Pr. CIT vs. Tupperware India Pvt. Ltd (Delhi High Court)

DATE: August 10, 2015 (Date of pronouncement)
DATE: August 26, 2015 (Date of publication)
AY: 2003-04
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S. 147: Failure by AO to comply with the law in G. K. N. Driveshafts & pass order on objections renders assessment order void; Even a s. 143(1) assessment cannot be reopened in the absence of new/ tangible material

(i) The Court is of the considered view that after having correctly understood the decision of the Supreme Court in G.K.N. Driveshafts (India) Ltd. v. ITO (2003) 259 ITR 19 (SC) as mandatorily requiring the AO to comply with the procedure laid down therein and to dispose of the objections to the reopening order with a speaking order, the CIT (A) committed an error in not quashing the reopening order and the consequent assessment;

(ii) Though only an assessment u/s 143(1) and not 143(3) was made, the reopening order of the AO only refers to the report of Statutory Auditor under Section 44AB of the Act which report was already enclosed with the return filed by the Assessee. Therefore, factually, there was no new material that the AO came across so as to have “reasons to believe that the income had escaped assessment”.

(iii) The department’s contention that the judgement in CIT vs. Orient Craft Ltd. (2013) 354 ITR 536 (Del) is contrary to the Full Bench verdict in CIT-VI v. Usha International Ltd. (2012) 348 ITR 485 and the issue should be referred to a larger Bench is not acceptable because the central issue examined in the decision of the Full Bench in Usha International Ltd. was as to what constituted a “change of opinion”. The Court, therefore, does not consider the decision in Orient Craft Ltd. as being contrary to the decision in Usha International Ltd. In other words, there is no occasion for the Court to refer to a larger bench the question of the correctness of the decision in Orient Craft Ltd. which decision squarely applies to the facts of the present case. (Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007) 291 ITR 500 & Madhukar Khosla v. Assistant Commissioner of Income Tax (2013) 354 ITR 356 referred).

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