ERIS LIFESCIENCES LIMITED V. ASST. COMMISSINOER OF INCOME TAX, CIRCLE 2(1)(1)

SCA/14777/2018

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Eris Lifesciences Limited challenged a notice issued by the Assistant Commissioner of Income Tax under section 148 of the Income Tax Act, 1961, seeking to reopen their assessment for the year 2011-12. The petitioner argued that the notice was issued beyond the permissible period of four years and that there was no failure on their part to disclose material facts during the original assessment. The court found that the reasons for reopening the assessment were identical to those in a previous case involving the same petitioner for a different assessment year, where the court had ruled in favor of the petitioner. Consequently, the court quashed the notice, stating that the reopening was not justified as there was no new material or failure to disclose facts by the petitioner.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 760202 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 10-12-2018
• Assessment Year: misc
• Other Referred Cases: Special Civil Application no.21403 of 2017
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: M R BHATT; MAUNA BHATT
• Assessee Lawyers: B S SOPARKAR
• Keywords: Assessment Year 2011-12; Failure to disclose material facts; Income Tax; Reopening of assessment; Section 148 notice
• Section: 147; 148; 143(3); 143(1); 133-A

Judgement Text

"C/SCA/14777/2018 ORDER IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 14777 of 2018 ================================================================ ERIS LIFESCIENCES LIMITED Versus ASST. COMMISSINOER OF INCOME TAX, CIRCLE 2(1)(1) ================================================================ Appearance: MR B S SOPARKAR(6851) for the PETITIONER(s) No. 1 MR MR BHATT, Senior Advocate with MRS MAUNA M BHATT(174) for the RESPONDENT(s) No. 1 ================================================================ CORAM: HONOURABLE MS.JUSTICE HARSHA DEVANI and HONOURABLE DR.JUSTICE A. P. THAKER Date : 10/12/2018 ORAL ORDER (PER : HONOURABLE MS.JUSTICE HARSHA DEVANI) 1. Rule. Ms. Mauna Bhatt, learned Senior Standing Counsel, waives service of notice of rule on behalf of the respondent. 2. Having regard to the controversy involved in the present case, which lies in a very narrow compass and with the consent of the learned advocates for the respective parties, the matter is taken up for final hearing today. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 30.3.2018 issued by the respondent under section 148 of the Income Tax Act, 1961 (hereinafter referred to as \"the Act\"), seeking to reopen the assessment of the petitioner for the assessment year 2011-12. Page 1 of 5 C/SCA/14777/2018 ORDER 4. The petitioner, a company, is engaged in the business of manufacturing of pharmaceutical products. For the assessment year 2011-12, the petitioner filed the original return of income on 5.9.2011 declaring total income of Rs.31,18,79,250/-. Thereafter, survey proceedings under section 133 (A) of the Act were carried out at the business premises of the petitioner during the course of which the petitioner offered income of Rs.3.10 crore as a disclosure to buy peace of mind. The petitioner filed revised return of income of Rs.34,28,79,250/-, which was processed under section 143 (1) of the Act. Subsequently, the case was selected for scrutiny, which culminated into an assessment order dated 31.1.2014 under section 143 (3) of the Act. Thereafter, by the impugned notice dated 30.3.2018, the assessment of the petitioner for the year under consideration is sought to be reopened. Upon receipt of the notice, the petitioner requested the respondent to furnish the reasons recorded for initiating re-assessment proceedings. Upon such reasons being furnished to the petitioner, the petitioner raised detailed objections before the respondent on 28.6.2018. By an order dated 29.8.2018, the respondent rejected the objections. Being aggrieved, the petitioner has filed the present petition. 5. Mr. B. S. Soparkar, learned advocate for the petitioner submitted that the impugned notice has been issued on 30.3.2018 in respect of assessment year 2011-12, which is clearly beyond a period of four years from the end of the relevant assessment year, therefore, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts, necessary for its assessment, the assumption of jurisdiction on the part of the Assessing Officer under section Page 2 of 5 C/SCA/14777/2018 ORDER 147 of the Act is without authority of law. Referring to the reasons recorded, it was pointed out that the Assessing Officer has relied upon the material on record for the purpose of reopening the assessment and that no new material has been found by him. It was submitted that it is evident that the assessment is sought to be reopened on the basis of the very material which the assessee has placed on record and, therefore, there being no failure on the part of the petitioner, the Assessing Officer has no jurisdiction to initiate proceedings under section 147 of the Act. 5.1 The attention of the court was invited to a judgment and order dated 21.2.2018 passed by this court in the petitioner's own case rendered in Special Civil Application no.21403 of 2017, wherein the assessment of the petitioner was sought to be reopened for assessment year 2010-11, on similar grounds. It was submitted that the above decision would be squarely applicable to the facts of the present case, and, hence, the petition deserves to be allowed by setting aside the impugned notice. 6. Opposing the petition, Mr. M. R. Bhatt, Senior Advocate, learned counsel for the respondent reiterated the grounds raised in the affidavit-in-reply filed on behalf of the respondent. He, however, was not in a position to distinguish between the facts of the case in respect of the assessment year 2010-11, wherein this court had examined the case on merits and set aside the impugned notice. 7. This court has considered the submissions advanced by the learned advocates for the parties. Page 3 of 5 C/SCA/14777/2018 ORDER 8. On a conjoint reading of the reasons recorded for reopening the assessment in the present case in relation to assessment year 2011-12 and the reasons recorded as reflected in the judgment and order dated 21.2.2018 for the assessment year 2010-11 shows that, except for the figures, the reasons recorded are identical. In that case also, the reopening of assessment was beyond a period of four years from the end of the relevant assessment year as in the present case. This court, after considering the material on record, has found that there was no failure on the part of the petitioner to disclose fully and truly all material facts. 9. In the facts of the present case also, a perusal of the reasons recorded reveals that the Assessing Officer has not been able to pin-point any specific failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the year under consideration, and has merely made a general statement that though the assessee has filed a copy of annual report and audited profit and loss account and balance-sheet along with return of income, where various information/material were disclosed, the requisite material facts for reopening the assessment were embodied in such a manner that the material evidence could not be discovered by the Assessing Officer and could be discovered with due diligence attracting the explanation to the provisions of section 141 of the Act. From the reasons recorded, it is evident that no fresh material has been found by the Assessing Officer on the basis of which the assessment is sought to be reopened, and that upon verification of the very record that the petitioner has produced during the course of scrutiny assessment, the assessment is sought to be reopened. Nothing Page 4 of 5 C/SCA/14777/2018 ORDER specific has been pointed out by the learned counsel for the respondent to show as to what was the failure on the part of the petitioner to disclose fully and truly all materials facts. Under the circumstances, in the absence of any failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment for the assessment year under consideration the first proviso to section 147 of the Act would be attracted and consequently, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act by issuing the impugned notice under section 148 of the Act is without authority of law. The impugned notice under section 148 of the Act, therefore, cannot be sustained. 10. For the foregoing reasons, the petition succeeds and is, accordingly, allowed. The impugned notice dated 30.3.2018 issued by the respondent under section 148 of the Act is hereby quashed and set aside. Rule is made absolute accordingly with no order as to costs. (HARSHA DEVANI, J) (A. P. THAKER, J) R.S. MALEK Page 5 of 5 "