Astrazeneca Indian Private ... vs The Assistant Commissioner Of ...
2022 Latest Caselaw 10025 Kant

                           1




     IN THE HIGH COURT OF KARNATAKA AT BENGALURU

         DATED THIS THE 30TH DAY OF JUNE, 2022

                        BEFORE

           THE HON'BLE MR. JUSTICE M.I.ARUN

       WRIT PETITION NO.54208 OF 2018 (T-IT)
                      C/W
       WRIT PETITION NO.54209 OF 2018 (T-IT)



IN WP NO.54208/2018

BETWEEN:

ASTRAZENECA INDIAN PRIVATE LIMITED
(A PRIVATE COMPANY LIMITED BY SHARES
HAVING ITS OFFICE AT
12TH MILE ON BELLARY ROAD,
VENKATALA, KATTIGENAHALLI YELAHANKA
BANGALORE - 560 063

(COMPANY HAS CHANGED ITS REGISTERED OFFICE TO
BLOCK A NEVILLE TOWER, 11TH FLOOR, RAMANUJAN IT
SEZ TARAMANI, CHENNAI
CHENNAI, TAMIL NADU INDIA - 600 113)
                                     ... PETITIONER
(BY SRI.NAGESHWAR RAO, ADVOCATE FOR
SRI. MALLAHA RAO K, ADVOCATE)

AND:

1.      THE ASSISTANT COMMISSIONER OF INCOME TAX
        CIRCLE 1(1)(1)
        BMTC BUILDING, 80 FT ROAD, 6TH BLOCK,
        NEAR KHB GAMES VILLGE
        NRUPATHUNGA ROAD, KORAMANAGALA
        BENGALURU - 560 095.
                          2




2.     THE DEPUTY COMMISSIONER OF INCOME TAX
       CIRCLE 1(1)(1)
       2ND FLOOR, ROOM NO. 215,
       BMTC COMPLEX, KORAMANGALA
       BENGALURU - 560 001.

3.     COMMISSIONER OF INCOME TAX
       C.R.BUILDING, NO.1, QUEENS ROAD,
       BANGALORE - 560 001.
                                  ... RESPONDENTS

(BY SRI.K.V.ARAVIND, ADVOCATE)

     WRIT PETITION NO.54208/2018 IS FILED UNDER
ARTICLES 226 AND 227 OF THE CONSTITUTION OF
INDIA PRAYING TO QUASH THE NOTICE DTD
28.03.2018 VIDE ANNX-A LETTER ISSUED BY R-1 TO
THE PETITIONER UNDER SECTION 148 OF THE INCOME
TAX ACT, 1961 (THE ACT) AS BEING ILLEGAL AND
INVALID AND ETC.,

IN WP NO.54209/2018

BETWEEN:

ASTRAZENECA INDIAN PRIVATE LIMITED
(A PRIVATE COMPANY LIMITED BY SHARES
HAVING ITS OFFICES AT
12TH MILE ON BELLARY ROAD,
VENKATALA, KATTIGENAHALLI YELAHANKA
BANGALORE - 560 063

(COMAPANY HAS CHANGED ITS REGISTERED OFFICE
TO: BLOCK A, NEVILLE TOWER, 11TH FLOOR,
RAMANUJAN IT SEZ, TARAMANI, CHENNAI,
CHENNAI, TAMIL NADU, INDIA - 600 113)
                                     ... PETITIONER

(BY SRI.NAGESHWAR RAO, ADVOCATE FOR
SRI.MALLAHA RAO.K., ADVOCATE)

AND:
                           3




1.   THE ASSISTANT COMMISSIONER OF INCOME TAX
     CIRCLE 1(1)(1)
     BMTC BUILDING, 80 FT ROAD, 6TH BLOCK
     NEAR KHB GAMES VILLAGE
     NRUPATHUNGA ROAD, KORAMANGALA
     BENGALURU - 560 095.

2.   DEPUTY COMMISSIONER OF INCOME TAX
     CIRCLE 1(1)(1)
     2ND FLOOR, ROOM NO. 215
     BMTC COMPLEX, KORAMANGALA BENGALURU -
     560001.

3.   COMMISSIONER OF INCOME TAX
     7TH FLOOR, BMTC BUILDING, 80 FT ROAD,
     KORAMANGALA 6TH BLOCK, BANGALORE - 560
     095.
                                ... RESPONDENTS

(BY SRI.K.V.ARAVIND, ADVOCATE)

      WRIT PETITION NO.54209/2018 IS FILED UNDER
ARTICLES 226 AND 227 OF THE CONSTITUTION OF
INDIA PRAYING TO QUASH THE NOTICE DATED
19.6.2018 (IMPUGNED NOTICE) ISSUED BY R-1 TO THE
PETITIONER UNDER SEC. 148 OF THE INCOME-TAX
ACT, 1961 (THE ACT) AS BEING ILLEGAL AND INVALID,
VIDE ANNEX-A AND ETC.


     THESE WRIT PETITIONS COMING ON FOR
PRELIMINARY HEARING 'B' GROUP, THIS DAY THE
COURT MADE THE FOLLOWING:


                        ORDER

The assessment of the petitioner for the

assessment years 2011-12 and 2012-13 were sought to

be re-opened after lapse of 4 years but before 6 years

from the last date of the relevant assessment years. In

this regard, notices under Section 148(1) of the Income

Tax Act, 1961 were issued for which the petitioner filed

its objections and the orders have been passed rejecting

the same. Thereafter, further proceedings have been

initiated to re-assess the income that is alleged to have

escaped assessment for the assessment years 2011-12

and 2012-13.

2. In writ petition No.54208/2018, the

petitioner has sought to challenge the notice issued

under Section 148 (1) of the Income Tax Act, 1961

bearing No.ITBA/COM/F/17/2017-18/1009493181(1)

dated 28.03.2018 vide Annexure-A to the writ petition,

the order rejecting its objections bearing

No.ITBA/COM/F/17/2018-19/1012944734(1) dated

10.10.2018 vide Annexure-B to the writ petition and the

notice issued under Section 142(1) of the Income Tax

Act dated 21.11.2018 bearing No.DCIT/C-

1(1)(1)/2018-19/148/AstraZeneca/11-12 vide

Annexure-N to the writ petition in respect of the

assessment year 2011-12. Similarly, in writ petition

No.54209/2018, the notice issued under Section 148 (1)

of the Income Tax Act, 1961 bearing

No.ITBA/AST/S/148/2018-19/1010211165(2) dated

19.06.2018 vide Annexure-A to the writ petition, the

order rejecting its objections bearing

No.ITBA/COM/F/17/2018-19/1013673599(1) dated

17.11.2018 vide Annexure-B to the writ petition and the

notice issued under Section 142(1) of the Income Tax

Act bearing No.DCIT/C-111/2018-

19/148/AstraZeneca/12-13 dated 17.11.2018 vide

Annexure-N to the writ petition for the assessment year

2012-13 are challenged.

3. The case of the petitioner is that it has been

filing its returns regularly and has always made true and

full disclosure of all necessary particulars. In the

process, it had claimed certain exemption under Section

35(1)(iv) of the Income Tax Act and the said deductions

were allowed by the revenue for the assessment years

2011-12 and 2012-13. However, in the year 2018, after

lapse of 4 years but before 6 years from the assessment

years 2012-13 and 2013-14 the claim of deductions by

the petitioner under Section 35(1)(iv) of the Income Tax

Act has been held not permissible and concluding that

the income has escaped assessment proceedings to re-

open the assessment were initiated by the authorities.

However, no allegation has been made against the

assessee that he has not made true and full disclosure.

On the said ground and other grounds contending that

the income has not escaped assessment, the instant

writ petitions are filed.

4. Admittedly, the proceedings to re-open

assessment has been made as per the proviso to

Section 147 of the Income Tax Act as it existed then

and it has been made after lapse of 4 years but before 6

years from the last date of the relevant assessment

year. The said fact is not disputed. The first proviso to

Section 147 of the Income Tax Act as it stood then

reads as under:

"Provided that where an assessment under sub- section (3) of section 143 or this section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the

part of the assessee to make a return under section 139 or in response to a notice issued under sub-section(1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year".

Section 149 (1)(b) as it stood then reads as under:

"149. Time limit for notice.-(1)No notice under section 148 shall be issued** for the relevant assessment year, -

(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause(b) or clause(c);

(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for the year";

5. The High Court of Bombay in Hindustan

Lever Ltd. vs. R.B.Wadkar reported in [2004] 137

Taxman 479 (BOM.) while interpreting the

aforementioned provision at paragraph 20 has held as

under:

"The reasons recorded by the Assessing Officer nowhere state that there was failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment of that assessment year. It is needless to mention that the reasons are required to be read as they were recorded by the Assessing Officer. No substitution or deletion is permissible. No additions can be made to those reasons. No inference can be allowed to be drawn based on reasons not

recorded. It is for the Assessing Officer to disclose and open his mind through reasons recorded by him. He has to speak through his reasons. It is for the Assessing Officer to reach to the conclusion as to whether there was failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment for the concerned assessment year. It is for the Assessing Officer to form his opinion. It is for him to put his opinion on record in black and white. The reasons recorded should be clear and unambiguous and should not suffer from any vagueness. The reasons recorded must disclose his mind. Reasons are the manifestation of mind of the Assessing Officer. The reasons recorded should be self-explanatory and should not keep the assessee guessing for the reasons.

Reasons provide link between conclusion and evidence. The reasons recorded must be based on evidence. The assessing Officer, in the event of challenge to the reasons, must be able to justify the same based on material available on record. He must disclose in the reasons as to which fact or material was not disclosed by the assessee fully and truly necessary for assessment of that assessment year, so as to establish vital link between the reasons and evidence. That vital link is the safeguard against arbitrary reopening of the concluded assessment. The reasons recorded by the Assessing Officer cannot be supplemented by filing affidavit or making oral submission, otherwise, the reasons which were lacking in the material particulars would get supplemented, by the time the matter reaches to the Court, on the strength of affidavit or oral submissions advanced.

6. I find no reason to differ from the opinion

expressed in the judgment of the High Court of Bombay

while interpreting Sections 147 and 149 of the Income

Tax Act. Thus, when assessment is reopened after 4

years but within 6 years under the provisions of Section

143(3) of the Income Tax Act, it has to be for the

reason that the assessee has not disclosed fully and

truly all the material facts necessary for that

assessment year. In the instant case, no such allegation

is made. The reason assigned for reopening

assessment year 2011-12 is that 'the facts in respect of

deduction U/s 35(1)(iv) of IT Act, 1961 by the assessee

company in AY 2011-12 are similar to facts in AY 2013-

14 & 2014-15. Thus, the claim of assessee u/s 35(1)(iv)

of IT Act, 1961 in AY 2011-12 of Rs.12,98,55,150/- is

not allowable to the assessee company' and for the

assessment year 2012-13 is 'the facts in respect of

claim of deduction u/s 35(1)(iv) of IT Act, 1961 by the

assessee company in AY 2011-12 are similar to facts in

AY 2013-14 & 2014-15. Thus, the claim of assessee u/s

35(1)(iv) of IT Act, 1961 in AY 2011-12 of

Rs.12,98,55,150/- is not allowable to the assessee

company. Thus, there is a escaped taxable income to

the tune of Rs.12,98,55,150/- and consequently short

levy of tax to the tune of Rs.6,03,88,487

(Rs.4,31,34,634 IT plus Rs.1,72,53,853 int u/s 234B for

40 months)'.

7. Thus, the assessment is not reopened on

the allegation that there is no true and full disclosure by

the assessee. In fact, it is not the case of the

respondent-authority at all. Their case is that the claim

of deduction under Section 35(1)(iv) of the Income Tax

Act as claimed by the petitioner was wrongly granted.

The revenue is not in a position to dispute the

aforementioned facts. In the instant case, for the

aforementioned reasons, the reopening of assessment

for the assessment years 2011-12 and 2012-13 and

authorities assuming jurisdiction for the same has to be

held invalid. Under the given facts and circumstances of

the case, the writ petition deserves to be allowed on

this preliminary ground itself. There is no necessity to

examine the other contentions raised by petitioner.

Hence, the following:

ORDER

1) The notice dated 28.03.2018 bearing

No.ITBA/COM/F/17/2017-

18/1009493181(1) issued under Section

148(1) of the Income Tax Act, 1961 for the

assessment year 2011-12 vide Annexure-A

in writ petition No.54208/2018 is hereby set

aside.

2) Consequently, the order dated 10.10.2018

bearing No.ITBA/COM/F/17/2018-

19/1012944734(1) vide Annexure-B issued

by respondent No.1 under Section 148 of

the Income Tax Act, 1961 in writ petition

No.54208/2018 is hereby set aside.

3) The notice dated 21.11.2018 bearing

No.DCIT/C-1(1)(1)/2018-

19/148/AstraZeneca/11-12 issued by

respondent No.2 under Section 142(1) of

the Income Tax Act, 1961 vide Annexure-N

in writ petition No.54208/2018 is hereby

set aside.

4) The notice dated 19.06.2018 bearing

No.ITBA/AST/S/148/2018-

  19/1010211165(2)           issued      under    Section

  148 of Income Tax               Act 1961 for the

assessment year 2012-13 vide Annexure-A

in writ petition No. 54209/2018 is hereby

set aside.

5) Consequently,       order      dated     17.11.2018

  bearing               No.ITBA/COM/F/17/2018-

19/1013673599(1) vide Annexure-B issued

by respondent No.1 for the objections filed

by the petitioner against initiation of

reassessment proceedings under Section

147 of the Act in Writ petition

No.54209/2018 is hereby set aside.

6) The notice dated 17.11.2018 bearing

No.DCIT/C-111/2018-

19/148/AstraZeneca/12-13 issued by

respondent No.2 under Section 142(1) of

the Act vide Annexure-N in Writ petition

No.54209/2018 is hereby set aside.

The writ petitions stand disposed of

accordingly.

Sd/-

JUDGE

BH