Case Law Details

Case Name : Shri Parasram Industries Pvt. Ltd. Vs ITO (Delhi High Court)
Appeal Number : Writ Petition (C) 9094 of 2014
Date of Judgement/Order : 11/12/2015
Related Assessment Year :
Courts : All High Courts (3747) Delhi High Court (1183)

Brief of the Case

Delhi High Court held In the case of Shri Parasram Industries Pvt. Ltd. vs. ITO that the present case is related to change of opinion. This is so, because in the questionnaire, the AO specifically raised the issue with regard to the validity of shareholdings. The responses were given by the assessee from time to time and what is more important is that the Assessing Officer had directly issued letters to all the share applicants, who had, in turn, given their confirmations along with their PAN numbers and bank details. After having received the said information, the Assessing Officer did not think it fit to make an addition and that itself would amount to forming an opinion. Therefore, the present exercise of issuing the notice under Section 148 would be nothing but one of change of opinion, which is impermissible.

Facts of the Case

In this case, the AO received information about receipt of accommodation entries from the investigation Wing. The AO observed that the said information was not received at the time of original assessment. Accordingly, he formed an opinion that he has reason to believe that income has escaped assessment and issued notice u/s 148. The main grounds raised in the writ petition are that the re-assessment proceedings having been initiated after four years from the end of the relevant assessment year required certain pre-conditions to be fulfilled. One of the pre-conditions was that there was failure on the part of the assessee to fully and truly disclose all the material particulars necessary for the assessment. It is contended by the learned counsel for the petitioner that apart from there being no such failure, in fact, there is not even an allegation in the reasons that there has been such a failure on the part of the assessee.

The second ground urged on behalf of the petitioner/assessee is that this is a case of change of opinion inasmuch as the very issue sought to be raked up by way of the impugned notice under Section 148 has been considered by the Assessing Officer during the time of the original assessment under Section 143 (3).

Contention of the Assessee

The ld counsel of the assessee placed reliance on the decision of this Court in Lahmeyer Holding GMBH v. Deputy Director of Income Tax: [2015] 376 ITR 70 (Delhi) to submit that the re-assessment proceedings would be invalid in case an issue or query is raised and answered by the assessee in the original assessment and yet, the Assessing Officer does not make any addition in the assessment order. In such situations, it would have to be accepted that the issue had been examined, but the Assessing Officer did not find any ground or reason to make any addition or reject the stand of the assessee.

Relying on the said decision, it was also submitted that when such an exercise is undertaken by the Assessing Officer, it can be regarded as a case where the Assessing Officer forms an opinion and that re-assessment on the very same ground would be invalid because the Assessing Officer having once formed an opinion in the course of the original assessment, although he did not record the reasons for the same, cannot be permitted to change his opinion through the re-assessment proceedings.

Held by High Court

We note that in Lahmeyer Holding GMBH [2015] 376 ITR 70 (Delhi) , a Division Bench of this Court had placed reliance on the Full Bench decision in CIT v. Usha International Limited: [2012] 348 ITR 485 (Delhi) (FB), wherein it was, inter alia, held as under:-

“3. Reassessment proceedings will be invalid in case an issue or query is raised and answered by the assessee in original assessment proceedings but thereafter the Assessing Officer does not make any addition in the assessment order. In such situations it should be accepted that the issue was examined but the Assessing Officer did not find any ground or reason to make addition or reject the stand of the assessee. He forms an opinion. The reassessment will be invalid because the Assessing Officer had formed an opinion in the original assessment, though he had not recorded his reasons.”

We are of the opinion that the present case is also one of change of opinion. This is so, because, the questionnaire specifically raised the issue with regard to the shares. The responses were given by the assessee from time to time and what is more important is that the Assessing Officer had directly issued letters to all the share applicants, who had, in turn, given their confirmations along with their PAN numbers and bank details. After having received the said information, the Assessing Officer did not think it fit to make an addition and that itself would amount to forming an opinion, as indicated in CIT v. Usha International Limited [2012] 348 ITR 485 (Delhi) (FB) and Lahmeyer Holding GMBH [2015] 376 ITR 70 (Delhi) . Therefore, the present exercise of issuing the notice under Section 148 would be nothing but one of change of opinion, which is impermissible.

The second point that has been urged by the learned counsel for the petitioner/assessee is that even otherwise, the impugned notice under Section 148 and the proceedings pursuant thereto have to be set aside for the simple reason that the clear pre-condition of there being a failure on the part of the assessee to fully and truly disclose all the material particulars necessary for assessment, has not been made out. It is evident from the reasons given for reopening of assessment that there is not even an allegation that there has been a failure on the part of the assessee to disclose fully and truly all the material particulars necessary for assessment. This aspect is also covered by several decisions of this Court, including Global Signal Cables (India) Private Limited v. Deputy Commissioner of Income Tax: [2014] 368 ITR 609 (Delhi), wherein a reference to an earlier decision in Haryana Acrylic Manufacturing Company v. CIT: [2009] 308 ITR 38 (Delhi) was made.

Thus, on both grounds, the petition is liable to succeed.

Accordingly appeal of the assessee allowed.

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