly, the petition is disposed off. Sd/- JUDGE VGR "