Case Law Details
Brief of the Case
Delhi High Court held In the case of Munjal Showa Limited vs. DCIT that it is clear that the AO did not apply his mind independently and went by the order of the CIT. It is a settled law that a quasi-judicial authority cannot afford to act on the direction and in the present case on the direction of a superior officer. In Anirudhsinhji Jadega v. State of Gujarat (1995) 5 SCC 302, it was reiterated by the Supreme Court that once a discretion is vested with a certain authority, he alone should exercise that discretion vested under the statute and if he acts in accordance with the direction or any compliance with some higher authorities instruction, it would be a case of failure to exercise discretion altogether. Also this Court in Lahmeyer Holding GMBH v. Deputy Director of Income Tax (2015) 376 ITR 70 (Del), a distinction has been made as to the power to review and the power to re-assess. In the garb of reopening the assessment, the AO cannot be permitted to review the original assessment. That is in the domain of the CIT under Section 263, subject of course, to compliance with the mandatory requirements of that provision. In the present case, apart from the fact that the CIT did not exercise such power, it is plain from the admission of the Revenue in the counter affidavit that the AO was acting on the direction of the CIT. Hence reopening of assessment is not permissible.
Facts of the Case
The Assessee, a public limited company, was incorporated in 1985 as a joint venture between Showa Corporation, Japan and Hero Group, India. It is engaged, inter alia, in the business of manufacture and sale of shock absorbers for vehicles. For the previous year relevant to AY 2008-09, the Assessee filed a return of income at a total income of Rs. 25,10,74,700. The return was picked up for scrutiny. on 28th November 2011 the AO passed a draft assessment order. The objections thereto filed by the Petitioner were considered by the Dispute Resolution Panel. By an order dated 15th June 2012, the DRP directed the AO to pass the final assessment order by issuing certain directions. On that basis, on 6th July 2012, the AO framed the assessment of the Assessee by the final order of assessment under Section 143(3) read with Section 144C assessing the total income of the Assessee at Rs. 44,29,50,186 as against the returned income of Rs. 25,10,74,695.
Further on 11th March 2013, the DCIT issued a notice to the Assessee under Section 148 enclosing therewith the reasons proposed for reopening of the assessment for the aforementioned AY 2008-09. On 17th September 2013, the Petitioner filed its legal objections to the reopening of the assessment. On 19th February 2014, an order was passed by the DCIT dismissing the objections raised by the Petitioner to the reopening of the assessment under Section 148. The AO concluded in the ‘reasons for reopening the assessment’ that he had reasons to believe that a sum of Rs. 49,46,301+ Rs. 1,71,43,726 aggregating to Rs. 2,20,90,027 had escaped assessment and there was a failure on the part of the Assessee to disclose the true particulars of its income by claiming expenses which were not paid.
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