Bombay High Court quashes, Jurisdictional Assessment Officer, could not reinstate

Bombay High Court quashes, Jurisdictional Assessment Officer, could not reinstate

Section 148 notices have been quashed by the Bombay High Court since the Jurisdictional Assessment Officer could not restore them at all.

The notice under Section 148 of the Act was issued after the end of the relevant assessment year had elapsed for a period of 4 years and the assessment had been completed in accordance with Section 143(3) of the Act. The proviso to Section 147 of the Act therefore applies. There must be evidence that the petitioner failed to disclose all relevant material facts during the assessment.

Petitioner has failed to satisfy its burden of demonstrating all material facts were not disclosed in a truthful and complete manner. Based on the petitioner's explanations as well as the documents annexed to it, it appears that all relevant details have been provided by them. During the Jurisdictional Assessment Officer's (JAO) valuation process, he raised 4 heads under which he believes income charged with tax has not been assessed.

Respondents, at the conclusion of their assessment under Section 143(3) of the Act, had sent petitioner a communication which listed the various objections raised by the audit department, including one which relates to this amount of Rs.29,30,000/- paid for interest expenses.

In its letter to respondents, the petitioner explained that the amount of Rs.29,30,000/- was not deducted from security deposits, but was deducted from interest paid on security deposits. Moreover, the petitioner explained that the Rs.29,30,000/- amount included in the profit and loss account under the heading of other income and that is deducted from the interest income represents interest expenditures for security deposits.

Respondents were also apprised that interest on security deposits was inadvertently accounted for under security deposits, hence the expenditure of Rs.29,30,000/- represents interest expenditure and is therefore deductible as a revenue expense rather than a capital expense.

Judge N.J. Jamadar and Justice K.R. Shriram ruled in their division bench that the petitioner is hereby directed to pay the amount of Rs.30,54,398/- as stipulated in the revenue audit objections. This amount is to be demanded from the respondent and the petitioner should pay the amount within the time frame specified by the demand.

"As we have pointed out before and made it clear that the entire notice 148 is quashed and set aside and we have held that respondents could not have reopened the assessment at all. Mr. Thakkar's offer without prejudice was the reason for including this portion in this order. So it cannot be interpreted as a statement of liability on the part of the petitioner. Under this category, the respondents are not allowed to bring penalty proceedings," the court said.