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E.I. DUPONT INDIA PVT. LTD. AND ANR. Vs. THE DEPUTY COMMISSIONER OF INCOME TAX
February, 21st 2013
        THE HIGH COURT OF DELHI AT NEW DELHI
%                                 Judgment delivered on: 14.02.2013

+       W.P.(C) 4507/2012

        E.I. DUPONT INDIA PVT. LTD. AND ANR.                     ..... Petitioner

                     versus

        THE DEPUTY COMMISSIONER
        OF INCOME TAX                                         ..... Respondent

Advocates who appeared in this case:
For the Petitioner  : Ms Kavita Jha with Mr Vaibhav Kulkarni, Advocates.
For the Respondent  : Mr Abhishek Maratha, Sr. Standing Counsel.


CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR

                                JUDGMENT

BADAR DURREZ AHMED, J (ORAL)

C.M. APPL. No.9341/2012 (for exemption)

        Exemption allowed subject to all just exceptions.

        The application stands disposed of.

W.P. (C) No.4507/2012 & C.M. APPL. 9340/2012

        Mr Maratha, Sr. Standing Counsel seeks another opportunity to file

the counter affidavit. However, we have given sufficient opportunity to

the respondent to file the counter affidavit in this matter. Mr Maratha







W.P. (C) 4507/2012                                                   Page 1 of 5
states that he is handicapped because he has not received any comments

from the department.


2.       We, therefore, close the right of the respondent to file the counter

affidavit in this matter.


3.       This writ petition is directed against the notice dated 27.03.2012

issued under section 148 of the Income Tax Act, 1961 (hereinafter

referred to as ,,the said Act) p roposing to reopen the assessment for the

assessment year 2005-06.        After the receipt of the said notice dated

27.03.2012, the purported reasons behind the issuance of the said notice

were also supplied to the petitioner. Those purported reasons read as

under:

         "Reasons for Notice u/s 148 of the IT Act, 1961

                The assessment u/s 143(3) of the IT Act in the above
         mentioned case for A.Y. 2005-06 was completed in
         December 2008 determining total income of `66,47,07,190/-.
         On the perusal of the record that pursuant to the scheme of
         amalgamation with Ms Liqui Box Liabilities, duties and
         obligations Etc. would be transferred and the deficit arising
         on account of excess of fair value of net assets taken over as
         a part of amalgamation over the face value of shares issued
         under the scheme should be treated as Goodwill/ Capital
         Reserve in accordance with the scheme of amalgamation.
         Accordingly `2,87,90,431/- being the difference between
         consideration and the net value of identifiable assets



W.P. (C) 4507/2012                                                 Page 2 of 5
        acquired, after adjustments was treated as Reserve. As, the
        assessee had received the benefit of `2,87,90,431/- from the
        scheme of amalgamation, the same would be offered for tax
        as business Income. By doing so, the assessee has not
        disclosed the total income correctly to the extent of
        `2,87,90,431/-.

               Based on the above facts, I have reason to believe that
        the income of the assessee chargeable to tax to the extent of
        `2,37,90,431/- has escaped assessment."

4.      In response to the said notice and purported reasons, the petitioner

submitted its objections by virtue of its letter dated 08.05.2012. An

opportunity of hearing was also granted to the petitioner whereupon the

assessing officer passed an order on 31.05.2012 rejecting the objections.


5.      In the reply submitted by the petitioner it had been categorically

stated that the proposed proceedings were hit by the first proviso to

section 147 of the said Act which specifically laid down that, in case an

assessment has already been made under section 143(3) of the said Act,

in order to reopen the said assessment after the expiration of four years

the assessing officer has to necessarily demonstrate that there was failure

on the part of the assessee to disclose the facts and particulars necessary

for the assessment.     However, this contention of the petitioner was




W.P. (C) 4507/2012                                                Page 3 of 5
brushed aside by the assessing officer in the order dated 31.05.2012 by

simply stating as under: -

        "The objection raised by the assessee has been considered
        but are found to be not tenable. The assessment in the case
        of assessee has been completed u/s 143(3) of the Act at total
        income of `66,47,07,190/- on December 2008. However, on
        perusal of records it was observed that assessee has failed to
        disclose its income fully and truly resulting in under
        assessment. Accordingly notice u/s 148 was issued on
        27.03.2012 after obtaining prior approval of Ld. CIT vide
        dated 15.03.2012."

6.      We have heard the learned counsel for the parties and we feel that

since this was a case of proposed reopening of assessment after four years

from the end of the relevant assessment year it was incumbent upon the

assessing officer to demonstrate that there was failure on the part of the

assessee to fully and truly disclose all material facts necessary for its

assessment. The purported reasons which we have extracted above do

not even allege that there has been a failure on the part of the assessee to

disclose any material fact. In fact, even in the impugned order dated

31.05.2012 there is no mention of what fact the assessee had failed to

disclose which was necessary for the assessment in the original round of

assessment.          Failure to disclose all material facts necessary for

assessment is a condition precedent for reopening of an assessment







W.P. (C) 4507/2012                                                Page 4 of 5
beyond the period of four years from the date of assessment. This is a

pre-condition set out in the statute itself.

7.      In view of the fact that this pre-condition has not been satisfied, we

feel that the impugned notice dated 07.03.2012 as also the order dated

31.05.2012 ought to be set-aside. It is ordered accordingly. All the

proceedings pursuant to the notice dated 27.03.2012 are quashed. The

writ petition is allowed.        There shall be no order as to costs.

Consequently, all the pending applications also stand disposed of.



                                               BADAR DURREZ AHMED, J



                                                           R.V.EASWAR, J
FEBRUARY 14, 2013
hs




W.P. (C) 4507/2012                                                 Page 5 of 5
 
 
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