Piramal Swasthya Management vs. Assistant Commissioner of Income Tax,

The brief facts of the case are that the petitioner is a society registered under the AP Societies Registration Act, 2OO 1 and is also registered under Section l2A of the Income Tax Act, 196 I (for short, "the Act"), established with the main object of carrying out extensive studies and research into various aspects relating to health services, besides managing health-related ltrograrnmes for Government departments and other organizations with a vier.r, to improving access to quality hea,lthcare. Further, during the linancial year 2076-17, the petitioner launched several community outreach programmes in the States of Andhra pradesh, Assam, Rajasthan and Telangana, in collaboration with the respective State Governments.

For the assessment year. 2OlT -18, the petitioner filed its return of income declaring nil income and claimed a refund of Rs.7,29,68,048/ -, and the petitioner had accumulated an amount of Rs.3,43,34,O21 /- and claimed exemption under Section 11(2) of the Act.

It is further contended that so as to claim beneht under Section 1i(2) of the Act, with effect from 0l.04.2016, for the financial year 2o16-17, under Rule 17 of the Income Tax Rures,

It is further stated that the l"t respondent taken up the case of the petitioner for scrutiny for the Assessment Year 2Ol7-18' and issued a notice, dt. 13.08.20 18, under Section 143(2) of the Act calling upon the petitioner to produce all evidence in support ofthereturnofincomefiled,andinresponsethereto'the petitioner furnished all the necessary documents, and insofar as submission of Form 10, the petitioner, on specific discussion with the l"t respondent, uploaded the same subsequiently, though it was prepared manually prior to filing of the return of income'

Further, the lst respondent, issued a notice, dt'18'01'2019' under Section 142(Il of the Act calling upon the petitioner to furnish various documents/information, including specific details

While matters stood thus, the 1"t respondent having completed the assessment, uide the assessment order dt.26.O7.2O19, altet a period of four years from the end of the relevant Assessment Y ear(2O77 -L8), issued a notice, dt.27.O2.2O23, under Section 148A(b) of the Act, directing the petitioner to show cause as to why a notice under Section 148 of the Act should not be issued stating that certain income had escaped assessment. In the said notice it was stated that as per Rule 17 of the Rules, Form 1 0 was required to be electronically submitted along with the return of income and since the same was not electronically transmitted, as such, the petitioner was not eligible for the benefit under Section 11(2) r/w Section i1(5) of the Act, and accordingly, the amount of Rs.3,43,34,O21 /- set apart underSectionll(2)wasproposedtobeaddedtothetota]income. g. In response to the said notice, the petitioner submitted a detailed reply, dt.O7 .O3.2O23, iruter alia contending that the assessment proceedings under Section 143(3) of the Act had already been concluded by order, dt.26'O7'2OL9, and that the issue relating to filing of Form 10, including its electronic transmission under Secti on 77 (21 & (3) of the Act, had been \ 6 examined during the original assessment proceedings by accepting the physical filing of the same, by the then assessing ofhcer, and further, once the assessment was completed and orders were passed, the very same authority cannot reopen the same, as it amounts to revieu,ing its on,n order, which is impressible under law.

Further, in support of the said contentions, the petitioner had placed reliance on the judgment of the Hrl.r'ble Supreme Court in the case of CIT a. Nagpur Hotels Owners Associationr and contends that once the requirements under the Act are fulfilled before the completion of the assessment proceedings, the petitioner is entitled to claim benefit under Sections I 1(2) & (5) of the Act. I 1. It is further stated that the l,r respondent failed to appreciate the law laid down by the Hon,ble Supreme Court in Nagpur Hotels Owners Associations case (supra), passed the impugned order dt.31.03.2023 under Section lagA(d) of the Act bearing No. ITBA/AST lF / L4SA/2O22-23 / 10S18060640l(1) and consequently issued notice bearing No. ITBA/AST/S/ l4g_l /2022- L l2OOt) 247 rTR 2Ot

The l't respondent filed counter afhdavit contending that the assessment for the year 2017-18 was originally completed under Section 1a3(3) of the Act on 26.07.2019 and subsequently, a revenue audit objection was raised on the ground that the petitioner had hled Form 10 (statement for accumulation under Section I 1(2)) in offline mode during the scrutiny proceedings, whereas the 1aw mandates that it must be filed electronica-lly before filing the return of income. Further, it is stated that based on the said audit objection, a notice under Section 148A(d) of the Act was issued on 27 .O2.2O23 to the petitioner, and aJter considering the petitioner's response, the order under Section 14BA(d), dt.31.O3.2023 was passed, recording the satisfaction that income chargeable to tax had escaped assessment on the following grounds: a) The benefit of accumulation under Section 11(2) can only be allowed to the extent of investments made during the year of accumulation, whereas the petitioner claimed benefits from deposits made in earlier years;

It was further contended that, in vievv of the above, as proper procedure was followed, the impugned proceedings are not vitiated by lavr,, and the notice under Section 148 has been validly issued for reopening the case under Section 147 of the Act, as such, there is no legal impediment in the impugned proceedings, and the writ petition is devoid of merit and liabte to be clismissed.

Heard Sri T. Suryanarayana, learned Senior Counsel representing Sri K. Raghavendra Rao, learned counsel for petitioner, Sri A. Ramakrishna Reddy, learned Standing Counsel for respondent No. I , and Sri Vrjay K. Punna, Iearned Senior Standing Counsel for respondents No.2. 15. Learned Senior Counsel, while reiterating the writ averments contended that as the impugned order, along with the consequential notice issued under Section 14g of the Act, having been passed after a lapse.of more than four years lrom the end of 9 the relevant assessment yea-r, are in violation of the statutory stipulation of revision.

It is further contended that the l*t respondent had no jurisdiction to revierv the earlier orders passed by the very sarne level of authority on 26.07 .2O 19, and thus, the writ petition is maintainable, and this Court has ample jurisdiction and authority to entertain the same in view of the settled principles of law as enunciated by the Hon'ble Supreme Court in the case of Assistant Comrnissioner (CT), LTLI, Kakinada & Ors. as, M/s. Glaxo Smith Kline Consumer Health Care Limited2 and Nagpur Hotels Ouners Association's case (supra).

On the other hand, Sri Vij ay K. Punna, learned Senior Standing Counsel, along with learned Standing Counsel Sri A. Ramakrishna Reddy, appearing for respondent No.1, would contend that the reopening of the petitioner's case is covered under Explanation I(ii) to Section 148, as inserted by the Finance Act, 2022, which deems any audit objection suggesting improper assessment to constitute valid "information" for the purpose of Section 147 proceedings. It is a-lso contended that, under Section 2 2020 ll9) scc 681

Haaing giuen earnest consideration to the submissions made bg the learned counsel appearing for the respectiue parties, pentsed the material on record.

In the above factua,l matrix, the points ,,vhich fall for consideration before this Court are: t. Whether the impugned proceeding, dt.31.03.2023, amounts to a review of the earlier assessment order passed by the very same authority on 26.0T.2OI9; and 2. Whether the fact that Form 10, which is mandated to be electronically transmitted under Rule 17 (A & (3) of the Income Tax Rules, 1962, was not electronicaily filed, has any impact on the reopening of proceedings, when the said form had already been verified and accepted by the assessment authorities in the earlier assessment order, dt.

OZ .2}lg.

In the light of the points framed as above, the main grievance of the learned Senior Counsel for the petitioner is that once Form 10 was examined, albeit filed manually, and accepted by the authorities as correct and va1id, resulting the assessment \

Further, once the assessment proceedings are completed and assessment order is passed, the 1st respondent cannot reopen the assessment proceedings by issuing the impugned show-cause notice, dt.27.O2.2O23, alleging that Form 1O had not been electronically submitted, thereby disentitling the petitioner to the benefit of Sections 11(2) and i1(5) of the Act in respect of the amount of Rs.3,43,34,O2l I-, arld thus, the impugned show_cause notice is untenable, for the simple reason that the return of income, along with Form 10, though filed manually, was duly examined and accepted by the assessment authorities at the time of the original assessment order, dt.26 .O7.2OI9, pursuant to which, the assessment proceedings were completed, in all respects and the order was validly passed, and the assessment officer once accepts the manually submitted Form 1O and completes the assessment, reopening of the said completed assessment wouid amount to review, which is impermissible under law. Thus, the contention of the learned Senior Standing Counsel as the Form 10 'was not electronically submitted as mandated under Rules lZ e) e (3), the earlier assessment is liable to reopened, does not hold merit and is negated.

It is settled principle of law that an Assessing officer cannot review al order already passed by the very same authority, it amounts to change of opinion or review, which is impermissible under law. This principle was upheld by the Hon,ble Supreme Court in Nagpur Hotels Owners Associations case (supra).

In view of the above findings, we are of the considered view that the impugned proceeding, dated 31.03.2023, atnount to a review of the earlier assessment order, dt.26.OZ.2Ol9, passed by the very same authority. Thus, in our considered view, the impugned order suffers from gross illegality, vitiated by law, perverse, and is liable to set aside. Thus, the points framed by this Court are answered in favour of the petitioner and against the respondents.

Accordingly, the Writ Petition is allowed ald the impugned order, dt.31 .03.2023, bearing No.ITBA/AST / S / I4B_t / 2022_23 / 10518066i7(1), and the consequential order, dt.31.03.2023, bearing No.ITBA/AST/F / t48A/2022-231 105i80606401(1) are hereby set aside and quashed. No order as to costs.