Hitech Corporation Ltd. (Formerly Known as Hitesh Plast Ltd.) v. ACIT

Case snapshot

Sections / provisions: 147

Questions before the Court / Tribunal

• S. 147 : Reassessment-After the expiry of four years-Change of opinion-Subsidy-Provision for expenses-Query raised during assessment proceedings-Reply filed-It is not necessary that the assessment order should contain reference or discussion in the assessment order-Order was quashed-Court observed that the order of disposal of objections in to 21 pages and referring 68 case laws without referring the issue under consideration-Faceless Assessing Officer has only wasted his time in writing unsustainable order on objections. [S. 4, 37(1), 143(3), 148, Art. 226] The assessment of the petitioner was completed under section 143(3) of the Act. In the course of assessment proceedings specific question was raised as regards taxability of the subsidy and provision for expenses. After considering the reply the Assessing Officer has accepted the contention of the petitioner and partly disallowed…
• Which factual, statutory and procedural conditions controlled the requested relief?
• How did the forum apply the governing provisions to the evidence and procedural history recorded in this case?

Material facts and procedural background

1/5 908-wpl-6861-22.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION (L) NO.6861 OF 2022 Hitech Corporation Ltd. (Formerly known as Hitech Plast Ltd.) ….Petitioner V/s. Assistant Commissioner of Income Tax Circle 15(1)(2) Mumbai & Ors. …Respondents ---- Dr. K. Shivram, Sr. Advocate i/b Mr. Rahul Hakani for Petitioner Mr. Suresh Kumar for Respondents ---- CORAM : K.R. SHRIRAM & N.J. JAMADAR, JJ DATED : 9th MARCH 2022 P .C. : 1 Petitioner is impugning a notice dated 31 st March 2021 issued under Section 148 of the Income Tax Act 1961 (the said Act), for A.Y. 2015-2016 on the ground that the reopening proposed is purely based on change of opinion by the Assessing Officer. It is petitioner’s case that there are two issues which have been raised in the reasons recorded for re-opening and both those issues have been discussed and analysed during the assessment proceedings before the original assessment order dated 29th December 2017. 2 Here is the case, where admittedly the notice under Section 148 has been issued after the expiry of 4 years from the end of relevant year and assessment having been completed under Section 143(3) of the Act, proviso to Section 147 applies. As provided in the proviso, there is a bar on reopening after 4 years unless there has been failure on the part of assessee Meera Jadhav

2/5 908-wpl-6861-22.doc to disclose truly and fully material facts relating to the assessment. The onus is on respondents to show that there has been failure on the part of the assessee to truly and fully disclose material facts. 3 We have considered the reasons for reopening, copy whereof is annexed to the petition. There is nothing in the reasons to indicate that there was failure on the part of petitioner to truly and fully disclose material facts. A bald allegation in the reasons that the assessee had not disclosed fully and truly all material facts, would not assist respondents since it is quiet obvious that such an allegation has been made only to take the case out of the restrictions imposed by the provisio to Section 147 of the Act.

The reasons for reopening has raised two issues namely subsidy received of Rs.61,50,969/- and the provision for expenses of Rs,59,04,000/-. Both these issues were subject matter of consideration during the original assessment proceedings. 4 The documents annexed to the petition indicate that during the assessment proceedings under Section 143(3), the Assessing Officer had asked for the details of the subsidy received of Rs.61,50,969/- and also called upon petitioner to justify its claim on its taxability on the date of hearing held on 27 th December 2017. A questionnaire dated 15 th September 2017 was also issued to petitioner. Petitioner replied to the questionnaire by a letter dated 28th December 2017 and explained that the said subsidy was a capital receipt and hence not taxable under the said Act.

3/5 908-wpl-6861-22.doc subsidy being capital receipt. 5 As regards the provision for expenses of Rs.59,04,000/-, the Assessing Officer had raised a specific query on the date of hearing held on 27 th December 2017 and petitioner by letter dated 28 th December 2017 submitted their explanation. Based on the same and after due verification, the Assessing Officer made disallowance of Rs.34,20,657/- in regard to provision for doubtful debts out of total provision for expenses claimed of Rs.59,04,000/-. Of course, petitioner has filed an appeal against the said disallowance, which appeal is still pending. 6 In view of the above, it is quiet clear that both the issues raised in the reasons for reopening were subject matter of consideration before the Assessing Officer. When primary facts necessary for assessment are fully and truly disclosed, the Assessing Officer is not entitled on change of opinion to commence the proceedings for reassessment. Where on consideration of material on record, one view is conclusively taken by the Assessing Officer, it would not be open to reopen the assessment based on the very same material with a view to take another view. 7 In the circumstances, we are satisfied that the proposed reopening is purely based on change of opinion which is not permissible in law. The notice, therefore, has to go. 8 At this stage, Mr. Suresh Kumar submits that the subsidy issue was not discussed in the assessment order and, therefore, there is nothing to indicate that it was subject matter of consideration during the assessment Meera Jadhav

4/5 908-wpl-6861-22.doc proceedings. 9 It is settled law that once a query is raised during the assessment proceedings and the assessee has replied to it, it follows that the query raised was a subject of consideration of the Assessing Officer while completing the assessment. It is not necessary that an assessment order should contain reference and/or discussion to disclose its satisfaction in respect of the query raised. The change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment. In the circumstances, petition is allowed in terms of prayer clause (a), which reads as under: “(a) that this Hon’ble Court may be pleased to issue a Writ of Certiorari or a Writ in the nature of Certiorari or any other appropriate Writ, order or direction, calling for the records of Petitioner’s case and after going into the legality and propriety thereof, to quash and set aside the said (i) Notice dated 31/3/2021 u/ s 148 for A.Y.-2015-16 (Exh.A), (ii) the impugned order dated 8/2/2022 being (Exh.B) and (iii) Notice u/s 142(1) dated 2/3/2022 being (Exh.C) and after examining the legality and validity thereof to quash and set aside the same.” 10 Before we part, we have to observe that the order disposing the objections, though running into almost 21 pages, does not deal with any of the submissions made by petitioner on merits.

Appellant / petitioner / assessee submissions

The judgment does not separately label this side’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Revenue / respondent submissions

The judgment does not separately label the respondent’s submissions in an independently extractable passage. No contention is inferred; read the full record.

Court / Tribunal analysis and reasoning

5/5 908-wpl-6861-22.doc earlier assessment proceedings. In our view, the Faceless Assessing Officer has only wasted his time in writing such unsustainable order on objections. 11 Petition disposed. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.) Meera Jadhav

Operative decision and relief

The operative relief must be read from the final paragraphs of the complete packaged judgment.

Ratio and legal principle

The narrow proposition associated with Hitech Corporation Ltd. (Formerly Known as Hitesh Plast Ltd.) v. ACIT concerns s. 147 : reassessment-after the expiry of four years-change of opinion-subsidy-provision for expenses-query raised during assessment proceedings-reply filed-it is not necessary that the assessment order should contain reference or discussion in the assessment order-order was quashed-court observed that the order of disposal of objections in to 21 pages and referring 68 case laws without referring the issue under consideration-faceless assessing officer has only wasted his time in writing unsustainable order on objections. [s. 4, 37(1), 143(3), 148, art. 226] the assessment of the petitioner was completed under section 143(3) of the act. in the course of assessment proceedings specific question was raised as regards taxability of the subsidy and provision for expenses. after considering the reply the assessing officer has accepted the contention of the petitioner and partly disallowed… The proposition cannot be separated from the judgment’s facts, the governing statutory version, the forum’s jurisdiction, and the exact relief recorded in WRIT PETITION (L) NO.6861 OF 2022.

For working-paper purposes, the decision should be cited only after matching the material facts and reading the passages under the judgment-grounded record above. The editorial outcome label “Quashed / set aside” is a navigation aid; it does not replace the operative order or explain every issue in a multi-issue case.

Why this judgment matters

This decision is relevant when a file raises the same central question identified in the source headnote: S. 147 : Reassessment-After the expiry of four years-Change of opinion-Subsidy-Provision for expenses-Query raised during assessment proceedings-Reply filed-It is not necessary that the assessment order should contain reference or discussion in the assessment order-Order was quashed-Court observed that the order of disposal of objections in to 21 pages and referring 68 case laws without referring the issue under consideration-Faceless Assessing Officer has only wasted his time in writing unsustainable order on objections. [S. 4, 37(1), 143(3), 148, Art. 226] The assessment of the petitioner was completed under section 143(3) of the Act. In the course of assessment proceedings specific question was raised as regards taxability of the subsidy and provision for expenses. After considering the reply the Assessing Officer has accepted the contention of the petitioner and partly disallowed… Its practical value lies in the way the Bombay High Court connected the governing provisions—147—to the procedural posture and evidence before it.

The authority level is High Court. That affects persuasive or binding weight, but authority level alone is never enough. Territorial jurisdiction, statutory period, the identity of the challenged order, and later appellate treatment must all be checked before the case is used in advice, a submission, or litigation strategy.

Practitioner action points

• Begin with the complete judgment and mark the paragraphs supporting the exact proposition relied upon.
• Match the statutory version of 147 and the decision date 2022-03-09; do not assume the current text is identical.
• Compare the notice, assessment, appeal or other procedural sequence with the chronology recorded in this case.
• Verify the stated later-history status and any review, appeal, SLP, curative or rectification proceedings before citation.
• Record why the client’s evidence is materially similar, and also record any fact capable of distinguishing the result.

Does this case match your facts?

Detailed reliance and distinction analysis

Identity check. Confirm that the cited cause title is Hitech Corporation Ltd. (Formerly Known as Hitesh Plast Ltd.) v. ACIT, the proceeding is WRIT PETITION (L) NO.6861 OF 2022, and the decision is dated 2022-03-09. These fields are taken from the judgment record and should appear exactly in the citation note.

Bench check. The judgment identifies the coram as K.R. SHRIRAM & N.J. JAMADAR, JJ. A later order by another bench, a larger bench, or a higher forum may alter the weight or interpretation of the proposition.

Provision check. The source associates the dispute with 147. The practitioner should place the historical statutory text next to the current text and identify every amendment, proviso, explanation, rule or notification that could change the analysis.

Fact check. The source issue is not a free-standing abstract rule. It arises from the concrete record summarized above. A reliable application note should list the common facts, the different facts, and whether each difference affects jurisdiction, admissibility, limitation, burden, computation or relief.

Remedy check. The recorded result is Quashed / set aside. Where a matter is remanded, set aside, partly allowed, or disposed with directions, the exact operative language is more important than a binary winner/loser label.

History check. The current closure state is REVIEW_APPEAL_SLP_CHECK_PENDING. If that state is pending, the page does not assert that no later case exists. It means the check remains open and must be completed at the point of professional reliance.

Section / provision impact

• 147 — apply the exact version considered in the judgment.

Case network

• Adityaraj Builders v. State of Maharashtra — Bombay High Court · Quashed / set aside
• Sanket Vinayak Nagvekar v. ITO — Bombay High Court · Quashed / set aside
• Hero Products India Pvt. Ltd. v. NFAC — Bombay High Court · Quashed / set aside
• Pr. CIT v. Macleods Pharmaceuticals Ltd. — Bombay High Court · Quashed / set aside

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