Delhi High Court
Technico Agri Sciences Ltd. vs Deputy Commissioner Of Income Tax ... on 7 December, 2016
$~7
* IN THE HIGH COURT OF DELHI AT NEW DELHI
Judgment delivered on: 07.12.2016
+ W.P.(C) 2685/2016, CM APPL. 11355/2016
TECHNICO AGRI SCIENCES LTD
..... Petitioner
Through: Mr. Rupesh Jain, Adv.
Versus
DEPUTY COMMISSIONER OF INCOME TAX & ANR.
..... Respondent
Through: Mr. P. Roychoudhuri, Senior Standing
Counsel
CORAM:
HON'BLE MR. JUSTICE S. RAVINDRA BHAT
HON'BLE MR. JUSTICE NAJMI WAZIRI
S. RAVINDRA BHAT, J (Oral)
1. The assessee/petitioner, in the present proceedings under
Articles 226/227 of the Constitution, impugns a notice issued under
Section 148 of the Income Tax Act, 1961 ['the Act', for short]
proposing re-assessment for Assessment Year (AY) 2008-09 which
was concluded through scrutiny assessment under Section 143(3) of
the Act on 22.12.2010. The re-assessment notice refers to the
proceedings for a subsequent year, i.e., AY 2012-13 as well as a
decision of the Karnataka High Court in the case of CIT v. Namdhari
Seeds Pvt. Ltd.: 16 taxmann.com 83 which states as follows:
"M/s Technico Agri Science Ltd. is assessed to tax
with Circle 25(1) New Delhi. Assessment in this
case for AY 2008-09 was completed on
22.12.2010 u/s 143(3) of the Act. While
completing assessment for AY 2012-13 under
section 143(3), it has been held that assessee has
wrongly claimed income of ` 5,33,26,639/- as
agricultural income. Considering this finding
assessment record for A.Y.2008-09 was examined
and it was found that income of ` 10,15,72,169/-
has also been claimed as agriculture income for
this year and treated as exempt. Nature of
business of the assessee company remained same
during these years. Assessee is involved in the
business of producing and selling
TECHNITUBER seed potatoes and field
generated seed potatoes. Assessee claimed it as
purely agricultural activity but after deep
investigation, it was established that income
generated from this activity is not an agricultural
income because assessee has no interest in the
land nor it actually cultivates the land. Assessee is
getting the land cultivated from growers by way of
contract farming.
As the assessee has wrongly claimed the
income of ` 10,15,72,169/- as agricultural income
while computing its income for AY 2008-09
otherwise which would have been treated as
normal business income. Therefore, the income of
` 10,15,72,169/- has escaped assessment by
reason that assessee failed to disclose fully and
truly all materials facts necessary for its
assessment for the A.Y. 2008-09 as provided in 1st
proviso to section 147 of the I.T. Act, In view of
the above facts I have reason to believe that
income to the tune of ` 10,15,72,169/- of the
assessee company for A.Y. 2008-09 has escaped
assessment. Therefore, in accordance with sub
section (1) of Sec.151 of I.T. Act notice u/s 148 is
being issued after getting necessary approval
from Pr.CIT, Delhi-09."
2. It is urged that the re-assessment notice is unsupported in law
given the fact that at all relevant times all materials were in fact
furnished and, there was no concealment and furthermore that on the
very same issue, i.e., nature of operation and business carried on and
whether it amount to agricultural activities, the scrutiny assessment
had carried out full inquiry. The learned counsel for the assessee
relies upon a notice/questionnaire by the A.O. during the course of the
scrutiny assessment issued on 19.11.2010 pointing to the fact that on
the very same issue, pointed query was made which was supported
through documentary evidence and other materials. It is therefore
contended that the re-assessment notice is nothing but a change of
opinion which is not permissible having regard to the narrow scope of
Section 147/148 of the Act which admits all violated re-assessment
proceedings only if tangible material as to escapement of income on
the ground of non-disclosure of material facts, is discerned.
3. The learned counsel for the revenue seeks to justify the re-
assessment notice and urges that since for the subsequent year, and
the matters which came to light are sufficient grounds to constitute
tangible material, there were valid reasons to believe under Section
147 of the Act. It is submitted that in the circumstances the Court
would desist from exercising writ jurisdiction. As is evident, the
completed scrutiny assessment for the concerned year, i.e., AY 2008-
09, encompassed the inquiry. The nature of the inquiry was as to the
kind of activities carried on by the petitioner company. The AO in his
letter/query dated 19.11.2010 elicited specific information interalia
which is produced as follows:
"(1)A detailed note on the activities carried out
by the assessee company during the year
under consideration.
(2) File separate balance sheets, profit & loss
accounts alongwith all annexures in respect
of agricultural income claimed exempt u/s
10(1) and business income.
(3) Justify the criteria of offering income under
different heads i.e. income from business and
agricultural income while the activity on
which income has been earned is same.
(4) xxx ... xxx ... xxx
(5) Give complete details of agricultural income
i.e. details of agricultural land, evidence of
possession of agricultural land, details of
crops produced and sold and other expenses
incurred.
(6) xxx ... xxx ... xxx
(7) Justification with evidence in respect of claim
u/s 10(1) in respect of income from field
generated seed potatoes."
4. The assessee has placed on record the replies to the queries on
each of the aspects made as well as the documentary evidence
spanning 21 Annexures to the letter. It is quite evident that the A.Os.,
upon proper inquiry and investigation into these materials, were
satisfied as to the nature of the petitioner's activities and it is eligible
to claim exemption under Section 10 of the Act.
5. It has been repeatedly held in several decisions, both before and
after the ruling of the Supreme Court in Commissioner of Income Tax
v. Kelvinator 320 ITR 561(SC) that a notice for re-opening the
assessment is permissible only when it (i) does not amount to "change
of opinion"; (ii) is based on tangible material/evidence but is not
opposed to the existing record and (iii) points to suppression of
material facts by the assessee in the original return.
6. In the present case there is none of these elements ex facie
exists to justify the impugned notice. It is therefore quashed as well as
all proceedings emanating from the impugned notice. The writ
petition is allowed in the above terms.
S. RAVINDRA BHAT, J
NAJMI WAZIRI, J
DECEMBER 07, 2016/acm
