INNOVATIVE FOODS LTD Vs. UNION OF INDIA

JUDGEMENT

(1.) Exhibit P12 order passed by the third respondent disposing the objections to reopen the assessment under s. 147 of the IT Act, 1961 is the subject-matter of challenge in this writ petition. The petitioner company is engaged in the manufacturing and marketing of frozen value added food products and is an assessee on the files of the 3rd respondent under the IT Act. In the year 2007-08, another company engaged in similar line of business viz., M/s. Amalgum Foods & Beverages Ltd., was merged with the petitioner company in tune with the approved scheme of the Board for Industrial & Financial Reconstruction (BIFR). In the same assessment year, the petitioner also selected another company, M/s. Residency Foods & Beverages Ltd., as a strategic investor and it is stated that the said company had acquired the management and control of the petitioner company with 67.93 per cent shareholding in the petitioner company. In respect of the asst. yr. 2007-08, the petitioner filed return of income on 30th Oct., 2007, showing a business loss of Rs. 4,28,00,960. In response to the notice issued under s. 143(2) of the IT Act, the petitioner submitted Ext. P1 written statement dt. 8th Dec, 2009 explaining the facts and figures. After considering the same, the assessment was finalised under s. 143(3) of the IT Act as borne by Ext. P2 assessment order dt. 31st Dec. 2009.

(2.) According to the petitioner, there were some mistakes in Ext. P2 order and in the said circumstance, an application was preferred before the third respondent under s. 154 of the IT Act to rectify the mistakes, which was considered and Ext. P3 order came to be passed on 9th April, 2010. But, since some vital aspects were not considered, the petitioner filed an appeal on the issue of non-consideration of unabsorbed business loss and after considering the said appeal, the appellate authority passed Ext. P4 order dt. 6th Aug., 2012, granting the relief to the extent as specified. In respect of the other aspects contained in Ext. P2 assessment order, the petitioner has already filed a statutory appeal, as borne by Ext. P5 dt. 25th Jan., 2010, which is pending consideration before the second respondent/appellate authority. While so, the petitioner was served with Ext. P6 notice dt. 6th March, 2012, seeking to reopen the assessment under s. 147 of the IT Act. The petitioner pointed out that, by virtue of the law declared by the apex Court in GKN Driveshafts (India) Ltd. vs. ITO, 2003 259 ITR 19, reason for reopening the assessment was liable to be given in writing for contesting the matter effectively. According to the petitioner, Ext. P7 request was made and after considering the same, Ext. P8 order/proceeding was issued by the third respondent revealing the reasons. On receipt of Ext. P8, Ext. P9 statement of objections was filed by the petitioner and sought to pass a speaking order, particularly on the question of jurisdiction. However, before passing any such order, the petitioner was required to furnish some documents as per Ext. P10, when the petitioner reminded the third respondent as to the necessity to pass a speaking order vide Ext. P11. After considering the matter, Ext. P12 speaking order came to be passed on 11th Feb., 2013, overruling the objections and deciding to proceed with the merits of the case. The petitioner filed Ext. P13 representation dt. 18th Feb., 2013 seeking for extension of time to submit the version on merits and has approached this Court by filing the present writ petition.

(3.) The case of the petitioner, as projected by Mr. Anil D. Nair, the learned counsel for the petitioner, is that Ext. P12 order passed by the third respondent is not an appealable order and hence the challenge in the writ petition. It is stated that the present course of proceedings sought to be pursued by the third respondent, is only by virtue of a 'change of opinion', which shall not be a ground for reopening the assessment under s. 147 of the IT Act, as made clear by the apex Court in CIT vs. Kelvinator of India Ltd., 2010 228 CTR 147. It is pointed out that all the vital aspects which are now sought to be relied on for proceeding under s. 147 of the Act were dealt with by the petitioner, as pointed out in Ext. P1 written statement. These aspects were considered by the assessing authority earlier and some aspects were found as not acceptable, some were accepted and some were left out. Having taken such a conscious decision, it is not a matter which is liable to be reworked by resorting to the course and proceedings under s. 147 and hence the challenge. The learned counsel also submits that the very purpose of passing a speaking order when reassessment is proposed under s. 147, in the light of the ruling rendered by the apex Court in GKN Driveshafts (India) Ltd. vs. ITO is to enable the assessee to substantiate the position to the effect that there is no tenable 'reason to believe' that income was escaped so as to reopen the assessment and if it goes wrong, to have it challenged by way of Art. 226 of the Constitution of India instead of undergoing the ordeal of reassessment and the necessity to pursue the statutory remedy therefrom.