Gujarat Borosil Ltd. vs Deputy Commissioner of Income Tax

Akil Abdul Hamid Kureshi, J.—Heard learned counsel for the parties for final disposal of the petition. The petitioner has challenged a notice dated March 23, 2012, as at annexure A to the petition issued by the respondent-Assessing Officer u/s 148 of the income tax Act, 1961 ("the Act" for short). The petitioner is a company registered under the Companies Act. For the assessment year 2007-08, the petitioner filed its return of income declaring a total income of Rs. 17.68 crores (rounded off). Such return was processed by the respondent and order of assessment u/s 143(3) of the Act was passed on December 29, 2009. To reopen such assessment, the impugned notice dated March 23, 2012, came to be issued.

We propose to dispose of this petition on a short ground, namely, that, at the time of issuance of notice, the respondent had not recorded his reasons for reopening the assessment. The petitioner had, from the outset, contended that such notice, though was issued on March 23, 2012, the reasons were recorded by the Assessing Officer on March 30, 2012. This contention we had recorded in our order dated January 29, 2013, while issuing notice in the following manner:

Learned counsel for the petitioner submitted that in the original assessment, the Assessing Officer had considered the question of depreciation, bearing in mind the provisions contained in section 32(2)(iii) of the income tax Act, 1961, as amended on April 1, 1997. Such issue, therefore, cannot be allowed to be re-agitated, by way of reopening of the assessment. Learned counsel, further, submitted that notice for reopening the assessment was issued on March 23, 2012, whereas, the reasons for reopening the assessment, recorded by the Assessing Officer, carried the date March 30, 2012, i.e., the reasons are recorded after issuance of notice.

Learned counsel, further, submitted that the very issue, on which the reopening is sought to be made, has been, on the merits, examined by this court in the decision in the case of General Motors Co. P. Ltd., dated August 23, 2012. The issue is, thus, concluded by the Division Bench of this court against the Department.

Issue notice, returnable on 26th February, 2013.

The respondents may continue with the assessment in question for the impugned notice but final order thereon shall not be passed without the leave of the court.

Learned counsel, Mr. Parikh, appeared for the Department and candidly stated on the basis of the original file which were also made available for our perusal today that the petitioner''s averments in this respect are correct. With his assistance, we have perused the file which reveals without any doubt that the notice was issued on March 23, 2012. We are informed that the same was received by the petitioner on March 26, 2012. Thus, on the date of issuance of notice, no reasons for issuing such notice were recorded. Requirement of recording reasons flows from the statutory pro-visions of section 148(2) of the Act. Sub-section (1) of section 148 as is well known pertains to issuance of notice where income has escaped assessment. Sub-section (1) of section 148 pertains to such a notice to be issued by the Assessing Officer before making the assessment, reassessment or re-computation of income u/s 147 of the Act. Sub-section (2) of section 148 provides that the Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so. When such essential requirement of issuance of notice under sub-section (1) of section 148 was not fulfilled, the notice itself would be rendered ineffective. We are informed that before issuance of notice, the Commissioner''s approval was also obtained on March 19, 2012. If the Assessing Officer had not recorded reasons, we wonder how the Commissioner persuaded himself to authorise issuance of notice. In the result, the impugned notice dated March 23, 2012, is quashed. The petition is disposed of accordingly.