IN THE HIGH COURT OF JUDICATURE AT BOMBAY
\nO.O.C.J.
\nWRIT PETITION NO. 3342 OF 2018
\nPrecilion Holdings Limited .. Petitioner
\nVersus
\nThe Deputy Commissioner of Income Tax,
\nInternational Taxation -3(3)(2), Mumbai & Ors. .. Respondents
\n……………….
\n\uf0b7 Mr. Jehangir Mistri, Senior Counsel a\/w Mr. Madhur Agrawal i\/by
\nAtul Jasani for the Petitioner
\n\uf0b7 Mr. P.C. Chhotaray for the Respondents
\n……………….
\nCORAM : AKIL KURESHI &
\nM.S. SANKLECHA, JJ.
\nDATE : FEBRUARY 25, 2019.
\nORAL JUDGMENT (Per Akil Kureshi, J.)
\n1. The petitioner has challenged a notice of reopening of
\nassessment dated 3.4.2018.
\n2. Brief facts are as under:-
\n2.1 Petitioner is a company incorporated in Cyprus enjoying
\ntax residency certificate issued by the Cyprus Authorities.
\nPetitioner’s principal activity is to act as an investment
\nholding company. During the assessment year 2011-12, the
\npetitioner had made investment in Compulsory Convertible
\n1 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nDebentures of M\/s. Wadhwa Residency Pvt Ltd, a company
\nincorporated in India, of a sum of Rs. 161.31 crore (rounded
\noff). On such investment, the petitioner had received
\ninterest amount of Rs. 11.93 crore (rounded off) during the
\nrelevant period. The petitioner had filed return of income for
\nthe assessment year 2012-13 declaring total income of Rs.
\n11.93 crore being the interest eared by the petitioner and
\noffered the same to tax @ 10%, placing reliance on Article 11
\nof the Double Taxation Avoidance Agreement (“DTAA” for
\nshort) between India and Cyprus. It is undisputed that M\/s.
\nWadhwa Residency Pvt Ltd is an associated enterprise of the
\npetitioner and the receipt of interest income was subject to
\ntransfer pricing mechanism. The order of assessment came
\nto be passed by the Assessing Officer on the petitioner’s said
\nreturn of income under Section 143(3) of the Income Tax Act,
\n1961 (“the Act) for short) on 23.3.2016. The income was
\ntaxed at 10%, as offered by the petitioner. In order to reopen
\nsuch assessment, the Assessing Officer had issued the
\nimpugned notice. For doing so, the Assessing Officer had
\nrecorded following reasons:-
\n2 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\n“THE REASONS FOR INITIATING PROCEEDINGS U\/S 148 FOR A.Y. 2012-13
\nThe return of income for A.Y. 2012-13 was e-filed on 30.11.2012 declaring
\ntotal income of Rs. 11,93,41,710\/- On which assessee has deducted TDS of
\nRs. 1,19,34,170\/. @ 10%. The return was processed u\/s 143(1) on
\n31.12.2013.
\n2. The assessee company ie. Precilion Holding Limited is a company
\nincorporated in Cyprus. The assessee has offered interest income at tax
\nrate of 10% claiming beneficial ownership of interest income as per Article
\n11 of DTAA.
\n3. The case was selected for scrutiny and assessment order u\/s 143(3)
\nr.w.s. 92CA(3) of the I. T. Act was passed on 23.03.2016 accepting the
\nreturned income.
\n4. The draft assessment order u\/s 143(3) r.w.s 92CA(3) r.w.s. 144C(1)
\nof the Income Tax Act, 1961 was completed for A.Y. 2014-15 on 29.12.2017.
\nDuring the course of assessment proceedings following facts merged out
\nand assessee was denied beneficial ownership of interest income.
\n5. In this case for A.Y. 2014-15, assessee is Cyprus based Foreign
\nCompany. It holds investments in Compulsory Convertible Debentures
\n(CCD’s) in various Indian companies and offers for tax the interest income
\non such investments on receipt basis. The said income of Rs.
\n55,01,17,499\/- has been offered to tax @ 10% as per the provisions of
\nArticle 11(2) of the DTAA by the assessee as beneficial owner of interest
\nincome.
\n6. To be beneficial owner of interest income assessee should be
\nindependent and free to utilize its interest income on its own and it should
\nhave substantial commercial activity in Cyprus.
\n7. In order of the interest income at lower tax rate @ 10%, assessee
\nhas to be beneficial owner of such interest income.
\n8. Accordingly in order to verify the same movement of the receipts
\nand payments through bank account transfer was verified and analyzed.
\nSource of the investment made by the assessee was inquired into and
\n3 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nnature of payback to investors was analyzed. A inquiry regarding whether
\nassessee has any office and employees on its payroll in Cyprus was
\nmade. Activities of directors were studied and related party transactions if
\nany were looked into. Articles of Association and memorandum of
\nassociation of company were gone through and terms and conditions of
\nissue of various types of shares were studied.
\n9. Thus, it is clearly established that assessee has invested in CCD’s
\nof Indian company out of its share holders funds. Upon receipt of interest
\nincome related to CCD’s, invariably within 6 to 20 days, this income amount
\nis transferred to share holder by paying dividend. Pay out of income is
\ndependent on receipt of interest income in terms of timing and availability of
\nfunds. Assessee does not have a single employee and any substantial
\neconomic activity in Cyprus and working of the company is controlled by
\nbeneficial share holder of the company by hiring of services of working as
\ndirectors from employees of IPS Mauritius by whom local address is given
\nin Mauritius to beneficial owner of Assessee Company.
\n10. In the assessment proceedings, it is held that the assessee is not
\nbeneficial owner of this income on these tests and thus treaty benefits are
\ndenied to the assessee to the extent of interest income only in the present
\ncase. Interest income of Rs. 55,01,17,499\/- is taxed at rate @ 20% as per
\nprovision of section 115A(1)(a)(ii) of I.T. Act, 1961 instead of 10% offered by
\nthe assessee.
\n11. In view of this, it was held that the assessee is not beneficial owner
\nof this income on these tests and thus treaty benefits are denied to the
\nassessee in respect of interest income. Interest income is taxed at the rate
\n@ 20% as per provision of Section 115A(1)(a)(ii) of I.T. Act, 1961.
\n12. It is pertinent to note that during the assessment proceedings, order
\nu\/S. 143(3) r.w.s. 92CA(3) of the I.T. Act, 1961 for the A.Y. 2012-13 was
\npassed on 23.03.2016. The assessing officer has not raised any query on
\nthe above issue and the same was not verified during the course of
\nassessment proceedings for A.Y. 2012-13. Keeping in view of the above
\nfact, the issue is required to be verified for the A.Y. 2012-13.
\n4 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\n13. In view of the above facts, it is clear that interest income is taxed at
\nlow rate of 10% instead of 20% and I have reason to believe that the
\nprovisions of clause (c) of Explanation 2 to Section 147 of the Income Tax
\nAct are applicable to the facts of this case and the assessment year under
\nconsideration is deemed to be a case where the income which is more than
\nRs. 1,00,000\/- chargeable to tax @ 20% rate tax has escaped
\nassessment.
\n14. In this case, more than four years have lapsed from the end of the
\nassessment year under consideration. Hence, necessary sanction to issue
\nnotice u\/S. 148 has been obtained separately from the Commissioner of
\nIncome Tax(IT)-3, Mumbai as per the provisions of Section 151 of the Act.”
\n2.2 The petitioner raised objections to the notice of
\nreopening of assessment under communication dated
\n28.5.2018. Such objections were disposed of by the
\nAssessing Officer by order dated 25.9.2018. Upon which, this
\npetition came to be filed.
\n3. Appearing for the petitioner, learned senior counsel
\nShri. Mistri raised the following contentions in support of
\nchallenge:-
\ni. The impugned notice has been issued beyond the
\nperiod of four years from the end of relevant
\nassessment year. The petitioner had made true
\nand full disclosures in the return filed. The
\nAssessing Officer, therefore, could not have
\n5 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nreopened the assessment;
\nii. During the scrutiny assessment, the entire issue
\nwas examined by the Assessing Officer. Only after
\nwhich the order of assessment was passed
\naccepting the stand of the petitioner that the
\ninterest income was correctly offered to tax @
\n10%. Even in the order of assessment, this
\naspect has been referred by the Assessing Officer;
\niii. Even on merits, the Assessing Officer’s stand is
\ncompletely incorrect. The petitioner enjoys a tax
\nresidency certificate issued by Cyprus Authorities.
\nThe Assessing Officer cannot disregard such
\ncertificate to hold a belief that the assessee
\ncompany is not a genuine company based in
\nCyprus and that, therefore, the benefit of reduced
\nrate of tax as per DTAA was wrongly claimed.
\n4. On the other hand, learned counsel Shri. Chhotaray
\nopposed the petition contending that the Assessing Officer
\nhas recorded proper reasons. During the course of the
\nassessment of the petitioner assessee for the subsequent
\nassessment years, the entire issue was examined by the
\nAssessing Officer at length and he has come to the
\n6 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nconclusion that the assessee had wrongly claimed reduced
\nrate of tax on the interest income. Thus, the formation of
\nbelief of the Assessing Officer in the present case is based on
\ninformation available subsequent to the framing of
\nassessment. He relied on several decisions reference to
\nwhich would be made at an appropriate stage.
\n5. Having thus, heard the learned counsel for the parties,
\nwe may record that the impugned notice has been issued
\nbeyond the period of 4 years from the end of relevant
\nassessment year. Under these circumstances, the additional
\nrequirement flowing from the first proviso of Section 147 of
\nthe Act that escapement of income chargeable to tax should
\nbe due to a failure on the part of the assessee to disclose
\ntruly and fully all material facts, must be satisfied. We may
\nperuse the materials on record on such basis.
\n6. The perusal of the reasons recorded by the Assessing
\nOfficer would show that according to the Assessing Officer, in
\norder to claim the benefit of Article 11 of the DTAA, the
\nassessee had to be a beneficial owner of the interest income
\n7 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nand in turn, the assessee should be independent and free to
\nutilize its interest income on its own and should have
\nsubstantial commercial activities in Cyprus. He has further
\nrecorded during the course of assessment for the
\nassessment year 2014-15 to verify the movement and the
\nreceipt of payments, bank account was verified and
\nanalyzed. Source of investment of the assessee was inquired
\ninto and nature of payback to the investors was analyzed by
\nthe Assessing Officer. He has also verified the activities of
\nthe directors and related party transactions. He had also
\ngone through the Articles of Association and Memorandum of
\nAssociation of the company. On the basis of such material,
\nthe Assessing Officer had come to certain important
\nconclusions ultimately leading to his belief that the assessee
\nwas not the beneficial owner of the interest income and that,
\ntherefore, the reduced rate of tax @ 10% was not available,
\ninstead, the assessee would have to pay tax at higher rate
\non such income.
\n7. In the reasons, the Assessing Officer further records
\nthat in respect of the scrutiny assessment for the
\n8 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nassessment year 2012-13, “the Assessing Officer has not
\nraised any query on the above issue and the same was not
\nverified during the course of the assessment proceedings for
\nthe assessment year 2012-13”. Keeping in view the above
\nfact, the issue requires to be verified for the assessment year
\n2012-13″
\n8. We notice that during the course of the assessment
\nproceedings for assessment year 2012.13, the Assessing
\nOfficer had raised multiple queries and elicited replies from
\nthe petitioner assessee. For example, under a letter dated
\n16.2.2016, the Assessing officer had called for, besides
\nother, following information:-
\n“7. Furnish the details of share holding \/ investments \/ loans \/
\nadvances & interest earned \/ paid with M\/s. Wadhwa Residency
\nPvt Ltd as on 31.3.2011, 31.3.2012 and 31.3.2013.
\n8. Furnish details of purchases of debentures \/ shares from
\nWadhwa Residency Pvt Ltd;
\n9. Furnish list of directors of the company along with details of their
\nshare holdings;
\n10.Furnish details of investments made \/ interest with M\/s. Wadhwa
\nResidency this is your associated enterprises.”
\nIn reply to such queries, the assessee under
\ncommunication dated 2.3.2016 had provided following
\n9 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\ninformation and documents :-
\n“A. At the outset, we wish to inform you that assessee is an
\ninvestment holding company incorporated in Cyprus on 20
\nApril 2011.
\nThe assessee has made investment in compulsory
\nconvertible debentures (“CCDs”) of Wadhwa Residency
\nPrivate Limited (“WRPL”) amounting to Rs. 1,61,53,50,000
\nduring the year under consideration. Further, the assessee
\nhas received interest on CCDs amounting to Rs.
\n11,93,41,705\/-
\nThe assessee has earned interest on CCDs and has not
\nearned any other income in India during the year under
\nconsideration.
\nB. ……..
\n3. Copy of incorporation certification is enclosed as Annexure III
\n5. Copy of financial statements is enclosed as Annexure VI.
\nFurther, the assessee is a foreign company and made
\ninvestment in India and therefore, the assessee is not required
\nto prepare tax audit report.
\n7. The assessee has earned interest on CCDs from WRPL as
\nfollows:-
\nAY 2011-12 – Nil. Investment was made in CCDs in AY 2012-
\n13
\nAY 2012-13 – Rs. 11,93,41,705
\nAY 2013-14 – Rs. 32,30,70,000
\n8. Copy of the agreement in respect of investment in CCDs of
\nWRPL is enclosed as Annexure VII.
\n9. Directors of the assessee company are as follows:
\na. Briantserve Limited
\nb. Ceantrust Limited
\nc. Basanta Lala Couldiplall
\nShareholding structure of the assessee is as under:-
\n10 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nSr. No. Name of the Shareholder Percentage of shareholding
\n1 IL & FS Realty Fund II LLC 74.46%
\n2 Saffron India Real Estate Fund I 25.54%
\nTotal 100%
\n10. Please refer point A above.
\n12. Copy of bank account and bank statement is enclosed as
\nAnnexure IX and Annexure X.
\nAlong with this communication, the petitioner had
\nannexed certain documents which included the bank
\nstatement.
\nOn 16.3.2016, the petitioner supplied further
\ninformation to the Assessing Officer which included the
\nfollowing:-
\n“The total grossed up amount of interest was INR 119,341,705.
\nWRPL deducted tax at the rate of 10 percent as per Article 11 of
\nDouble Taxation Avoidance Agreement between India and Cyprus.
\n3. The assessee company was formed on 20 April 2011. IL&FS
\nRealty Fund II LLC and Saffron India Real Estate I invested
\ninto 74.46% and 25.54% of equity shares of the assessee
\nrespectively.
\nThe assessee had invested the money received against the
\nequity shares into CCDs of WRPL. Copy of the bank
\nstatement depicting the flow is enclosed as Annexure III.
\n4. Details of the shareholders of the assessee are as under
\nSr. No. Name of the Shareholder Percentage of shareholding
\n1 IL & FS Realty Fund II LLC
\nAddress : IFS Court, Twenty Eight
\nCybercity, Ebene, Mauritius
\n74.46%
\n11 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\n2 Saffron India Real Estate Fund I
\nAddress : Rogers House, 5 Joh N.
\nPresident Cennedt Street, Port Lueis
\nMauritius
\n25.54%
\nTotal 100%
\nWe further confirm that the above entities are tax residents of
\nMauritius and do not have any upstream shareholders in
\nIndia.”
\nUnder letter dated 21.3.2016, the petitioner supplied
\nfollowing additional documents:
\n“Further, without prejudice to the above, as requested by your
\ngoodself, we submit as under:-
\n1. Shareholding structure of IL&FS Realty Fund II LLC as on 31
\nMarch 2012 as Annexure I
\n2. Shareholding structure of Saffron India Real Estate Fund I as
\non 31st March 2012 as Annexure II
\n3. Bank statement for the period from 1 January 2011 to 31
\nMarch 2013 of IL&FS Realty Fund II LLC as Annexure III
\n4. Bank statement for the period from 1 January 2011 to 31
\nMarch 2013 of Saffron India Real Estate Fund I as Annexure
\nIV.”
\nIt was after such exchange of communications that the
\nAssessing Officer had passed the the order of assessment on
\n23.3.2016 in which he has observed as under:-
\n“4. The assessee i.e Precilion Holdings Limited is a company
\nincorporated in Cyprus. The Principal activity of the assessee
\nis to act as an investment holding company.
\n5. During the year, the assessee has received interest on
\ncompulsory convertible debentures amounting to Rs.
\n11,93,41,705\/- from Wadhwa Residency Private Limited, which
\nis Associated Enterprises of the assessee.
\n12 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\n6. The Arm’s length price of the international transaction as
\nreported by the assessee has been accepted by the transfer
\npricing officer. The details furnished by the assessee have
\nbeen verified and discussed.
\n7. In view of the facts of the case as discussed above, the total
\nincome of the assessee is assessed on the income of Rs.
\n11,93,41,705\/- i.e income returned.
\n8. Assessed accordingly under Section 143(3) r.w.s. 92CA(3) of
\nthe Act at the total income of Rs. 11,93,41,710 (round off) as
\ninterest income. Give credit for TDS and taxes paid, if any
\nafter due verification. Charge interest as applicable. Issue
\nD.N.\/R.O\/ Challan accordingly.”
\n9. It can thus be seen that the entire financial activity of
\nthe petitioner during the relevant period came up for scrutiny
\nbefore the Assessing Officer during the original scrutiny
\nassessment. The petitioner had limited financial activities
\nduring the said period resulting into only one principal
\ntransaction of earning interest income. The Assessing officer
\nhad inquired about the nature of activities of the assessee
\nand the nature of source of income. Even if, it is believed
\nthat the question of taxing such interest income at the
\nconcessional rate as per the DTAA was not in the mind of the
\nAssessing Officer when such queries were raised and the
\norder of assessment was passed, one thing that cannot be
\ndenied is that there was no failure on the part of the
\nassessee to disclose truly and fully all material facts
\n13 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nnecessary for assessment. Whatsoever allegations by the
\nAssessing Officer in the reasons recorded that there was no
\nfailure on the part of the assessee to disclose true and full all
\nmaterial facts. The assessee had filed the return of income
\nmaking all necessary declaration. Detailed scrutiny
\nexamination during the original assessment was carried out.
\nThe assessee supplied full information called for by the
\nAssessing Officer and also placed on record voluminous
\ndocuments for his consideration. Nowhere in the reasons,
\nthe Assessing Officer contends that in the process of such
\nscrutiny also, there was any failure on the part of the
\nassessee to disclose truly and fully all material facts.
\nWhatever be the validity of the Assessing Officer’s contention
\nthat the assessor’s interest income in the case on hand could
\nnot be taxed at the concessional rate, reopening of
\nassessment beyond the period of four years was simply not
\npermissible.
\n10. Even in the reasons, the Assessing Officer’s logic
\nrevolves around the further scrutiny carried out by the
\nAssessing Officer for the assessment year 2014-15 during
\n14 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nwhich he formed the belief that the income should have been
\ncharged at high rate of 20%. In the quoted portion of the
\nreasons, he goes on to suggest that the Assessing Officer
\nduring the scrutiny for assessment year 2012.13 had not
\nraised any query on this aspect and had not verified the
\nsame during the assessment. In that view of the matter, he
\nwas of the opinion that the issue requires verification; which
\nwould tantamount to fishing or roving inquiry. His reference
\nto the subsequent assessment, in absence of any additional
\nmaterial outside of the present assessment proceedings
\nwould not form a valid source of information permitting him
\nto reopen assessment. If during the assessment of the later
\nassessment year, the Assessing officer collects or chances
\nupon new material which may have bearing on the
\nassessment of the assessee, and in case where the
\nassessment is sought to be reopened beyond four years, he
\ncan also establish lack of true and full disclosures on the part
\nof the assessee, it may be open for him to reopen
\nassessment of the earlier year. However, merely because in
\nthe later year, the Assessing Officer takes a different view on
\nthe basis of similar material, which may have been collected
\n15 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nduring such process, would not permit him to reopen the
\nassessment. Under these circumstances, the Assessing
\nOfficer’s reference to further exercise undertaken while
\ncarrying out scrutiny assessment for the assessment year
\n2014-15 during which he decided to tax the assessee at
\nhigher rate would not enable the Assessing Officer in the
\npresent case to reopen the assessment beyond four years.
\n11. We may now refer to the decisions cited by the learned
\ncounsel for the Revenue. In case of Raymond Woolen
\nMills Ltd Vs. ITO1, information was obtained in assessment
\nproceedings for subsequent year which would suggest that
\nthe disclosures by the assessee during the year under
\nconsideration were untrue. It was on that basis that
\nreopening of assessment was permitted, however, observing
\nthat at that stage, the Court would consider only whether
\nthere was prima facie material on which the assessment
\ncould be reopened.
\n1 236 ITR 54 (SC)
\n16 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\n12. In case of Rabo India Finance Ltd Vs. Deputy CIT
\n(Bom)2, this Court observed that the judgments of the
\nSupreme Court lay down a principle that the Assessing
\nOfficer acts within jurisdiction in reopening the assessment
\non the basis of the information which comes to him after the
\noriginal assessment and during the course of the assessment
\nproceedings for subsequent assessment years. This principle
\nwas reiterated in later judgment in case of Multiscreen
\nMedia Pvt Ltd Vs. Union of India & Anr.3. With this
\nproposition, there cannot be any doubt or dispute. What is
\nto be gathered in a given case as in the present one is
\nwhether the Assessing Officer can be stated to have received
\nany such additional information during the course of
\nsubsequent assessment. Significantly, in both these cases,
\nthe notice of reopening was issued within the period of four
\nyears.
\n13. In case of Sociedade De Formento Industrial P Ltd
\nVs. Asst. CIT & Anr.4, this Court had not turned down the
\nassessee’s challenge to the notice of reopening of
\n2 [2013] 356 ITR 200 (Bom)
\n3 [2010] 324 ITR 54 (Bom)
\n4 [2011] 339 ITR 595 (Bom)
\n17 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::1. os wp 3342\u00ad18.doc
\nassessment but had merely refused to act in exercise of writ
\njurisdiction observing that the challenge could be more
\nconveniently dealt with in the proceedings under the Income
\nTax Act rather than Writ Petition.
\n14. Reference to the decision in case of Asst. CIT Vs.
\nRajesh Jhaveri Stock Brokers P Ltd5 was limited to the
\nobservations suggesting that at the stage of deciding the
\nlegality of reopening of assessment, the Court would be
\nconsidering only with the prima facie satisfaction of the
\nreasons recorded.
\n15. In view of the above discussion, the impugned notice of
\nreopening of assessment cannot be sustained. We, however,
\nmake it clear that we have not examined the contention of
\nthe petitioner that even on merits, the additions could not
\nhave been made. In the result, the impugned notice is
\nquashed. The petition is allowed and disposed of
\naccordingly.
\n[ M.S. SANKLECHA, J. ] [ AKIL KURESHI, J ]
\n5 [2007] 291 ITR 500 (SC)
\n18 of 18
\n::: Uploaded on – 27\/02\/2019 ::: Downloaded on – 04\/03\/2019 10:04:24 :::<\/p>\n","protected":false},"excerpt":{"rendered":"
If during the assessment of the later assessment year, the Assessing officer collects or chances upon new material which may have bearing on the assessment of the assessee, and in case where the assessment is sought to be reopened beyond four years, he can also establish lack of true and full disclosures on the part of the assessee, it may be open for him to reopen assessment of the earlier year. However, merely because in the later year, the Assessing Officer takes a different view on the basis of similar material, which may have been collected during such process, would not permit him to reopen the assessment<\/p>\n