HITACHI HOME & LIFE SOLUTIONS(I) LTD vs. ASSTT.COMMISSIONER OF INCOME TAX,

Whether Reporters of Local Papers may be allowed to see the judgment ? NO 2. To be referred to the Reporter or not ? NO 3. Whether their Lordships wish to see the fair copy of the judgment ? NO 4. Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? NO 5. Whether it is to be circulated to the civil judge ? NO ====================================== HITACHI HOME & LIFE SOLUTIONS (I) LTD - Petitioner Versus ASSTT.COMMISSIONER OF INCOME TAX - Respondent ====================================== Appearance : MR S N SOPARKAR, SENIOR COUNSEL ASSISTED BY MR BANDISH SOPARKAR for Petitioner. MR M R BHATT, SENIOR CENTRAL GOVERNMENT STANDING COUNSEL ASSISTED BY MRS MAUNA M BHATT, CENTRAL GOVERNMENT STANDING COUNSEL for Respondent. ====================================== CORAM : HONOURABLE MR.JUSTICE V. M. SAHAI and HONOURABLE MR.JUSTICE N.V. ANJARIA Date : 25/07/2012 ORAL JUDGMENT

We have heard Mr. S.N. Soparkar, learned Senior Counsel assisted by Mr. Bandish Soparkar for the petitioner and Ms. Mauna M. Bhatt, learned Central Government Standing Counsel appearing for the respondents.

Though this petition has been listed for admission hearing, since the legal question on the admitted facts is involved, with the consent of learned counsel for the parties, this petition is taken up for final disposal at the admission stage. Rule. Ms. Manua M. Bhatt, learned Central Government Standing Counsel waives service of rule on behalf of respondent.

The brief facts are that return of income for the assessment year 2005-06 was filed by the assessee Company on 30.10.2005 declaring total income at Rs.NIL. Thereafter, the assessee filed revised return on 6.6.2006 declaring total income at Rs.NIL after adjusting the carried forward losses. The return filed by the assessee was processed under Section 143(1) of the Income-tax Act, 1961 (for short 'the Act'), The book profit under Section 115JB of the Act was computed by the assessee Company at Rs. NIL which was duly accepted by the Assessing Officer by order dated 30.12.2008. 3.1 After expiry of four years, on 30.8.2010, the Deputy Commissioner of Income-tax, Circle-4, Ahmedabad recorded reasons for initiating proceedings under Section 148 of the Act on the ground that the records revealed that during the course of assessment proceedings under Section 143(3) of the SCA/15724/2011 3/4 JUDGMENT Act, the Assessing Officer had accepted the book profit declared by the assessee at Rs. NIL. The assessee Company had debited an amount aggregating to Rs.4,29,07,000/- as provision for diminution in value of assets such as provision for doubtful debts, provision for doubtful advances etc. The Deputy Commissioner of Income-tax came to the conclusion that as there was no certainty regarding amount of bad debt, the provision for doubtful debt was not allowable. Therefore, owing to the failure on the part of the assessee to fully and truly disclose all material facts relevant for it's assessment, income chargeable to tax has escaped assessment, as a result of not adding back the said provision for doubtful debts to the book profit computed under Section 115JB of the Act at the time of original assessment. In the reasons recorded by the Deputy Commissioner of Income-tax, insertion of Explanation (1)(i) to Section 115JB(2) of the Act which has been inserted with retrospective effect was applied as well as Circular No.05/2010 dated 3.6.2010 clarifying the provisions of Finance Act (2) of 2009 was relied on and the Deputy Commissioner of Income-tax came to the conclusion that Explanation added to Section 115JB was clarificatory in nature and, therefore, there was failure on the part of the assessee to fully and truly disclose all material facts necessary for its assessment and the Assessing Officer had reason to believe that the assessed income has escaped the assessment within the meaning of Section 147 of the Act. After recording the above reasons on 30.8.2010, the Deputy Commissioner of Income-tax issued the impugned notice under Section 148 of the Act on 1.3.2011. 4. The law is well settled that if a retrospective

We are in agreement with the view taken by the Division Bench and we do not find that there was any failure on the part of the assessee to disclose fully and truly all material facts to the Assessing Officer. Therefore, we are of the considered opinion that the impugned notice issued by the Assessing Officer dated 1.3.2011 under Section 148 of the Act was illegal and deserves to be quashed.

In the result, this petition succeeds and is allowed. The notice dated 1.3.2011 issued by the Assessing Officer under Section 148 of the Act to the petitioner (Annexure A to the petition) is quashed. Rule is made absolute. The parties shall bear their own costs. [V. M. SAHAI, J.] [N. V. ANJARIA, J.] Savariya