P C Snehal Engineers Private Limited Vs ACIT Circle 3(1)(1) (Gujarat High Court)
The petitioner, a private limited company engaged in construction and engineering, filed its return for AY 2011-12 declaring total income of Rs. 2,61,86,720/-. The return was selected for scrutiny, and notices under Sections 142(1) and 143(2) of the Income Tax Act, 1961 were issued. During the assessment proceedings, the petitioner furnished detailed replies, audit reports, earlier assessment orders, details relating to guarantee commission, interest payments, investments yielding exempt income under Section 14A, and reconciliation between Form 26AS and the books of account. The Assessing Officer completed the assessment under Section 143(3) on 06.03.2014, making only a disallowance of Rs. 75,000 under Section 14A.
On 13.03.2018, the Assessing Officer issued a notice under Section 148 seeking to reopen the assessment on four grounds:
- Payment of guarantee commission of Rs. 27,26,230.
- Excess interest payment of Rs. 5,13,366 to persons covered under Section 40A(2)(b).
- Disallowance under Section 14A amounting to Rs. 3,67,488.
- Difference of Rs. 1,73,79,860 between contract receipts reflected in Form 26AS and the books of account.
The petition challenged the reopening notice and the order rejecting objections.
Procedural History
- Return filed for AY 2011-12.
- Scrutiny assessment completed under Section 143(3) on 06.03.2014.
- Notice under Section 148 issued on 13.03.2018.
- Reasons for reopening supplied on 04.07.2018.
- Petitioner filed objections on 20.09.2018.
- Objections rejected by order dated 03.10.2018.
- Writ petition filed before the Gujarat High Court.
Legal Issues
- Whether reassessment under Sections 147/148 beyond four years was valid.
- Whether there was any failure by the assessee to make full and true disclosure of material facts.
- Whether reopening was based merely on a change of opinion.
Relevant Statutory Provisions
- Sections 147, 148, 142(1), 143(2), 143(3), 14A and 40A(2)(b) of the Income Tax Act, 1961.
- First proviso to Section 147.
- Explanation 1 to Section 147.
Parties’ Submissions
