IN THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on : 24.01.2013
+ W.P.(C) 7087/2012
SHIVALIK BIMETAL CONTROLS LTD ..... Petitioner
versus
INCOME TAX OFFICER ..... Respondent
Advocates who appeared in this case:
For the Petitioner : Mr Prakash Chand Yadav, Adv.
For the Respondent : Mr Sanjeev Rajpal, Sr. Standing Counsel.
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V. EASWAR
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
1. This writ petition is directed against the notice dated 28.03.2012
under section 148 of the Income Tax Act, 1961 (hereinafter referred to as
,,the said Act) whereby the assessment for assessment year 2005 -06 is
sought to be reopened. The petitioner on receipt of the said notice filed
its objections on 08.05.2012. But, those objections were rejected by an
order dated 24.08.2012.
W.P.(C)7087/2012 Page 1 of 5
2. The purported reasons for issuance of the impugned notice under
section 148 of the said Act read as under: -
"Assessment u/s 143(3) was completed on 19.04.2007 on
total income of `5,64,85,110/- u/s 115JB as against the
normal income of `3,16,410/-. It has been noticed that
while completing the assessment, disallowance u/s 80-IC
could not be made as the conditions as laid down in that
section are not fulfilled. This resulted in under assessment
of the income to the tune of `1,32,50,439/-.
Section u/s 147 reads as under:
"Section 147....
Explanation 2 for the purposes of this section,
the following shall also be deemed to be cases
where income chargeable to tax has escaped
assessment namely:
(a) .........
(b) .........
(c) where the assessment has been made,
but
i) income chargeable to tax has been
under assessed; or
ii) such income has been assessed at too
low a rate or
iii) such income has been made the subject
of excessive relief under this Act; or
iv) excessive loss or depreciation
allowance or any other allowance under
this Act has been computed:"
W.P.(C)7087/2012 Page 2 of 5
In view of explanation 2 (c)(i) & (iv) to section 147,
as quoted above, I have reason to believe that taxable
income to the tune of `1,32,50,439/- has escaped
assessment. Therefore it is proposed to issue notice u/s 148
of the IT Act, 1961 in order to tax the above said escaped
income. In view of the above, as per provisions of section
151, it is requested to kindly accord approval for issuance of
notice u/s 148 in this case for the assessment year 2005-06."
3. The learned counsel for the petitioner submits that this is a case
where the conditions stipulated in the proviso to section 147 of the said
Act would have to be satisfied because the notice has been issued after a
period of four years from the end of the relevant assessment year. He
further submitted that the conditions stipulated in the proviso are not
satisfied and, therefore, the said notice is bad in law.
4. The learned counsel for the respondent/ revenue sought to support
the issuance of the notice under section 148 of the said Act on the ground
that it was a case of escapement of income as indicated in the notice
itself. He also sought to rely on Explanation 2 in section 147 of the said
Act.
5. We have considered the arguments advanced by the counsel for
parties and we agree with the submission made by the learned counsel for
W.P.(C)7087/2012 Page 3 of 5
the appellant that the said notice is bad in law as the same has been issued
beyond a period of four years from the end of the relevant assessment
year without satisfying the condition precedent therefor. The proviso to
section 147 of the said Act imposes an injunction on the revenue
authorities prohibiting them from taking any action beyond the said
period of four years unless (i) any income chargeable to tax has escaped
assessment for such assessment year, (ii) by reason of the failure on the
part of the assessee (a) to file a return under section 139 of the said Act or
in response to a notice issued under sub-section (1) or section 147 or
section 148 of the said Act or (b) to disclose fully or truly all material
facts necessary for the assessment for that assessment year. In this matter
it is not the case of the revenue that the assessee had failed to file the
return under any of the provisions. Therefore, the only way in which the
notice under section 148 of the said Act beyond the period of four years,
could be justified would be if there was failure on the part of the assessee
to disclose fully and truly all material facts necessary for his assessment.
It is not sufficient that the income chargeable to tax has escaped
assessment but it must further be shown that this has escaped as a result
W.P.(C)7087/2012 Page 4 of 5
of failure on the part of assessee to disclose fully and truly all material
facts necessary for his assessment.
6. In the present case, the impugned reasons behind the notice dated
28.03.2012, which we have extracted above, does not even carry a
whisper that there has been a failure on the part of the assessee to fully
and truly disclose all material facts necessary for the assessment. Even
the order rejecting the objections does not indicate as to what material
fact has not been disclosed by the assessee.
7. In these circumstances the impugned notice dated 28.03.2012
cannot be sustained in law. The same is set aside and so, too, all
proceedings pursuant thereto. The writ petition is allowed as above.
There shall be no order as to costs.
BADAR DURREZ AHMED, J
R.V.EASWAR, J
JANUARY 24, 2013
hs
W.P.(C)7087/2012 Page 5 of 5
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