Madras High Court
Ppn Power Generating Company Private ... vs The Assistant Commissioner Of Income ... on 21 April, 2025
Author: Mohammed Shaffiq
Bench: Mohammed Shaffiq
WP. No.31888 of 2022
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 21.04.2025
CORAM:
THE HONOURABLE MR.JUSTICE MOHAMMED SHAFFIQ
WP. No.31888 of 2022
and
WMP No.31334 of 2022
PPN Power Generating Company Private Limited,
Represented by its Joint Managing Director,
Mr.Harshad Reddy,
S/o.P.Vijaykumar Reddy ... Petitioner
vs
The Assistant Commissioner of Income Tax,
Central Circle 3(1),
3rd Floor, Investigation Building,
No.46, (Old No.108), Mahatma Gandhi Road,
Nungambakkam,
Chennai-600 034. ... Respondent
PRAYER: Writ Petition filed under Article 226 of the Constitution of India,
for the issuance of a writ of Certiorari, calling for the records in DIN &
Letter No.ITBA/AST/F/17/2022-23/1047546124(1) dated 21.11.2022 on
the file of the respondent relating to the A.Y.2003-04 and quash the same
and pass orders.
1/8
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
WP. No.31888 of 2022
For the Petitioner :Mr.R.Sandeep Bagmar
For the Respondent :Mr.A.P.Srinivas
Senior Standing Counsel
ORDER
The present writ petition is filed challenging the impugned
proceedings invoking the power of re-assessment under Section 148 of the
Act on the limited ground that though the notice is beyond the period of
four years, however, there is no finding that there was failure on the part of
the petitioner to fully and truly disclose all material particulars for
assessment.
2. It is submitted that assessment under Section 148 of the Act beyond
4 years can be made only on finding that there was failure on the part of the
petitioner to fully and truly disclose all material particulars for assessment.
The above finding is a condition precedent, jurisdictional fact/sine qua non
for exercise of the power of re-assessment. In the absence of a finding on
the above aspect, the entire proceedings for reassessment would suffer from
want of jurisdiction. The petitioner would submit that the question stands
resolved by the Division Bench of this Court in Durr India Pvt. Ltd. v.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
Asst. CIT, reported in (2023) 455 ITR 460:
3. To the contrary, learned Senior Panel Counsel for the respondent
would submit that merely because the notice does not set out that the
petitioner had failed to fully and truly disclose material particulars that by
itself would not render the proceedings bad for want of jurisdiction.
4. The impugned proceedings are also challenged on the ground that
it is made on the basis of change of opinion. Further reasons which prompts
respondent authority to invoke power of re-assessment as disclosed in the
present notice is different from that which was set out originally. Thus,
limitation ought to be reckoned on the basis of the present notice, if so, the
proceeding would be barred by limitation.
5. I do not propose to go into the above question inasmuch as on the
first issue, viz., whether a finding of failure on the part of the assessee to
fully and truly disclose material particulars, is a jurisdictional fact and
whether the absence of such a finding would vitiate the proceedings stands
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
resolved by this Court in the case Durr India Pvt. Ltd. v. Asst. CIT ,
reported in (2023) 455 ITR 460, wherein it was held as under:
“12. From the above decisions, it is clear that existence
of ''jurisdictional fact'' is sine qua non for the exercise of
power. If the jurisdictional fact exists, the authority can
proceed with the case and take an appropriate decision in
accordance with law. It leaves no room for any doubt that to
invoke the extended period, the Assessing Officer ought to
show/ demonstrate the existence of any of the three
circumstances set out in the proviso to Section 147. In this
case, failure on the part of the assessee to fully and truly
disclose all material particulars in our view would constitute
the "jurisdictional fact" for invoking extended period of
limitation and failure to record the existence of the above
jurisditional fact while invoking the extended period under the
proviso to Section 147 of the Act, would vitiate the entire
proceedings. In this regard, it may be relevant to refer the
following judgments, wherein it was held that failure to render
a finding as to the existence of the above circumstance
warranting invocation of the extended period in terms of the
proviso to Section 147 of the Act would vitiate the entire
proceedings.
a) Duli Chand Singhania vs ACIT (269 ITR 192) (Punjab and
Haryana High Court):
“...that the reasons recorded for issue of notice showed that the
satisfaction recorded therein wes merely about the escapement of income.
There was not even a whisper of an allegation that such escapement had
occurred by reason of failure on the part of the assessee to disclose fully
and truly all the material facts necessary for his assessment. Absence of
this finding which is a "sine qua non" for assuming jurisdiction under
section 147 of the Act in a case falling under the proviso thereto, made the
action taken by the Assessing Officer wholly without jurisdiction. The
notice was not valid and was liable to be quashed. "
(Emphasis Supplied)
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
b) Commissioner of Income Tax vs. Eigi Ultra industries Ltd. (296
ITR 573):
"...the reopening of the assessment under s. 148 beyond the period
of four years at the end of the relevant assessment year can be sustained
only if it is established that there is a failure on the part of the assessee to
disclose fully and truly all material facts. in this case there is no finding
that there is failure on the part of the assessee to disclose fully and truly
all material facts".
(Emphasis supplied)
c) Commissioner of Income-Tax v. Premier Mills Ltd., 2007 SCC
OnLine Mad 1058 : (2008) 296 ITR 157 at page 160:
"6. In case where the assessment is completed under section
143(3) of the Income-tax Act, the reopening of the assessment under
section 148 beyond the period of four years at the end of the relevant
assessment year can be sustained only if it is established that there is a
failure on the part of the assessee to disclose fully and truly all material
facts. In this case there is no finding that there is failure on the part of the
assessee to disclose fully and truly all material facts. Further, all the
material facts are available at the time of making original assessment. The
Tribunal has correctly followed the principles enunciated in the Supreme
Court judgment reported in CIT v. Foramer France, [2003] 264 ITR 566,
as well as this court judgment reported in the case of CIT v. Elgi Finance
Ltd., [2006] 286 ITR 674 and came to the correct conclusion."
(emphasis supplied)
d) Commissioner of Income-Tax v. A.V. Thomas Exports Ltd., 2007
SCC OnLine Mad 1078 : (2008) 296 ITR 603 : (2007) 212 CTR 164 at
page 606:
"6. The Tribunal has applied the correct principle of law and held
as follows: “But whether recourse to section 147 could be made beyond
four years is the real question in the present appeal. Circumstances for
extending limitation beyond four years do not exist in the facts of the
present case. As such on the ground of limitation assumption of
jurisdiction under section 147 is bad. In the case of CIT v. Foramer
France, [2003] 264 ITR 566 (SC), it was held that if there is no failure to
file return or to disclose fully and truly all material facts, issuance of
notice beyond the period of four years is barred by limitation. In the case
of CIT v. Annamalai Finance Ltd., [2005] 275 ITR 451 (Mad) it was held
that section 147 of the Act does not postulate conferment of power upon
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
the Assessing Officer to initiate reassessment proceedings upon a mere
change of opinion. It is incumbent on the Assessing Officer to prove that
there was a failure to disclose material facts necessary for the assessment
for the issuance of notice beyond the period of four years." (emphasis
supplied)
e) Caprihans India Ltd. v. Tarun Seem, Deputy Commissioner
of Income-Tax, 2003 SCC OnLine Bom 692 : (2004) 266 ITR 566 :
(2003) 6 Bom CR 559 : (2003) 185 CTR 157 at page 569:
"8. The Assessing Officer seeks to reopen the assessment after
a period of four years from the end of the assessment year and in
view of the judgment of this court in the case of IPCA Laboratories
Ltd. v. Gajanand Meena, Deputy CIT (No. 2)[2001] 251 ITR 416,
the Assessing Officer cannot act in the matter of reopening of
assessment beyond four years, unless he has reason to believe that
income has escaped assessment by reason of the failure on the part
of the assessee to disclose fully and truly all material facts necessary
for assessment. He submitted that a bare reading of the reasons
shows that reopening is sought to be effected only on the basis of the
case records. He submitted that on two out of three points mentioned
in the reasons, the Assessing Officer merely states “that the issue
needs to be looked into”. That, on those two issues regarding
subsidy and provident fund being disallowed, the Assessing Officer
does not even say that there is escapement of income from
assessment. He therefore submits that the proviso to section 147 is
not attracted. That, on the said two points, there is nothing to
indicate escapement of income. That, on the said two points, there is
nothing to indicate failure on the part of the assessee to disclose
fully and truly all material facts. That, on these two points, there is
nothing to show as to on what basis the Assessing Officer has
formed his belief regarding escapement of income from assessment.
It is submitted that on the face of the given reasons, there is a total
non-application of mind on the part of the Assessing Officer.”
(emphasis supplied)
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
6. Following the Division Bench order of this Court, the impugned
proceedings are set aside. There shall be no order as to costs. Consequently,
connected miscellaneous petition is closed.
21.04.2025
Index : Yes/No
Neutral Citation : Yes/No
mrn
To:
The Assistant Commissioner of Income Tax,
Central Circle 3(1),
3rd Floor, Investigation Building,
No.46, (Old No.108), Mahatma Gandhi Road,
Nungambakkam,
Chennai-600 034.
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
MOHAMMED SHAFFIQ, J.
(mrn)
21.04.2025
https://www.mhc.tn.gov.in/judis ( Uploaded on: 15/05/2025 04:12:07 pm )
