Madras High Court
Cholamandalam Investment And ... vs Deputy Commissioner Of ... on 23 June, 2021
W.P.No.22850 of 2017
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED :23.06.2021
CORAM
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.No.22850 of 2017
and
W.M.P.Nos.24018 to 24020 of 2017
Cholamandalam Investment and Finance Company Ltd.,
I Floor, Dare House,
NSC Bose Road,
Parry, Chennai – 600 001. ...Petitioner
Vs
Deputy Commissioner of Income-Tax,
Corporate Circle – 1 (2),
121, Mahatma Gandhi Road,
Aaykar Bhavan, Wanaparthy Block, 6th Floor,
Chennai – 600 034. ... Respondent
PRAYER : Petition filed Under Article 226 of the Constitution of India to
issue of Writ of Certiorarified Mandamus, calling for the records comprised
in the notice bearing ITBA/AST/S/148/2016-17/1003823852 (1) DATED
31.03.2017 issued by the respondent and all proceedings in furtherance
thereof, including but not limited to order PAN: AAACC1226H/AY 2012 –
13, dated 14.07.2017 passed by the respondent, and quashing the same
being arbitrary, illegal and without jurisdiction and to consequently restrain
the respondent from proceeding with reassessment against the petitioner for
the assessment year 2012 – 13.
1
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
For Petitioner : Mr.Arijitchakravarthy
for M/s.Arun Karthik Mohan
For Respondent : Mr.D.Prabhu Mukunth Arunkumar
Standing Counsel for Income Tax
ORDER
The writ on hand is filed challenging the reopening
proceedings initiated under Section 147 of the Act and the order dated
14.07.2017 passed by the respondent disposing of the objections filed by the
writ petitioner.
2. The writ petitioner is a non-deposit accepting non-banking
finance Company registered with the Reserve Bank of India and has its
registered office in Chennai. It is engaged in asset based financing business
such as vehicle finance, home loans, home equity loans etc. The petitioner
filed its return of income for the Assessment Year 2012 – 2013, declaring
total income and it was selected for scrutiny and an order of Assessment
was passed under Section 143 (3) of the Act, in proceedings dated
18.03.2015. The respondent, thereafter issued the impugned notice dated
31.03.2017 under Section 148 of the Income Tax Act, seeking to reopen the
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
assessment of the petitioner for the Assessment Year 2012 – 13. Admittedly,
the reopening proceedings are initiated within a period of four years from
the end of relevant Assessment Year. The respondent through letter dated
17.04.2017, furnished reasons for reopening of assessment of the petitioner:
● The first reason relates to excess depreciation claim on strong
room etc.
● The second reason is excess depreciation claim on motor
vehicles on hire.
● The third reason is excess claim of lease equalization charge.
● The fourth reason is loss on hedging transactions not regarded
as speculative in nature.
3. In response, the petitioner submitted its detailed objections
to drop the proceedings initiated under Section 147 of the Act. The
petitioner has mainly contended that the reopening of assessment is based
on change of opinion and there is no tangible material available on record to
invoke the powers under Section 147 of the Act. The petitioner furnished all
the details, account books etc., fully and truly at the time of original
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
assessment and the Assessment Officer scrutinized all these aspects, which
forms a reason for reopening the assessment and passed the final
Assessment Order which became final. Thus, the reopening of assessment is
nothing but change of opinion and the initiation does not comply with the
requirements as contemplated under Section 147 of the Act.
4. The learned Senior Counsel appearing on behalf of the writ
petitioner mainly contended that the objections in detail submitted by the
writ petitioner, drop off further proceedings on initiation of reopening
proceedings, were not considered nor findings are given. Thus, the order
impugned disposing of the objections is non-speaking and on that ground
also, the impugned order is liable to be set aside.
5. The learned Senior Counsel relied on the judgments of the
Hon'ble Supreme Court and the High Courts, stating that the objections
submitted by the assessee is to be considered meaningfully and mere
disposal of objections is insufficient. While disposing of the objections, the
Competent Authority is expected to deal with the objections with reference
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
to the facts, materials available on record and the principles laid down by
the Courts. In the present case, the impugned order disposing of the
objections is nothing but extraction of the provisions and certain judgments
of the Courts and the objections with reference to various heads furnished,
are not even dealt with by the Assessing Officer and therefore, the
impugned order is non-speaking and is liable to be set aside.
6. The learned Standing Counsel appearing on behalf of the
respondent objected the said contention by stating that the reopening of
assessment is not change of opinion. The learned Standing Counsel referred
the reasons furnished for reopening in proceedings dated 17.04.2017. It is
contended that there was an excess depreciation claim on motor vehicles on
hire and certain structures were claimed as temporary, which all are not
actually temporary, so as to fall under particular category. The learned
Standing Counsel referred the reasonings furnished by the respondent and
stated that there are materials available on record for reopening of
assessment and further the reopening proceedings are initiated within a
period of four years. Therefore, the scope is wider and thus, there is no
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
infirmity in respect of the reopening proceedings with reference to the
impugned order disposing of the objections. The respondent is unable to
establish that all the objections submitted by the writ petitioner are dealt
with by the respondent and findings are given with reference to the said
objections made. Perusal of the order impugned would reveals that the
detailed objections with reference to certain facts furnished by the assessee
based on the reasons furnished by the Department are not dealt with and
thus, this Court is of an opinion that the case is to be remanded back for
fresh consideration with reference to the objections filed by the petitioner /
assessee.
7. Undoubtedly, it is a case falling within a period of four years
and the scope of reopening of assessment is wider, if the Assessing Officer
has reason to believe any income chargeable to tax has escaped assessment,
then he is empowered to initiate reopening proceedings. Further the
explanation 1 & 2 enumerates that mere production of account books or
other evidences are insufficient and even those books of accounts are
produced by the assessee, the Competent Authority could able to draw
certain inferences or omissions or commissions. Explanation 2 (c) provides
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
various circumstances under which reopening of assessment is permissible,
even where an assessment has been made, then also reopening proceedings
are permissible. Thus, mere production of materials, books of accounts etc.,
alone is not the deciding factor for assailing the reopening proceedings,
various factors and circumstances are to be considered. However, the
reasons are furnished to the petitioner by the respondent. The petitioner also
submitted its detailed objections for drop off the proceedings. The
impugned order disposing of the objections are lacking findings with
reference to the objections raised by the petitioner, more specifically, with
reference to certain transactions. Thereafter, if the Authority forms an
opinion that it is a case for reopening of assessment, then they are bound to
proceed further.
8. This being the factum established, this Court is of an opinion
that the case is to be remanded back for reconsideration and for passing an
order of disposal of the objections submitted by the writ petitioner.
Accordingly, the impugned order passed by the respondent in proceedings
PAN : AAACC1226H/AY 2012 – 13, dated 14.07.2017 is set aside.
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
9. The respondent is directed to dispose of the objections filed
by the writ petitioner afresh on merits and in accordance with law and by
affording opportunity to the writ petitioner to file further objections, if any
or otherwise.
10. The petitioner is permitted to file their original objections
and further objections, if any, within a period of two weeks from the date of
receipt of a copy of this order. The respondent is directed to dispose of the
objections on merits and in accordance with law within a period of 12
weeks from the date of receipt of a copy of this order. Thereafter, the
respondent has to proceed further in accordance with law, if required.
11. With these directions, the writ petition stands allowed. No
costs. Consequently, connected miscellaneous petitions are closed.
23.06.2021
Speaking order
Index : Yes
Internet: Yes
Pns
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
To
Deputy Commissioner of Income-Tax,
Corporate Circle – 1 (2),
121, Mahatma Gandhi Road,
Aaykar Bhavan, Wanaparthy Block, 6th Floor,
Chennai – 600 034.
https://www.mhc.tn.gov.in/judis/
W.P.No.22850 of 2017
S.M.SUBRAMANIAM,J.
Pns
W.P.No.22850 of 2017
and
W.M.P.Nos.24018 to 24020 of 2017
Dated : 23.06.2021
https://www.mhc.tn.gov.in/judis/
