DCW LIMITED vs. ASSISTANT COMMISSIONER OF INCOME TAX CIRCLE-3(4) AND 2 ORS

Since pleadings are completed, with the consent of Counsels, we take up the Petition for hearing at the admission stage. Rule. Rule returnable forthwith. Gaikwad RD CNR No : HCBM020057672022 Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

Petitioner had filed its return of income for Assessment Year 2014-15 on 29th November 2014. It was processed and intimation under Section 143(1) of the Income Tax Act, 1961 (“the Act”) was issued. Subsequently, Petitioner’s case was selected for scrutiny assessment. Petitioner was called upon to file several details pertaining to Petitioner’s claim for deductions under Section 32AC of the Act. These include details of the installation of the machinery with respect to which a claim for deduction was made. Details of money borrowed, interest paid, etc. was also called for. All details were made available along with Auditor’s Certification for the purpose of calculation of allowance under Section 32AC of the Act.

The assessment came to completed by an order dated 17th November 2016 under 143(3) of the Act.

An audit objection came to be raised by a letter dated 16th August 2018 on Petitioner’s claim of deduction under Section 32AC of the Act. In reply, the concerned Assistant Commissioner of Income Tax vide a letter 14th March 2021 stated that the audit objection/Observation was not acceptable. Notwithstanding that a notice under Section 148 of the Act came to be issued on 30th March 2021 alleging there was escapement of income within the meaning of Section 147 of the Act.

Petitioner filed its objections and the objections came to be Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

Section 147 of the Act provides for income escaping assessment. It states if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may assess or reassess such income subject to the further conditions mentioned therein. The proviso to Section 147 of the Act states that where an assessment order under Section 143(3) has been passed and more than four years had expired from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for assessment for that assessment year, reopening of assessment was not permissible.

In this case, an assessment order under Section 143(3) of the Act has been passed and more than four years have expired from the Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

The reasons given to reopen assessment read as under:

There is not even a hint in the reasons to reopen, that there has been a failure to truly and fully disclose. The reason itself indicates that everything has been disclosed because it reads “…… on perusal of the records it was observed that the asssessee was allowed the deduction of Rs.20,91,45,934/- under Section 32AC. The assessee contended that for the purpose of calculation of allowance…… it was Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

Moreover, during the course of assessment proceedings, Petitioner was told to provide detailed break-up of various plants and machinery installed and commissioned pursuant to Section 32AC of the Act duly weighted by its Chartered Accountant. Petitioner provided the details vide letter dated 5th July 2015. Vide letter dated 7th October 2016, Petitioner also forwarded the details, which were called for during the hearing held on 22nd September 2016, of installation date item-wise in respect of the plant. In view of voluminous data falling under the eligible category of Section 32AC of the Act, Petitioner made available few important and high value equipment details running into about 67 pages. Copies of these documents are also annexed to the Petition.

In the order disposing the objections, there is no denial of the fact that these materials were made available or these details were called for during the assessment proceedings. The only explanation is that these have not been discussed in the assessment order. In Aroni Commercials Ltd. v Deputy Commissioner of Income Tax 2(1), Mumbai & Anr.1 this Court has held that once a query is raised during the assessment proceedings and assessee has replied to it, it follows 1 2014 (44) taxmann.com 304 (Bombay). Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

It is also settled law that change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

Mr. Sharma submitted that an audit query was raised and there was misapplication of provision of Section 32AC of the Act. However, the Assessing Officer himself has replied to the audit objection raised denying that there was any escapement of income. In fact, in the letter dated 4th March 2021 a copy whereof is annexed to the Petition it is stated “audit objection/observation is not acceptable to the Department”

When the primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence proceedings for reassessment. Even if the Assessing Officer, who passed the assessment order, may have raised too many legal inferences from the facts disclosed, on that account the Assessing Officer, who has decided to reopen assessment, is not competent to reopen assessment proceedings.

In Bennett Coleman & Company Limited v. Deputy Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20

Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it is not open to reopen the assessment based on the very same material with a view to take another view. (Ananta Landmark Pvt. Ltd. v. DCIT, Central Circle 5(3), Mumbai3).

In the circumstances, Rule made absolute in terms of prayer clause (a) which reads as under: "(a) this Hon'ble Court may be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other 2 Writ Petition No. 4 of 2022 decided on 18th January 2022. 3 (2021) 131 taxmann.com 52 (Bombay). Gaikwad RD Uploaded on - 21/11/2023 Downloaded on - 27/10/2026 22:31:20