JOSHI TECHNOLOGIES INTERNATIONAL INC vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE (INT. TAXN) 1, AHMEDABAD

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SCA/18180/2021HC GujaratGJHC24065680202107 December 2021Bench: HONOURABLE THE CHIEF JUSTICE MS. JUSTICE SONIA GOKANI,HONOURABLE MS. JUSTICE NISHA M. THAKORE4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court heard the learned advocate for the petitioner who argued that the reopening beyond four years was unsustainable in the absence of any allegation of failure to disclose material facts. The petitioner relied on *Parashuram Pottery Works Co. Ltd. vs. Income-tax Officer* and *Shree Bansidhar Spg. & Wvg. Mills (P.) Ltd. vs Income-tax Officer*. However, at the conclusion of the hearing, the learned advocate for the petitioner sought withdrawal of the petition. Consequently, the Court disposed of the petition as withdrawn. No decision was made on the merits of the case regarding the validity of the reopening notice or the grounds raised by the petitioner. The operative direction was to dispose of the petition as withdrawn.

What were the facts?

The petitioner, Joshi Technologies International Inc., a foreign company with a project office in India and tax residence in the United States, is challenging a notice issued by the Assistant Commissioner of Income Tax under Section 148 of the Income-Tax Act, 1961, dated March 31, 2021. This notice sought to reopen the assessment for the assessment year 2014-15. The petitioner had initially filed its return of income for AY 2014-15 on November 29, 2014, declaring a total income of Rs. 104,83,51,430, and later filed a revised return on March 31, 2016, at Rs. 67,42,11,740. The original assessment order under Section 143(3) read with Section 144(C) was passed on February 15, 2017, determining the income at Rs. 130,80,53,520. The reasons for reopening were furnished on May 11, 2021, objections were filed on May 25, 2021, and the objections were disposed of on November 15, 2021, leading to the present petition.

What were the issues?

1. Whether the notice issued by the respondent under Section 148 of the Income-Tax Act, 1961, for reopening the assessment for assessment year 2014-15, is bad in law, particularly when it is issued beyond a period of four years from the end of the relevant assessment year. Assessee's Contention: The reopening is unsustainable as it is beyond four years, and the reasons recorded do not indicate any failure on the part of the petitioner to fully and truly disclose all material facts. The petitioner relies on the Supreme Court decision in *Parashuram Pottery Works Co. Ltd. vs. Income-tax Officer* and the Gujarat High Court decision in *Shree Bansidhar Spg. & Wvg. Mills (P.) Ltd. vs Income-tax Officer*. Revenue's Contention: No specific contentions for the revenue are recorded in the judgment.

Which sections of the Income-tax Act were involved?

Section 148,Section 143(3),Section 144(C),Section 35(i)(ii)

AI-generated summary — verify with the full judgment below

C/SCA/18180/2021 ORDER DATED: 07/12/2021 IN THE HIGH COURT OF GUJARAT AT AHMEDABAD R/SPECIAL CIVIL APPLICATION NO. 18180 of 2021 ========================================================== JOSHI TECHNOLOGIES INTERNATIONAL INC Versus ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE (INT. TAXN) 1, AHMEDABAD ========================================================== Appearance: MR B S SOPARKAR(6851) for the Petitioner(s) No. 1 for the Respondent(s) No. 1 ========================================================== CORAM: HONOURABLE MS. JUSTICE SONIA GOKANI and HONOURABLE MS. JUSTICE NISHA M. THAKORE

Date : 07/12/2021

ORAL ORDER (PER : HONOURABLE MS. JUSTICE SONIA GOKANI) 1. The petitioner is before this Court under Article 226 of the Constitution of India challenging the notice issued by the respondent under Section 148 of the Income-Tax Act dated 31.03.2021 directing the petitioner to furnish the return of income for the assessment year 2014-15 on the ground that the assumption of jurisdiction itself is bad in law. 2. The petitioner is a foreign company having project office in India as per the approval of the Reserve Bank of India which is engaged in the business of extraction of crude petroleum and natural gas and having its tax residence in the United States. It has filed its original return of income for the Page 1 of 4

C/SCA/18180/2021 ORDER DATED: 07/12/2021 assessment year 2014-15 on 29.11.2014 declaring the total income of Rs. 104,83,51,430/-. The revised return of income was filed on 31.03.2016 at Rs. 67,42,11,740/-. 2.1. The petitioner’s case was selected for scrutiny assessment relating to the payment under Section 35(i)(ii) on 24.11.2016. This has been replied to by the petitioner on 01.12.2016 and 08.12.2016. The order of assessment was passed on 15.02.2017 under Section 143(3) read with Section 144(C) of the Income-Tax Act determining the income at Rs. 130,80,53,520/-. 2.2. A notice came to be issued on 06.10.2020 where the petitioner was asked to furnish the details such as nature of expanses incurred under Section 35(i)(ii) of the Income-Tax Act, names, PAN and addresses of the parties to whom the payments were made. The petitioner made payment of Rs.65,00,000/- to Shri Arvindo Institute of Applied Scientific Research as contribution towards expenditure of Thalassemia project of the trust and against the said donation assessee has claimed weighted deduction under Section 35(i)(ii) of the IT Act amounting to Rs. 1,13,75,000/-. 2.3. The respondent issued notice under Section 148 on 31.03.2021 seeking to reopen the assessment for the Page 2 of 4

C/SCA/18180/2021 ORDER DATED: 07/12/2021 assessment year 2014-15. The reasons have furnished for reopening vide letter dated 11.05.2021 which had been objected to on 25.05.2021 and on 15.11.2021 the respondent disposed of the objections which are under challenge before this Court with the following prayers: - “(a) quash and set aside the impugned notice at Annexure A to this petition; (b) quash and set aside the impugned order at Annexure H to this petition; (c) pending the admission, hearing and final disposal of this petition, to stay implementation and operation of the notice at Annexure A to this petition and stay further proceedings for assessment for A.Y. 2014-15; (d) any other and further relief deemed just and proper be granted in the interest of justice; (e) to provide for the cost of this petition.” 3. We have heard learned advocate Mr. B.S.Soparkar appearing for the petitioner who has extensively taken us through the law and according to him, this is purely a question of law which arises for consideration as the reopening is beyond a period of four years and the reasons recorded do not, in any manner, say that there was anything that had been done on the part of the petitioner – assessee which has led to the income escaping the assessment. In absence of failure disclosed fully and truly all material facts, Page 3 of 4

C/SCA/18180/2021 ORDER DATED: 07/12/2021 any reopening beyond a period of four years from the end of the assessment year 2014-15 is unsustainable. There is no whisper of the failure of the part of the petitioner of the true and full disclosure in the reasons which have been furnished and therefore, the petitioner has to be considered as a victim and with that being clear in the mind of the revenue also, this notice has been issued, and hence, this requires indulgence. 3.1. He has also supported his submissions with follwoing two authorities: - (i) Parashuram Pottery Works Co. Ltd. vs. Income-tax Officer [[1977] 106 ITR 1 (SC)]; (ii) Shree Bansidhar Spg. & Wvg. Mills (P.) Ltd. vs Income- tax Officer [[1980] 3 Taxman 576 (Gujarat)]. 4. At this stage, learned advocate Mr. Soparkar seeks withdrawal of this petition. 5. The present petition stands disposed of as withdrawn. (SONIA GOKANI, J) (NISHA M. THAKORE,J) Bhoomi Page 4 of 4

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