Silver Oak Laboratories Private ... vs Deputy Commissioner Of ...
2008 Latest Caselaw 2281 Del

Citation : 2008 Latest Caselaw 2281 Del
Judgement Date : 18 December, 2008

Delhi High Court

Silver Oak Laboratories Private ... vs Deputy Commissioner Of ... on 18 December, 2008

Author: Badar Durrez Ahmed

       THE HIGH COURT OF DELHI AT NEW DELHI

%                               Judgment delivered on: 18.12.2008

+                   WP(C) 17719-20/2006

SILVER OAK LABORATORIES
PRIVATE LIMITED AND ANOTHER                                ... Petitioner

                               - Versus -

DEPUTY COMMISSIONER OF INCOME-TAX,
CIRCLE 8(1), NEW DELHI          ... Respondents

Advocates who appeared in this case :-

For the Petitioner : Mr C.S. Aggarwal, Sr Advocate with Mr Prakash Kumar For the Respondent : Mr Sanjeev Sabharwal

CORAM:-

HON'BLE MR JUSTICE BADAR DURREZ AHMED HON'BLE MR JUSTICE RAJIV SHAKDHER

1. Whether Reporters of local papers may be allowed to see the judgment ?

2. To be referred to the Reporter or not ?

3. Whether the judgment should be reported in Digest ?

BADAR DURREZ AHMED, J (ORAL)

1. The petitioner is aggrieved by the initiation of re-assessment

proceedings under Section 147 of the Income-tax Act, 1961. The

petitioner had filed the return of income on 30.12.1999 declaring a

total loss of Rs 5,55,80,254/- which was processed under Section

143 (1) on 29.09.2000. Subsequently, by a notice dated

01.03.2006 issued under Section 148 of the said Act, the

assessment in respect of the assessment year 1999-2000 was

proposed to be re-opened. The reasons recorded for the re-

opening of the assessment were recorded on 21.02.2006 and were

supplied to the petitioner on 08.11.2006. The said reasons are as

under:-

"M/s Silver Oak Laboratories Ltd. A.Y. 1999-2000

Sub: Proposal for issue of notice u/s 148 of the Income Tax Act M/s Silver Oak Lab. Ltd. for the A.Y. 1999-2000.

Return of income in this case was filed on 30.12.1999 declaring total loss of Rs. 5,55,80,254/- . The same was processed U/s 143(1) accepting the returned loss of Rs.5,55,80,254/- on 29.09.2000. While completing the asstt, in this case for asstt. year 1998-99 and 2001-02, it was noticed that the sale price was not driven by market forces. The sales during these assessment years were recomputed by taking net profit of 8% and additions were made on account of suppression of sales. These additions were also confirmed by CIT(A) and assessee's appeals are pending before the Ld. ITAT. In asstt year 98-99 and 2001-02 the sales were recomputed after marking up of 8% net profit.

I have therefore, reason to believe that income has escaped assessment due to suppression of sales by 1.41 crores within the meaning of section 147 of the Income Tax Act. In view of the above, as per the provision of section 151, it is requested to kindly accord approval for issuance of notice u/s 148 for asstt. year 1999-2000. Assessment record is enclosed alongwith this letter.

Sd/-

DTC circle 8(1), New Delhi"

2. The petitioner filed its objections on 10.11.2006. From the

reasons recorded, it is apparent that nothing specific was alleged

with regard to any escapement of assessment pertaining to the

assessment year 1999-2000. Apparently, the reasons for re-

opening the assessment were that in respect of the assessment

years 1998-99 and 2001-02, additions had been made by the

Assessing Officer in the course of the assessments on account of

the allegations of suppression of sales. The allegation was that the

sale price of the petitioner's products were not driven by market

forces. Consequently, in respect of those years, i.e., assessment

years 1998-99 and 2001-02, the sales figures were recomputed by

taking net profit of 8% and additions were made on that account at

the time of issuance of the notice under Section 148 as well as the

recording of the reasons. The additions made by the Assessing

Officer had been confirmed by the Commissioner of Income-tax

(Appeals) in respect of the said assessment years, i.e., 1998-99

and 2001-02. However, by the time the petitioner filed its

objections, the tribunal had deleted the said additions in appeals

before it. This fact was brought to the notice of the Assessing

Officer by the petitioner in the objections itself. It is also relevant

to note that the revenue has not preferred any appeal against the

order passed by the Income-tax Appellate Tribunal deleting the

additions on merits in respect of the assessment years 1998-99 and

2001-02. But, the Assessing Officer passed the order dated

17.11.2006 rejecting the objections preferred by the petitioner.

The order dated 17.11.2006 is impugned before us and it reads as

under:-

"Sub: Notice u/s 148 for reassessment - filing of objections - reg.

Asstt yr. - 1999 - 00

Please refer to your letter dated 10th November, 2006 on the above subject.

2. Proceedings u/s 147 in this case were initiated after recording reasons on 21-2-2006. At the time of recording of the reasons, the additions made on account of suppression of sales in the assessment year earlier to assessment year 1999-2000 and in subsequent assessment years have been confirmed by the superior authorities. And thus, the undersigned had reason to believe that the income has escaped assessment in the A.Y. 1999-2000 too.

3. Secondly, the subsequent order of the Hon'ble ITAT deleting the additions on merits does not vitiate the reassessment proceedings and has no bearing on the reasons to believe recorded on 21-2- 2006 for initiating the re-assessment proceedings.