JUDGMENT IN HIGH COURT OF GUJARAT AT AHMEDABAD SPECIAL CIVIL APPLICATION NO. 6196 of 2014 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER ================================================================ 1 Whether Reporters of Local Papers may be allowed to see judgment ? 2 To be referred to Reporter or not ? 3 Whether their Lordships wish to see fair copy of judgment ? 4 Whether this case involves substantial question of law as to interpretation of Constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to civil judge? ================================================================ MUNDRA INTERNATIONAL CONTAINER TERMINAL PVT LTD....Petitioner(s) Versus DEPUTY COMMISSIONER OF INCOME TAX....Respondent(s) ================================================================ Appearance: MR B S SOPARKAR, ADVOCATE for Petitioner(s) No. 1 MRS MAUNA M BHATT, ADVOCATE for Respondent(s) No. 1 ================================================================ CORAM: HONOURABLE MR.JUSTICE KS JHAVERI and HONOURABLE MR.JUSTICE K.J.THAKER Page 1 of 6 HC-NIC Page 1 of 6 Created On Fri May 06 12:58:25 IST 2016 C/SCA/6196/2014 JUDGMENT Date : 11/11/2014 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE KS JHAVERI) 1. This petition has been filed against action of respondent authority of issuing Notice dated 23.01.2014 u/s.148 of Income tax Act, 1961 to petitioner whereby, petitioner has been asked to file his return of income for A.Y. 2007 08 on ground that income assessable to tax for A.Y. has escaped assessment within meaning of Section 147 of said Act. 2. Briefly stated, facts are that petitioner herein, which is private limited company incorporated under Companies Act, 1956, had filed its original e returns of income on 30.10.2007 declaring loss of Rs.82,86,75,690/ and revised return on 17.09.2008 declaring loss of Rs.81,87,45,944/ . return was duly processed u/s.143(1) of Act. case was taken up for scrutiny and Notice u/s.143(3) was issued and served upon petitioner. petitioner furnished all necessary details along with reply. After perusing materials available before it, respondent framed assessment order u/s.143(3) on 07.02.2011 whereby, claim of petitioner was allowed. However, petitioner was served with impugned Notice dated 23.01.2014 whereby, petitioner was called upon to submit its reply on issue of reopening of assessment for A.Y. 2007 08. Being aggrieved by same, present petition has been preferred. Page 2 of 6 HC-NIC Page 2 of 6 Created On Fri May 06 12:58:25 IST 2016 C/SCA/6196/2014 JUDGMENT 3. Mr. BS Soparkar learned counsel appearing on behalf of petitioner submitted that impugned Notice issued by respondent is bad in law inasmuch as it has been issued merely on basis of change of opinion. It is submitted that assessment order dated 07.02.2011 makes it apparent that respondent had consciously allowed claim of petitioner with regard to depreciation on infrastructural usage facility after considering all materials on record. Therefore, now, it is not open for respondent to re open assessment merely on basis of change of opinion. It is submitted that present proceedings are initiated for purpose of re appreciating material available on record, which is impermissible in eye of law. 3.1 Learned counsel Mr. Soparkar further submitted that Notice u/s.147 of Act can be issued if and only if A.O has reason to believe that any income chargeable to tax has escaped assessment. Such belief must be based on reasonable ground and not on mere change of opinion. Therefore also, impugned Notice issued by respondent deserves to be quashed and set aside. 3.2 Learned counsel Mr. Soparkar submitted that merely because there exists reason to believe that income had escaped assessment, same is not sufficient to re open assessment beyond period of four years. escapement of income must also be occasioned by failure on part of assessee to disclose fully and truly all material facts. In this case, there is no failure on part of assessee to disclose truly and fully any Page 3 of 6 HC-NIC Page 3 of 6 Created On Fri May 06 12:58:25 IST 2016 C/SCA/6196/2014 JUDGMENT material fact. Therefore, it is now not open to respondent to re open assessment. 3.3 In support of his submissions, learned counsel Mr. Soparkar has placed reliance upon following decisions; (a) Commissioner of Income Tax v. Kelvinator of India Ltd., [2010] 320 ITR 561 (SC). (b) Gujarat Power Corporation Ltd. v. Assistant Commissioner of Income tax, [2013] 350 ITR 266 (Guj). (c) Cliantha Research Ltd. v. Dy. Commissioner of Income tax, Ahmedabad Circle I, [2013] 35 taxmann.com 61 (Gujarat). (d) National Dairy Development Board v. Dy. Commissioner of Income tax, [2013] 33 taxmann.com 429. (e) unreported decision of this Court rendered in Sepcial Civil Application No.1588/2013 decided on 29.07.2013. 4. Mrs. Mauna Bhatt learned Standing Counsel appearing for Revenue drew our attention to objection dated 25.03.2014 filed by petitioner. It was submitted that at no point of time, assessee disclosed fact that it was allowed to use only infrastructural facility and that it was not owner of Page 4 of 6 HC-NIC Page 4 of 6 Created On Fri May 06 12:58:25 IST 2016 C/SCA/6196/2014 JUDGMENT infrastructure. Ownership was one of conditions for admissibility of depreciation allowance. right to use infrastructural facility would not be same as intangible asset as enumerated in Section 32 of Act and hence, not eligible for any depreciation. assessee was only user of infrastructural facility but, not owner. depreciation allowance would be available only to owner of assets enumerated in Section 32 of Act. 4.1 It was submitted by Mrs. Bhatt that during course of original proceedings, there was no clear disclosure by assessee that it was not owner of facility. In view of this non disclosure by assessee, provision of Section 147 of Act has rightly been invoked. Hence, it was prayed that present petition may be dismissed. 5. We have heard learned counsel for both sides. It appears from record that petitioner has not concealed any fact while assessment proceedings for Assessment Year in question were under way. In fact, petitioner itself had informed respondent that it is not owner of infrastructural facility in question. said fact is apparent from following averments made by petitioner it its communication dated 07.11.2009 (copy of which is appended vide Annexure C) addressed to respondent; 3. . Further, infrastructure facility like dredged channel, use of rail, road connectivity, use of water, Page 5 of 6 HC-NIC Page 5 of 6 Created On Fri May 06 12:58:25 IST 2016 C/SCA/6196/2014 JUDGMENT electricity and telecommunication and use of marine and port facility of which ownership belong to Mundra Port and to utilize said assets company has paid amount. 6. Therefore, factum of ownership of infrastructural facility, which is basis for arrival of opinion by respondent, was very much present and visible at time when assessment proceedings were under way. There is no willful non disclosure of relevant facts on part of petitioner, as alleged by respondent. Therefore, impugned action of respondent proposing to re open assessment within meaning of Section 147 of Act for A.Y. 2007 08 is erroneous and bad in law. 7. In view of above discussion, petition is allowed and impugned Notice dated 23.01.2014 issued u/s.143 of Act is quashed and set aside. Rule is made absolute. (K.S.JHAVERI, J.) (K.J.THAKER, J) Pravin/* Page 6 of 6 HC-NIC Page 6 of 6 Created On Fri May 06 12:58:25 IST 2016 Mundra International Container Terminal Pvt. Ltd. v. Deputy Commissioner of Income-tax