In the High Court of Judicature at Bombay Ordinary Original Civil Jurisdiction
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WPL.944.2015.901.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO. 944 OF 2015 Capgemini India Pvt. Ltd. } Petitioner versus Asst. Commissioner of Income Tax } Circle 14(1)(2), Mumbai and Ors. } Respondents Mr. Percy Pardiwalla-Senior Counsel with Mr.Jitendra Jain and Mr. P. C.Tripathi i/b. Mr.Atul K. Jasani for the Petitioner. Mr. Anil Singh-Additional Solicitor General with Mr. Suresh Kumar and Mr. Arvind Pinto for the Respondents. CORAM :- S. C. DHARMADHIKARI & A. K. MENON, JJ. DATED :- MAY 6, 2015 ORAL JUDGMENT :- (Per S.C.Dharmadhikari, J.) This Writ Petition under Article 226 of the Constitution of India challenges the notice under section 148 of the Income Tax Act, 1961 (for short ªthe IT Actº), copy of which is at Annexure ©A© and the order dated 12th February, 2015 (Annexure ©AB©) and reassessment order Bombaydated 27th February, 2015 (AnnexureHigh ©AC©). Court 2) On the earlier occasion we had extensively heard both sides. We have also heard both sides today. In the light of the agreement and consent of both sides, we dispose of this Writ Petition finally. Page 1 of 17 J.V.Salunke,PA ::: Downloaded on - 26/05/2015 12:03:47 ::: WPL.944.2015.901.doc 3) Rule. Respondents waive service. 4) On 21st April, 2015, we had passed an order inviting the attention of the Respondents to the averments in the Writ Petition and particularly in para 12. Thereafter, we indicated to the Respondents that in view of authoritative pronouncements by this Court as also by the Hon©ble Supreme Court in the case of Asian Paints vs. Deputy Commissioner of Income Tax and Anr. reported in (2008) 296 ITR 90 and in the case of GKN Driveshofts (India) Ltd. vs. Income Tax Officer reported in (2003) 259 ITR 19, the order passed on 12th February, 2015 rejecting the objections should have been communicated and the Respondents thereafter ought not to have proceeded with for a period of four weeks and in pursuance of the impugned notice. Since the order of assessment dated 27th February, 2015 is assailed on the ground that this direction of the Division Bench of this Court and the Hon©ble Supreme Court has not been followed, we had called upon the Respondents© Counsel then appearing to take appropriate instructions and inform the Court as to whether that assessment order should be set Bombayaside by consent or appropriate High corrective steps would Court be adopted. 5) The matter was placed today for passing orders, because we were not happy with the stand taken by the Respondents in the affidavit in reply. We had also noticed that in several matters the Page 2 of 17 J.V.Salunke,PA ::: Downloaded on - 26/05/2015 12:03:47 ::: WPL.944.2015.901.doc Respondents have been adopting similar course. There could be difficulties in meeting certain deadlines and particularly of 31st March, but that does not justify that in every case the Respondents defy the directions in the Judgments of the Hon©ble Supreme Court and of the Division Bench of this Court. We could have appreciated a case of genuine difficulty and brought forward fairly and completely, but what we find in this case is that the notice under section 148 of the IT Act is dated 27th March, 2014. That was served on the Petitioner, but the reasons which are said to be recorded, annexed to this notice, came to be furnished to the Petitioner on 29th October, 2014. Thereafter, the Petitioner raised the objections on 12th December, 2014. The order passed by the Respondents, rejecting these objections, is dated 12th February, 2015. The Respondents were obliged to abide by the above directions and not passed an order of assessment for a period of 4 weeks from the date of service of this order rejecting the objections. In the instant case, if that order itself was served on 10th March, 2015, then, this haste in passing an assessment order within four weeks cannot be justified. If the notice is dated 27th March, 2014, then, the Bombayperiod till 27th March, 2015 High was enough to conclude Court the steps and in accordance with law. The Respondents having delayed the proceedings and at their own end, it would not be open for them to justify their conduct and complete disregard to the orders and directions which are Page 3 of 17 J.V.Salunke,PA ::: Downloaded on - 26/05/2015 12:03:47 ::: WPL.944.2015.901.doc binding on them. In such circumstances, we are not in agreement with the contention that the assessment order having now been passed, the Writ Petition should not be entertained and the Petitioner must be relegated to the statutory remedies. We are of the firm opinion that having regard to the factual statements in para 12 of the Writ Petition and there being absolutely no reply thereto in the affidavit in reply, this contention of the Respondents cannot be accepted. 6) On the earlier occasion, the learned Additional Solicitor General had also assured us that corrective steps would be taken and hereafter none of the Assessees would be visited with the consequences that are faced by the present Petitioner. We are informed today that appropriate corrective steps have been taken and the Principal Commissioner has issued clear directives to all Assessing Officers to abide by the law laid down by the Hon©ble Supreme Court in the case of GKN Driveshofts (India) Ltd. (supra) and equally by this Court in the case of Asian paints Ltd. (supra) and Aroni Commercials Ltd. vs. Deputy Commissioner of Income Tax reported in (2014) 44 Taxman 304. It is in Bombaythese circumstances that weHigh have proceeded to ignore Court the assessment order and on perusal of the notice under section 148 of the IT Act as well we are satisfied that this is a fit case for interference in our Writ Jurisdiction. Page 4 of 17 J.V.Salunke,PA ::: Downloaded on - 26/05/2015 12:03:47 ::: WPL.944.2015.901.doc 7) Turning to the legality and validity of the notice under section 148 of the IT Act and the proceedings in pursuance thereof, we find that the notice is issued to reopen the assessment for the assessment year 2007-08. The reasons for the same are recorded at page 198 of the paper book. We have proceeded on the footing that these reasons have been recorded on 27th March, 2014 and they reflect the satisfaction of the Assessing Officer. 8) In the present case, the Assessing Officer has issued notice under section 148 of the IT Act to reopen the assessment for the assessment year 2007-08. Going by this admitted factual position, it is evident that the Assessing Officer could have reopened the assessment only on recording his satisfaction that the income chargeable to tax has escaped assessment for the relevant assessment year by reason of the failure of the Assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. The reasons recorded and copy of which is at Annexure 198 of the paper book read as under:- ªANEXURE BombayM/s. CapegeminiHigh India Pvt. Ltd. Court Reason for issue of notice u/s 148 of the Income Tax Act, 1961 A. Y. 2007-08 In this case, the assessee company filed its return of income for A. Y. 2007-08 on 02.11.2007 declaring income of Rs.2,76,74,434/- under normal provision of the Act. Then the case was selected for scrutiny and the assessment was completed Page 5 of 17 J.V.Salunke,PA ::: Downloaded on - 26/05/2015 12:03:47 ::: WPL.944.2015.901.doc u/s 143(3) r.w.s. 144C(13) of the Act on 14.10.2011 assessing the total income at Rs.115,90,05,170/-. The assessee company is engaged in business of development and export of software. During the year under consideration, it is seen that the assessee company had claimed deduction u/s 10A of the Act for its Unit II & III without setting off losses of Unit IV from the profits derived by the eligible units. As per the provisions of section 10A of the Act, deduction u/s 10A of the Act is allowable on the net profit derived by the assessee company from eligible units after setting off of losses from other eligible units. I have therefore, reasons to believe that the failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, within the meaning of the provisions of section 147 of the Income-tax Act, 1961, income of Rs.5,14,12,534/- chargeable to tax has escaped assessment. This is, therefore, a fit case for issue of notice u/s 148 of the I. T. Act, 1961.º 9) The Petitioner raised a specific objection by a letter dated 12th December, 2014. The Petitioner pointed out that it had filed a return of income for assessment year 2007-08 on 2nd November, 2007. The admitted factual position was that it declared an income of Rs.2,76,74,434/- under normal provision of the IT Act. The case was selected for scrutiny and the assessment was completed under section 143(3) read with section 144C(13) of the IT Act on 14th October, 2011 assessing the total income at Rs.115,90,05,170/-. The Petitioner Bombaycompany is engaged in theHigh business of development Court and export of software.