Mandatory pre-conditions were not abided by, the notice u/s 148 cannot be sustained : Bom HC

In a recent decision, Hon’ble Bombay High Court held that:

“Upon hearing both sides and perusing the Writ Petition and all annexures thereto so also the affidavit in reply, we fail to understand as to how the Respondents justify the issuance of the notice u/s 148 of the IT Act and by referring to such details including of the claim of deduction under section 10A of the IT Act. If these details and pertaining to deduction in question were not furnished and were not available with the AO, then, one fails to understand as to from where the data and the computation has been taken and for reference by the Respondents themselves. In the reasons recorded, it is clear that the Assessing Officer is aware that the Petitioner assessee is engaged in the business of development and export of software. The AO was aware of the Units set up by the Assessee/Petitioner before us. He has derived the figures of profits and losses from the relevant records and the information, some of which was supplied and furnished by the Petitioner itself. In these circumstances and when material facts relevant to the assessment year were disclosed and were on record, then, one fails to understand as to why this notice has been issued. From the reasons itself, it is apparent that it is issued to revisit this claim of deduction u/s 10A of the IT Act and as put forward by the Petitioner/Assessee. If the deduction u/s 10A of the IT Act is allowable on the net profit derived by the Assessee company from eligible units, after setting off lossess from other eligible units, then, it is apparent that all the particulars and profits were before the Assessing Officer at the time of the original assessment. The Petitioner has, while disputing the reasons recorded and raising objections thereto, pointed out in details as to how the relevant facts were before the AO. We do not find any material to the contrary and which falsifies the Petitioner’s assertions in the letter dated 12th December, 2014 raising specific objections to the reasons recorded for reopening the assessment u/s 147 of the IT Act. The affidavit in reply is completely silent with regard to furnishing of these details and by the Petitioner. From the affidavit in reply, we have taken specific paragraphs, where the Petitioner’s version before the Assessing Officer in the original assessment though accepted by the AO, he is faulted for not having taken into consideration certain aspects of this deduction. If the Petitioner allegedly did not give information regarding the losses of the Unit IV and did not adjust the losses of Unit IV with the profits of other units and therefore the order in that behalf is termed as erroneous, then, this is a clear case of revisiting this claim. Now, a different opinion is held by the Respondents and for which they want to reopen the assessment. Such a course is clearly impermissible. Having referred to the undisputed factual materials on record and finding that there is no justification for reopening the assessment that we have no alternative but to allow this Writ Petition. Once we find that the mandatory precondition and as set out in the statute has not been abided by, then, the notice u/s 148 of the IT Act and all steps in furtherance thereof cannot be sustained.”

For complete text of judgement, click here CAPGEMINI INDIA PVT.LTD