M/S HONDA MOTOR INDIA PVT. LTD. V. ASSTT. COMMISSIONER OF INCOME TAX CIRCLE-I and ANOTHER

WTAX/796/2017

AI Insights

The case involves M/S Honda Motor India Pvt. Ltd., the petitioner, challenging the reassessment proceedings initiated by the Assistant Commissioner of Income Tax, Circle-I, NOIDA, for the Assessment Year 2012-13. The petitioner sought to quash the notice and subsequent orders issued under Section 148 of the Income Tax Act, arguing that there was no new or tangible material to justify the reopening of the assessment. The department contended that the reassessment was justified based on the consistent purchase policy of the assessee and previous years' assessments, which allegedly indicated income had escaped assessment. The court found that the objections raised by the petitioner were not adequately addressed in the previous orders and thus remanded the case for a fresh decision.

• Counselvise Citation: [2018] 140 COUNSELVISE.COM (IT) 763060 (HC-ALLAHABAD)
• Appeal Type: Others
• Pronouncement Date: 19-01-2018
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: SSC
• Assessee Lawyers: SUYASH AGARWAL; AMIT SRIVASTAVA; DEEPAK CHOPRA
• Keywords: Certiorari; Certiorari; Income Tax; Notice; Prohibition; Reassessment; Writ Tax
• Section: 148; 143(3)

Judgement Text

"Court No. - 35 Case :- WRIT TAX No. - 796 of 2017 Petitioner :- M/S Honda Motor India Pvt. Ltd. Respondent :- Asstt. Commissioner Of Income Tax Circle-I & Another Counsel for Petitioner :- Suyash Agarwal,Amit Srivastava,Deepak Chopra Counsel for Respondent :- S.S.C. Hon'ble Bharati Sapru,J. Hon'ble Neeraj Tiwari,J. Heard Sri Deepak Chopra, Advocate assisted by Sri Suyash Agrawal and Sri Amit Srivastava, learned Counsel for the petitioner and Sri Manish Goyal, learned Counsel for the department. Counter and Rejoinder Affidavits have been exchanged between the parties and, therefore, the matter is being disposed of at the stage of admission itself. The following prayers have been made by the petitioner :- \"(i) Issue writ order or direction in the nature of Certiorari quashing the notice and reasons dated 03.06.2016 issued by the Assistant Commissioner of Income Tax, Circle -1, NOIDA-Respondent No.1, under Section 148 of the Act for A.Y. 2012-13 . (ii) Issue writ order or direction in the nature of Certiorari quashing the order dated 09.10.2017 passed by the Assistant Commissioner of Income Tax, Circle- 1, NOIDA-Respondent No.1, on the objection filed against the reasons recorded for issuing notice under Section 148 of the Act for A.Y. 2012-13. (iii) Issue writ order or direction in the nature of prohibition restraining Assistant Commissioner of Income Tax, Circle-1, NOIDA - Respondent No.1 from proceeding with the reassessment proceedings under Section 148 for A.Y. 2012- 13.\" It is the contention of the petitioner that the reassessment proceedings initiated against the petitioner by way of an order dated 03.06.2016 were not justified in view of the fact that there was no new or tangible material against the petitioner, which was found in order to reopen the matter. However, a notice was issued on 17.05.2017 and, thereafter, reasons were received by the petitioner on 26.05.2017. The reasons recorded reveal that the AO had already recorded from material available on record that the income of the petitioner with regard to spare parts purchased from Associated Enterprises and the payment of royalty to the parent company of the petitioner had an escapped assessment and this reason was based on the basis of earlier years 2009- 10, 2010-11 and 2011-12. The current petition deals with the Assessment Year 2012-13. It was this income the AO said, he had reason to believe had not been included in the income as stated by him in his order. The State has filed a counter affidavit. For ready reference paragraphs no.10 & 11 of the counter affidavit are quoted hereunder:- \"10. That the contents of paragraph 2.12 and 2.13 of the writ petition are misconceived, misleading, incorrect and are denied. The petitioner has misread the reasons that were recorded by the Assessing Officer inasmuch as the Assessing Officer in the reasons that were recorded has not relied upon the assessment proceedings in the year 2009-10, 2010-11 and 2011-12. There is a reference to the same for the reasons which have been recorded and there is no dispute raised that the purchase policy of the assessee during the year under consideration remained the same. Hence, no plausible objections could be taken by the assessee as it has followed the same purchase policy during the year under consideration. The reasons that have ben recorded clearly establish that the information mentioned therein was not taken into consideration while passing the assessment order and as such rightfully the assessee has been put on notice for drawing re-assessment as there exists reasons to believe that income chargeable to tax has escapped assessment. Mere supply of information does not necessarily imply that an assumption can be drawn regarding such information being considered to be satisfactory. If such issue has not been addressed or adjudicated upon in the assessment order then there is every right in the Assessing Officer to reopen the assessment proceedings and to adopt the procedure for re-assessment. 11. That the contents of paragraph 2.14 of the writ petition are misconceived, misleading, incorrect and are denied. From a perusal of Annexure-10 to the writ petition, it is evident that only legal objections were taken and there was no specific denial as of fact to the reasons that were recorded for reopening the assessment. There has been no specific denial to the effect that the purchase policy remains the same. There is no specific denial of the fact that there was a case of shifting of profit from India to foreign tax jurisdiction. There is also no denial of the fact that the transaction was not on the arms length price. It was merely alleged in the objections to be a speculation on the part of the Assessing Officer but candidly the assessee avoided a direct emphatic denial of the same. Likewise the issue of royalty payment was found to be on the basis of the same agreement without any equivalent benefit to the company or any change in the business pattern of the company, which aspect has not been denied in the objections by the assessee. This clearly shows that the objections taken by the assessee were only superlative and had no foundation in them.\" It is apparent from the reading of these two paragraphs that the department had itself given up the case on the basis of the assessment proceedings held in the year 2009-2010, 2010-11 and 2011-12. From a perusal of the order passed on 09.10.2017 whereby the objections of the petitioner have been decided. It is apparent that the objection taken by the petitioner with regard to the material, which was already on record has not been dealt with specifically. The record reflects that this issue had engaged the attention of the AO earlier also, who had in the proceedings under Section 143(3) for the year 2012-13 referred to the same in its communication dated 19.02.2015, which is on record as Annexure No.5 to the writ petition. The order passed on the objections clearly do not deal with all the material, which is already on record. Learned Counsel for the revenue has sought to argue that since no specific ground was taken on this question the same could not have been taken into consideration while deciding the objections. We are not satisfied with the reply. On the contrary it was this very issue which was engaging the attention of the department when the matter was sought to be reopened, the material was there, the explanations were there, it could certainly have been part of the order passed on the objections but no reference is made to the material, which is already there. We are, therefore, of the opinion that in the facts and circumstances of this case, it would be appropriate and in the interest of justice that the matter go back to the authority to pass a fresh order on the objections of the petitioner after giving to the petitioner an opportunity of hearing. It is made clear that the decision will be made on the basis of the material, which is already on record. A fresh order may be passed within the next one month. Till decision by the authority concerned, the reassessment proceedings may be kept in abeyance. The Writ Petition stands disposed of. No costs. Order Date :- 19.1.2018 S.P. "