Madras High Court
M/S.Financial Software & Systems ... vs Deputy Commissioner Of Income Tax on 30 June, 2021
W.P.No.9409 of 2016
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED :30.06.2021
CORAM
THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM
W.P.No.9409 of 2016
and
W.M.P.No.8392 of 2018
M/s.Financial Software & Systems (P) Ltd.,
No.42, Ground Floor, Saradha Apartments,
3rd Main Road, Gandhi Nagar,
Adyar, Chennai – 600 020. ...Petitioner
Vs
Deputy Commissioner of Income Tax,
Company Circle 2 (1),
7th Floor, New Block,
121, Mahatma Gandhi Road,
Chennai – 600 034. ... Respondents
PRAYER : Writ Petition filed Under Article 226 of the Constitution of
India to issue of Writ of Certiorari, calling for the records on the file of the
respondent and quash the impugned proceedings in AAACF2351F/10-11
dated 26.02.2016 along with notice issued by the respondent under Section
148 of the Act dated 20.03.2015 along with notice issued by the respondent
under Section 148 of the Act dated 20.03.2015.
For Petitioner : Mr.N.V.Balaji
1
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
For Respondents : Mr.D.Prabhu Mukunth Arunkumar
Standing Counsel for Income Tax
ORDER
The Notice dated 20.03.2015 issued under Section 148 of the
Income Tax Act and the order dated 26.02.2016 disposal of the objections
filed by the petitioner for reopening of assessment, are under challenge in
the present writ petition.
2. The petitioner is a 'Payment Systems Company' with domain
expertise in the areas of financial transaction processing and payment
solution and its expertise include transaction switching & payment systems;
debit, prepaid, smart and credit cards processing; front-end devices, host
systems & interchanges; internet & Mobile payments; merchant
management; system integration, financial inclusion & micro banking.
3. The petitioner filed its return of income electronically for the
Assessment Year 2010 - 11 on 02.10.2010 returning a total income of
Rs.39,58,67,100/- after claiming deduction under Section 10 B of the Act.
The respondent initiated the assessment proceedings by issuing notice under
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
Section 143 (2) of the Act, followed by various notices under Section 142
(1) of the Act calling for information. The petitioner submitted all the
materials, informations, books of accounts etc., to the satisfaction of the
Assessing Officer, who in turn considered the same and passed an
assessment order under Section 143 (3) of the Act on 30.03.3013.
4. Surprisingly, on 20.03.2015, a notice was issued under
Section 148 of the Income Tax Act for reopening of assessment stating that
the Assessing Officer has reason to believe that the income chargeable to
tax for the Assessment Year 2010 -11 has escaped assessment. Thereafter,
the petitioner submitted a letter seeking reasons for reopening of
assessment proceedings and the reasons were provided by the respondent in
proceedings dated 20.08.2015. Thus, the petitioner submitted its objections
on 04.09.2015. The said objections were disposed of by the respondent in
order dated 26.02.2016. Thereafter the notice under Sections 142 (1) and
142 (2) of the Income Tax Act was issued to the petitioner on 26.02.2016.
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
5. The learned counsel for the petitioner mainly contended that
the basis for initiation of reassessment proceedings is not in consonance
with the factual details furnished by the petitioner. The petitioner has
submitted detailed objections with reference to the reasons furnished. The
specific objections raised in Paragraph No.2 of the letter dated 04.09.2015
has not been dealt with by the Assessing Officer and therefore, the order of
disposing of the objections are improper and liable to be set aside.
6. The learned counsel for the petitioner reiterated that the
validity of jurisdiction to initiate reassessment proceedings is also an
objection raised. This apart, the details with regard to issue of shares was
provided in letter dated 09.11.2012 and details of expenses relating to issue
of shares is provided in letter dated 05.12.2012. None of these letters were
considered by the Assessing Officer and no findings are given in the order
impugned. Thus, the matter is to be remanded back for fresh consideration.
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
7. The learned Standing Counsel appearing on behalf of the
respondents objected the said contention by stating that perusal of the
objections would reveal that the petitioner has raised validity of jurisdiction
to initiate reassessment proceedings in the present case. Admittedly,
reopening of assessment proceedings are initiated within a period of four
years and therefore, the scope is wider enough to proceed with.
8. The learned Standing Counsel for the respondents solicited
the attention of this Court with reference to the findings made in the
impugned order. The impugned order dated 26.02.2016, reveals that since
the details required with regard to issue of shares was provided during the
course of regular assessment, reopening of assessment will tantamount to
reapplication of mind on the same set of facts and the same is nothing but a
fresh examination of the legal proposition after the scrutiny assessment
under Section 143 (3), which is in effect of framing a different opinion on
the same set of facts which impermissible under reassessment proceedings.
In simple terms, the Act provides authority to the Assessing Officer to re-
assess the income of the assessee but not to review his own decision.
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
Paragraph No.2.1 states that as per first proviso to Section 147, the question
whether there is failure on the part of the assessee to disclose fully all
material facts arises only in cases where assessment under Section 143 (3)
has been completed and four years from the end of the relevant assessment
year has expired. Since the action under Section 147 was initiated before the
expiry of four years from the end of Assessment Year 2010 -11. The
contentions of the petitioner are not valid.
9. The learned counsel for the petitioner also in its objections
referred few judgments of the Constitutional Courts and the learned
Standing Counsel for the respondents also referred judgments in their
favour. High Court cannot conduct a roving enquiry with reference to the
facts and details which are to be scrutinized and ascertained through the
original documents and evidences. If the reasons furnished are sufficient
and if the objections are dealt with in accordance with the provisions of the
Act, it would be sufficient for the requirement to be complied with. At the
initial stage, one cannot expect that entire facts are to be adjudicated. It is
only initiation of reopening of proceedings and notice was issued, thereafter
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
objections were filed and thereafter reasons were given to assessee and
based on the reasons, he has passed an assessment and such objections are
disposed of. Thereafter the assessment / reopening of assessment
proceedings are to be proceeded with and the assessee has to cooperate by
furnishing all further clarifications, details, information etc., for the purpose
of completion of reassessment proceedings. In this regard notice was also
issued under Section 142 (5) on 26.02.2016. Therefore, if at all any further
information or materials are to be clarified or to be produced, the assessee is
at liberty to do so and the Assessing Officer is also empowered to look into
those materials or information and proceed in accordance with law and by
following the procedures contemplated.
10. At the stage of initiation of reopening proceedings under
Section 147 of the Income Tax Act, what is contemplated is notice under
Section 148 of the Act within the time limit as prescribed under Section 149
and thereafter, if any request is made by the assessee, the reasons are to be
furnished by the Assessing Officer and the assessee is at liberty to submit its
objections for the reasons and thus objections are to be disposed of by the
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
Assessing Officer.
11. Perusal of the objections raised as well as the reasons stated
in the disposal of objections by the Assessing Officer would be sufficient
and further details or scrutiny cannot be made by the High Court in a writ
proceedings and all such documents, materials or informations are to be
considered by the Assessing Officer while proceeding with the
reassessment.
12. This Court do not find any non-application of mind with
reference to the order impugned dated 26.02.2016. The Assessing Officer
has given reasons for rejection of the objections. Such reasons may not be
acceptable to the assessee. However, it is for him to provide further details
or information to the Assessing Officer while proceeding with the
reassessment proceedings.
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
13. This being the factum of the case, this Court do not find
any acceptable reason for the purpose of interfering with the orders
impugned. Accordingly, the writ petition stands dismissed. No costs.
Consequently, connected miscellaneous petition is closed.
30.06.2021
Speaking order/Non-speaking order
Index : Yes/No
Internet: Yes/No
Pns
To
Deputy Commissioner of Income Tax,
Company Circle 2 (1),
7th Floor, New Block,
121, Mahatma Gandhi Road,
Chennai – 600 034.
https://www.mhc.tn.gov.in/judis/
W.P.No.9409 of 2016
S.M.SUBRAMANIAM,J.
Pns
W.P.No.9409 of 2016
30.06.2021
https://www.mhc.tn.gov.in/judis/
