M/S PGS EXPLORATION UK LTD V. COMMISSIONER OF INCOME TAX AND ANOTHER

WPMS/197/2013

AI Insights

The case involves M/s. PGS Exploration (UK) Ltd., the petitioner, challenging a notice and subsequent orders for reassessment of the Assessment Year 2007-2008 issued by the Income Tax Department. The petitioner argued that the reassessment was based on a mere change of opinion and not on new material or valid grounds as required under the Income Tax Act. The court referenced previous judgments and rulings, particularly focusing on the distinction made by the addition of a proviso to section 44BB of the Act, which was effective from April 1, 2011, and noted that this did not apply retrospectively to the years in question.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 751080 (HC-UTTARAKHAND)
• Appeal Type: Others
• Pronouncement Date: 30-09-2013
• Assessment Year: misc
• Other Referred Cases: Deputy Director of Income Tax Vs. B.J. Services Company Middle East Ltd. Mumbai
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: H M BHATIA
• Assessee Lawyers: NAGESHWAR RAO; MANONEET DALAL; CHETAN JOSHI
• Keywords: Change of opinion; Extraction; Non-resident Assessee; Production; Reassessment; Mineral oils; Prospecting
• Section: 148; 142(1); 143(2); 44BB

Judgement Text

"IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL WRIT PETITION (M/S) No. 197 of 2013 M/s. PGS Exploration (UK) Ltd. ………….Petitioner Versus The Commissioner of Income Tax and another. ……...Respondents. Hon’ble Sudhanshu Dhulia, J. 1. Heard Mr. Nageshwar Rao, Mr. Manoneet Dalal and Mr. Chetan Joshi, Advocates for the petitioner and Mr. H.M. Bhatia, Advocate, present for the Income Tax Department/respondents. 2. This writ petition has been filed by the petitioner challenging Notice dated 27.03.2012 under section 148 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) and impugned order dated 14.12.2012 issued by respondent No.2 for the Assessment Year 2007-2008. Income Tax Department has also assigned the reasons for making reassessment and consequent to that the objections were filed by the petitioner before the Income Tax authority. Thereafter, a detail order was passed dealing with all objections; ultimately reassessment proceedings were initiated against the petitioner. Aggrieved by this order, petitioner came before this Court by filing present writ petition. 3. The principal ground for challenge is that reassessment can only be done by the Assessing Authority on limited grounds. Principal contention of the petitioner is that the reassessment has been initiated on a mere change of opinion, which cannot be “a reason to believe” on the part of Assessing Authority to open reassessment proceedings. 2 4. Learned counsel for the petitioner submits that the same issue was involved in a bunch of writ petitions, earlier a learned Single Judge of this Court has discussed the scope of sections 147 and 148 of the Act and had, interalia, came to the conclusion that such reassessment proceedings were being initiated on the same material which was already on the record, and the reassessment proceedings are merely a change of opinion, which cannot be a ground for reassessment. 5. Aggrieved by the judgment and order of learned Single Judge of this Court, Income Tax Department preferred Special Appeals the leading case being Special Appeal No.316 of 2012 (Deputy Director of Income Tax Vs. B.J. Services Company Middle East Ltd. Mumbai) before Division Bench of this Court, which were dismissed by passing following order: “3. Whereas section 44BB deals with a non- resident assessee providing, amongst others, services or facilities in connection with prospecting for, or extraction or production of, mineral oils, the sections mentioned in the proviso, referred to above, deal with fees received by non-resident assessees for providing, amongst others, services or facilities. Therefore, by adding the proviso with effect from 1 st April, 2011, a clear cut distinction has been made between those non-resident assessees, who are engaged in the business of providing, amongst others, services or facilities in connection with prospecting for, or extraction or production of, mineral oils and other kind of non- resident assessees, who get fees for providing services or facilities. The Assessing Officer felt that, by reason of insertion of the said proviso, he can look into those completed assessments for the accounting years, which stood closed prior to 1 st April, 2011 and, accordingly, exercised power under Section 148 of the Income Tax Act. By the judgment under appeal, the learned Judge has pointed out that there was no just reason for doing the same, inasmuch as, the distinction referred to 3 above, according to the Income Tax Act, applies only since 1 st April, 2011. 4. We, accordingly, refuse to admit the appeals. They are dismissed.” This aspect has therefore, attained a finality so far as this High Court is concerned. 6. Learned counsel for Income Tax Department Mr. H.M. Bhatia fairly submits that the dispute involved in the present writ petition stands covered by the order dated 20.08.2011 passed by a learned Single Judge of this Court in WPMS No.2197 of 2010 as also upheld by the order dated 28.05.2013 of Division Bench of this Court passed in Special Appeal No.316 of 2012 (Deputy Director of Income Tax Vs. B.J. Services Company Middle East Ltd. Mumbai) and connected Special appeals. In the Special Appeal, it was held that once assessment was closed and benefit was given to the present petitioner under section 44BB of the Income Tax Act, 1961, reassessment can be made on the ground that there is now a proviso added to section 44BB. The above provision grants certain benefits to non-resident engaged in the business of providing services or facilities in connection with, prospecting for or extraction or production of, mineral oils. The proviso of section 44BB was inserted with effect from Ist April, 2011. The proviso is as under :- “Provided that this sub-section shall not apply in a case where the provisions of section 42 or section 44D or section 44DA or section 115A or section 293A apply for the purpose of computing profits or gains or any other income referred to in those sections.” 7. Division Bench has held that this proviso is prospecting in nature i.e. it would be only effective after 4 01.04.2011 and it would have no application for previous reassessment years. On this reason also, this writ petition is liable to be succeed. 8. In view of the above, the writ petition succeeds. The notice under section 148 dated 27.03.2012, notices under section 143(2) and under section 142(1) dated 14.12.2012 and order dated 14.12.2012 are hereby quashed. 9. No order as to costs. (Sudhanshu Dhulia, J.) 30.09.2013 JKJ "