Nila Infrastructures Limited Vs ACIT (Gujarat High Court)
The Gujarat High Court allowed the writ petition and quashed the notice dated 29.03.2018 issued under Section 148 of the Income-tax Act, 1961, along with the order rejecting objections and all consequential reassessment proceedings for Assessment Year (AY) 2011–12. The Court held that the reopening of assessment was without jurisdiction and contrary to the statutory conditions prescribed under Sections 147 and 148 of the Act.
The assessee had filed its original return for AY 2011–12 on 27.09.2011 and a revised return on 27.09.2012. The assessment was completed under Section 143(3) on 29.03.2014 after detailed scrutiny. Subsequently, the Assessing Officer issued a notice under Section 148 on 29.03.2018, i.e., beyond four years from the end of the relevant assessment year. The reassessment was proposed on multiple grounds, including alleged non-deduction of tax at source on interest payments, incorrect accounting of VAT and service tax, wrongful claim of MAT credit relating to an amalgamating company, and alleged booking of bogus expenditure based on information received from another assessing authority.
The Court examined the reasons recorded for reopening and the order disposing of objections and found them to be identical in substance, indicating mechanical disposal without independent application of mind. On the first issue relating to disallowance under Section 40(a)(ia) for alleged non-deduction of TDS on interest payments, the Court noted that the assessee had produced relevant records and proof of deduction and payment of TDS during the original assessment as well as along with objections. The Assessing Officer’s observation that there was “nothing on record” to show TDS deduction was found to be factually incorrect, demonstrating that there was no suppression or failure to disclose material facts.
