SOUND CASTING PVT. LTD. vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-2 AND ORS

JUDGMENT :(PER DR.D.Y.CHANDRACHUD,J).

Mhi 2 WP-590-12 Respondents waives service. By consent the Petition is taken up for hearing and final disposal.

Mhi 3 WP-590-12 December 2011 and moved this Court in a Writ Petition under Article 226 for a direction to the Assessing Officer to dispose of the objections. The Petition was disposed of by a Division Bench of this Court on 23 December 2011 with the following directions :- “In response to a notice issued to the Petitioner under accordingly disposed of.” The fact that this Court had passed its order on 23 December 2011 was intimated to the Assessing Officer by the Petitioner’s Advocate on 27 December 2011. On 28 December 2011, the Assessing Officer informed the Petitioner that in absence of a copy of the order of the Court he was proceeding to complete the assessment which was becoming time-barred on 31 December 2011. On 30 December 2011, the Assessing Officer addressed a communication to the Panel Advocate for the Revenue and eventually passed an order of assessment on the same day. Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:58

Mhi 4 WP-590-12

Mhi 5 WP-590-12 allowable melting loss was ruled out at 5.5%, whereas, in your case it was claimed at 7.24%. In view of this fact, it was concluded, to the extent the assessment framed on 31/10/2006 has escaped the assessment by allowing excess claim of loss within the provisions of Sec.147 of the Act.” In that case as well the reopening of the assssement was beyond four years. While allowing the Petition, this Court held as follows :- “The original assessment was completed under Section 143(3). The assessment is sought to be reopened beyond a period of four years from the end of the relevant Assessment Year. The juri ictional condition is that in such case before an assessment can be validly reopened, there must be a failure on the part of the assessee to state fully and truly all the material facts necessary for the assessment. There is no such allegation in the reasons which have been disclosed to the assessee. The Assessing Officer has purported to reopen the assessment only recording that according to him the melting loss of 7.24% which was claimed by the assessee is higher than what is found in a similar line of business. This ex facie would amount merely to a change of opinion. As regards the contention of the counsel appearing for the Revenue that there was no discussion in the original order of assessment under Section 143(3) on the aspect of melting loss, it is evident that when the claim of the assessee was accepted during the course of the assessment proceedings, the Assessing Officer, as is normal in such cases, had not adverted to the melting loss claimed by the assessee or the reasonableness thereof. The claim of the assessee was nonetheless accepted by the Assessing Officer in the course of the order of assessment under Section 143(3). The order which has been passed by the Assessing Officer while disposing of the objections of the assessee would in fact indicate that it was on a verification of the records of the assessee for the year under consideration that the Assessing Officer came to the conclusion that the Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:58

Mhi 6 WP-590-12 melting loss was found to be on a higher side. The decision of the Tribunal in the case of Saroj Castings, which has been adverted to in the order of the Assessing Officer dated 9 December 2011, was rendered on 30 May 2008. The Assessing Officer could not have reopened the assessment on the basis of this subsequent decision of the Tribunal unless the juri ictional requirements in the proviso to Section 147 were fulfilled. Moreover, the order of the Tribunal in Saroj Castings, a copy of which has been produced on record by the counsel for the assessee, does not indicate that any general principle of law was laid down in that case by the Tribunal. All that the Tribunal held there was that the Commissioner (Appeals) had properly worked out the reasonable wastage percentage as 5.5% as against 6.6% shown by the assessee in that case. As a matter of fact, the order of the Tribunal would also indicate that it was only the Revenue which was in appeal against the determination made by the Commissioner (Appeals) which was not challenged by the assessee. Hence, looked at from every perspective, it is evident that the Assessing Officer has transgressed the limits on his juri iction for seeking to reopen an assessment beyond a period of four years from the end of the relevant assessment year. Counsel appearing on behalf of the assessee has drawn the attention of the Court to the fact that on 21 December 2011, this Court while issuing notice to the respondents had passed an ad-interim order in terms of prayer clause (c) restraining the respondents from acting on the impugned notice or proceeding further by way of re-assessment for A.Y. 2004-05. A communication was addressed to the Assessing Officer on 27 December 2011 drawing the attention of the officer to the order passed by this Court. The Assessing Officer passed an order of assessment on 30 December 2011 since the period of limitation was to expire. The assessee has filed an application dated 10 February 2012 before the Assessing Officer. Since the reopening of the assessment under Section 148 is not valid, the consequential assessment order dated 30 December 2011 would have to be quashed and set aside.” Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:58

Mhi 7 WP-590-12 The present case stands on the same foundation

Mhi 8 WP-590-12 Uploaded on - 22/08/2020 Downloaded on - 28/10/2026 03:21:58 Powered by TCPDF (www.tcpdf.org)