ASSISTANT COMMISSIONER OF INCOME TAX, vs. MARUDHAR HOTELS PRIVATE LIMITED,

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SAW/176/2019HC RajasthanRJHC01044951201801 July 2019Author: S. RAVINDRA BHAT,PUSHPENDRA SINGH BHATI3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the learned Single Judge was justified in quashing the reassessment notice. The original assessment order was framed under Section 143(3), indicating a scrutiny of all claims. The Court relied on *Commissioner of Income – Tax, Delhi Vs. Kelvinator of India Ltd.* (2010) 187 Taxman 312 (SC), which held that for a valid reopening of an assessment completed under Section 143(3), the Revenue must possess tangible material outside the existing record. A mere second opinion or review of existing material is impermissible. The Court found no allegation of suppression or mis-declaration by the assessee, and the Assessing Officer had considered all claims during the original assessment. The mere fact that the AO might have overlooked some provisions, in the absence of tangible material, did not afford an opportunity for reassessment. Therefore, the appeal was dismissed.

What were the facts?

The Revenue is aggrieved by a Single Judge's order quashing a reassessment notice dated March 28, 2012, issued under Section 147/148 of the Income Tax Act, 1961. The notice pertained to Assessment Years (AY) 2005-06, 2006-07, and 2007-08. The reassessment was based on two grounds: disallowance under Section 36(1)(iii) and commission allowance claimed without deducting tax under Section 194H, attracting Section 40(a)(ia). The assessee had successfully challenged the notice, arguing that the interest allowance issue was debatable and had been decided in its favour by the ITAT, with the Revenue's appeal pending. Regarding the second issue, the assessee contended that income tax was paid in accordance with provisions at the time of filing the final return.

What were the issues?

1. Whether the reassessment notice issued under Section 147/148 for AY 2005-06, 2006-07, and 2007-08 was valid, considering the original assessment was under Section 143(3) and the grounds for reopening involved debatable issues and the assessee's compliance with tax payment provisions? Assessee's Contentions: - The first issue concerning interest allowance was debatable and had been decided in its favour by the ITAT. The Revenue's appeal against the ITAT order did not ipso facto justify reopening the assessment. - For the second issue of non-deduction under Section 194H (amounting to ₹40,34,980), the assessee had paid the income tax amounts in accordance with provisions at the time of filing the final return. Revenue's Contentions: - The assessee could not have availed the extraordinary remedy of a writ petition in the circumstances, relying on *Commissioner of Income Tax & Ors. Vs. Chhabil Agarwal* (2013) 357 I.T.R. 357 (SC), *Deputy Commissioner of Income-tax, Central Circle-I, Jodhpur Vs. Sambhav Energy Ltd.* [2017] 80 taxmann.comm 389 (Rajasthan), and *Raymond Woollen Mills Ltd. Vs. Income-Tax Officer* (1999) 236 CTR 34.

Which sections of the Income-tax Act were involved?

Section 147,Section 148,Section 36(1)(iii),Section 194H,Section 40(a)(ia),Section 143(3)

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances
HIGH COURT OF JUDICATURE FOR RAJASTHAN AT JODHPUR D.B. Spl. Appl. Writ No. 176/2019 Assistant Commissioner Of Income Tax, Circle-I, Jodhpur. ----Appellant Versus Marudhar Hotels Private Limited, Umaid Bhawan Palace, Jodhpur. Through Shri Gaj Singh Director Of Marudhar Hotels Private Limited, R/o Umaid Bhawan Palace, Jodhpur. ----Respondent For Appellant(s) : Mr.K.K.Bissa For Respondent(s) : ------------ HON'BLE THE CHIEF JUSTICE S. RAVINDRA BHAT HON'BLE DR. JUSTICE PUSHPENDRA SINGH BHATI

Order 01/07/2019

1.

The Revenue is aggrieved by the order made by the learned Single Judge quashing the re-assessment notice issued under Section 147/148 of the Income Tax Act,1961 dated 28.03.2012. The re-assessment notice was in respect of A.Y.-2005-06, 2006-07 and 2007-08. Essentially, it was premised upon two grounds i.e. dis-allowance under Section 36(1)(iii) and secondly, the commission allowance claimed, in respect of which deductions were not made in accordance with the Section 194H by the assessee, attracting Section 40(a) (ia). The assessee had successfully challenged the impugned reassessment notice contending that so far as the first aspect i.e. interest allowance was concerned, the matter was debatable because the issue was carried in appeal to the ITAT which granted relief. That the Revenue preferred to challenge that order in appeal to this Court

(2 of 3) [SAW-176/2019] could not ipso facto be a ground for re-opening the assessment for concerned years.

2.

As far as the second issue i.e. non-deduction under Section 194H was concerned (in respect of amount of 40,34,980/-), the ₹ assessee successfully contend that the income tax amounts were paid in accordance with the provisions at the time of filing of the final return, well in time.

3.

The revenue relies upon the judgment in Commissioner of Income Tax & Ors. Vs. Chhabil Agarwal, (2013) 357 I.T.R. 357 (SC) to say that the assessee could not have availed extraordinary remedy of the writ petition in the circumstances. It also relies upon Deputy Commissioner of Income-tax, Central Circle-I, Jodhpur Vs. Sambhav Energy Ltd., [2017] 80 taxmann.comm 389 (Rajasthan) on the same effect besides relied upon the decision in Raymond Woollen Mills Ltd. Vs. Income-Tax Officer, (1999) 236 Income – Tax, Delhi Vs. Kelvinator of India Ltd., (2010) 187

(3 of 3) [SAW-176/2019] Taxman 312 (SC) where the Court after reviewing the entire law, including the decision in Raymond Woollen held that for a valid re- opening of an assessment completed under Section 143 (3), the revenue must be in possession of tangible material outside of the record. In other words, a second opinion or a review on the existing material is impermissible.

5.

Having considered the conspectus of the case, this Court is of the opinion that the learned Single Judge was justified in granting the relief to the assessee on both aspects, there was no allegation of suppression or mis-declaration by the assessee. The A.O. in the original assessment took into account all claims. The mere fact that he overlooked some provisions itself-in the absence of tangible material could have afforded opportunity of re- assessment to the revenue.

6.

There is no merit in the appeal, which is accordingly dismissed.

(PUSHPENDRA SINGH BHATI),J (S. RAVINDRA BHAT),CJ 3-Kshama Dixit/-

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