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Indus Towers Limited Through: Its Authorised Signatory Mr. Amish Mehta, Chief Financial Officer Vs. Deputy Commissioiner Of Income Tax, Circle- 11(1) & Anr.
June, 05th 2017
+                                    W.P.(C) 1560/2014

        OFFICER                                   ..... Petitioner
                     Through: Mr. Mihir Joshi, Senior Advocate with
                     Mr. Gajendra Maheshwari and Mr. Prakash
                     Kumar, Advocates.


        ANR.                                     ..... Respondents
                    Through: Mr. Dileep Shivpuri, Senior Standing
                    Counsel with Mr. Sanjay Kumar, Advocate.


%                                    29.05.2017

Dr. S. Muralidhar, J.:
1. This writ petition by Indus Towers Limited (`ITL') challenges a notice
dated 22nd February, 2013 issued to the Petitioner by the Deputy
Commissioner of Income Tax, Circle-11(1), New Delhi (`DCIT') under
Section 148 of the Income Tax Act, 1961 (`Act') seeking to re-open the
assessment for Assessment Year (`AY') 2009-10. It also seeks to challenge
the order dated 20th January, 2014 passed by the DCIT disposing of the
objections by the Petitioner to the initiation of proceedings under Section

Writ Petition (C) No. 1560 of 2014                              Page 1 of 6
147 of the Act by the aforementioned notice. The consequent assessment
proceedings are also sought to be quashed.

2. When the writ petition came up for hearing first on 10 th March 2014,this
Court while directing notice to issue in the petition restrained the
Respondents from making a final order in respect of the impugned
reassessment notice till the next date of hearing. That interim order has
continued since.

3. The brief facts are that the Petitioner is the successor to India Cellular
Towers Infrastructure Ltd. (`ICTIL'). ICTIL and India Cellular Limited
(`ICL') filed a scheme of arrangement (`demerger scheme') under Sections
391 to 394 of the Companies Act, 1956 on 17 th/24th April, 2009 for transfer
of the passive infrastructure (PI) assets owned by ICL to ICTIL with effect
from 1st January, 2009. On 3rd and 31st August 2009, the High Court of
Delhi and High Court of Gujarat, respectively, approved the demerger
scheme. ICTIL filed a return of income for the AY 2009-10 on 26th
September, 2009. On 29th September, 2009, the demerger scheme became
effective upon its submission to the Registrar of Companies. As a result, the
PI assets owned by ICL stood transferred to ICTIL with effect from 1 st
January, 2009.

4. On 31st March, 2010, ICTIL filed a revised return of income upon the
demerger scheme becoming effective.

5. In terms of Section 144 of the Act, the last date for issuance of notice by

Writ Petition (C) No. 1560 of 2014                                Page 2 of 6
the Assessing Officer (`AO') to ICTIL for carrying a scrutiny assessment
under Section 143(3) of the Act was 30th September, 2010.
6. ICTIL, Vodafone Infrastructure Limited (`VIL'), Bharti Infratel Ventures
Ltd. (`BIVL') filed a scheme of arrangement (merger) on 31st May, 2011
before this Court for transfer of all the tower companies to the Petitioner
herein i.e., Indus Tower Limited (`ITL') with effect from 1st April, 2009.

7. On 22nd February 2013, the AO i.e., Respondent No.1 herein issued a
notice under Section 148 of the Act to ICTIL for re-opening the assessment
for AY 2009-10, which already stood concluded by the order under Section
143(1) of the Act, requiring ICTIL to file its return of income within 30 days
of the receipt of the notice. Among the reasons for re-opening was the
receipt of capital assets by ICTIL on `nil' consideration from ICL. It was
further stated therein that the demerger approved by the High Court was not
compliant with the Act.

8. ICTIL replied to the above notices on 21st March, 24th September and 31st
October, 2013 raising objections to the initiation of reassessment
proceedings for AY 2009-10. ICTIL requested that the revised return filed
by it on 31st March, 2010 under Section 139(5) of the Act should be
considered as the return filed in response to the notice under Section 148 of
the Act.

9. The said objections were disposed of by Respondent No.1 by the
impugned order dated 20th January, 2014 reiterating the reasons for re-
opening the assessment.

Writ Petition (C) No. 1560 of 2014                                Page 3 of 6
10. Meanwhile, by an order dated 18th April, 2013 in Co. Pet. 14 of 2012,
this High Court approved the scheme of merger of ICTIL, VIL and BIVL to
form the Petitioner i.e., ITL. As a result, ICTIL ceased to exist. Thereafter,
the present petition was filed.

11. Two broad submissions have been advanced by Mr. Mihir Joshi, learned
Senior counsel appearing for the Petitioner:

(i) Even where proceedings under Section 147 of the Act are sought to be
taken with reference to intimation under Section 143(1) of the Act, there
should exist reason to believe that income chargeable to tax has escaped
assessment. In the facts and circumstances of the present case, certain
disclosures were made in the return of income (original as well as revised)
explaining the reasons for revising the return whereas the factual details
pertaining to the transfer of infrastructure assets along with copies of the
orders of the High Court were submitted. Therefore, the alleged formation of
belief by the AO of income having escaped assessment is a mere change of
opinion and an afterthought without any legal basis. The proceedings have
been initiated on the basis of no material and, therefore, assumption of
jurisdiction was plainly unsustainable in law.

(ii) In terms of the proviso to Section 153(1), the time limit for completion
of the assessment for AY 2009-10 was 31st December, 2011 (21 months
from the month of the AY). Further, the proviso to Section 143(2) of the Act
requires that notice for assessment should be issued within six months from

Writ Petition (C) No. 1560 of 2014                                Page 4 of 6
the end of the Financial Year (`FY') in which the return was furnished by an
Assessee. In the present case, the original return was filed by ICTIL on 25th
September, 2009 while the revised return was filed on 31 st March, 2010.
Therefore, the AO had time till 30th September, 2010 to issue notices under
Section 143(2) of the Act. After the merger scheme was approved by this
Court and ICTIL ceased to exist, notice in the meanwhile was issued on 22nd
February, 2013 under Section 148 of the Act. The last date for issuance of
the notice under Section 143(2) of the Act was 30 th September, 2013.
However, the notice under Section 143(2) of the Act was issued only on 18 th
September, 2014.

12. It must be mentioned here that although this was not initially urged as a
ground, by CM No. 574 of 2015 the Petitioner sought to amend the writ
petition to incorporate this as a ground. This CM was allowed by the Court
by its order dated 13th January, 2015 and the amended writ petition was
taken on record even while continuing the interim order.

13. In response to the above submissions, Mr. Dileep Shivpuri, learned
Senior Standing Counsel for the Department, submitted that as far as second
submission is concerned, the facts speak for themselves. He had nothing
further to add because there was no explanation for the failure to issue notice
under Section 143(2) of the Act pursuant to the notice under Section 148 of
the Act before 30th September 2013, the last date by which the notice ought
to have been issued.

14. The law on this point is fairly well settled in the decisions in ACIT v.

Writ Petition (C) No. 1560 of 2014                                 Page 5 of 6
Hotel Blue Moon [2010] 321 ITR 362 (SC) reiterated in CIT v. Madhya
Bharat Energy Corporation [2011] 337 ITR 389 (Del) and Principal
Commissioner of Income tax v. Jai Shiv Shankar Traders (P.) Ltd. [2016]
383 ITR 448 (Del). In the last mentioned judgment, this Court held that the
delay in issuing a notice under Section 143(2) of the Act would be fatal to
the re-assessment proceedings.

15. For the aforementioned reasons, it is held that as far as the second
ground is concerned, the Petitioner should succeed. In that view of the
matter, the Court does not consider it necessary to examine the first ground
of challenge.

16. The impugned notice dated 22nd February, 2013 issued to the Petitioner
under Section 148 of the Act as well as the consequential order dated 20 th
January, 2014 disposing of its objections as well as the reassessment
proceedings pursuant thereto are hereby quashed.

17. The writ petition is allowed in the above terms but, in the circumstances,
with no order as to costs.

                                                    S.MURALIDHAR, J

                                             CHANDER SHEKHAR, J
MAY 29, 2017

Writ Petition (C) No. 1560 of 2014                                Page 6 of 6
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