GULBRANDSEN PRIVATE LIMITED vs DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1) VADODARA
- Court
- Gujarat High Court
- Case type
- SPECIAL CIVIL APPLICATION
- Decided on
- 24-02-2026
C/SCA/15851/2025 JUDGMENT DATED: 24/02/2026
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 15851 of 2025
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE A.S. SUPEHIA Sd/-
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Sd/-
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Approved for Reporting Yes No
✔
==========================================================
GULBRANDSEN PRIVATE LIMITED
Versus
DY. COMMISSIONER OF INCOME TAX, CIRCLE 1(1)(1) VADODARA
==========================================================
Appearance:
MR TUSHAR HEMANI, SENIOR ADVOCATE WITH MS VAIBHAVI K
PARIKH(3238) for the Petitioner(s) No. 1
MR RUTVIJ R PATEL(10615) for the Respondent(s) No. 1
==========================================================
CORAM: HONOURABLE MR. JUSTICE A.S. SUPEHIA
and
HONOURABLE MR. JUSTICE PRANAV TRIVEDI
Date : 24/02/2026
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE A.S. SUPEHIA)
1. RULE. Learned Senior Standing Counsel
Mr.Patel waives service of notice of rule for
and on behalf of the respondent(s).
2. Since a short issue is involved in the
present writ petition, with the consent of the
learned advocates appearing for the respective
parties, the matter is taken up for final
hearing today.
3. In the present writ petition, the petitioner
has assailed the notice dated 16.06.2025 issued
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under section 148 of the Income Tax Act, 1961
(for short "the Act") and the order dated
14.06.2025 passed under section 148A(3) of the
Act.
FACTS:
4. The petitioner filed its return of income
under section 139 of the Act for the Assessment
Year (AY) 2021-22 on 27.02.2022 declaring its
total income of Rs.1,04,31,37,610/- followed by
filing of a revised return of income on
11.03.2022 declaring total income of
Rs.1,04,31,37,610/- and the same has been
processed under section 143(1) of the Act on
04.10.2022 accepting the returned income.
Subsequently, the case of the petitioner was
selected for complete scrutiny, pursuant to which
the petitioner was served with notice dated
28.06.2022 under section 143(2) of the Act.
Thereafter, the petitioner received the show-
cause notice dated 13.12.2023 under section
143(3) of the Act proposing certain variations
prejudicial to the interest of the petitioner in
the ongoing assessment proceedings for the year
under consideration. The petitioner replied to
the said show-cause notice vide letter dated
19.12.2023 providing detailed explanations along
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with supporting documents in respect of each
issue raised therein.
5. Thereafter, the Draft Assessment Order dated
28.12.2023 under section 144C(1) of the Act came
to be passed proposing variation to the
returned income of the petitioner, wherein the
additions were proposed. The petitioner thus,
submitted its objections against the said order
vide letter dated 24.01.2024 and opted not to
file objections before the Dispute Resolution
Panel (DRP), but to file an appeal before the
Commissioner of Income Tax (Appeals) (CIT(A))
against the final assessment order passed under
section 143(3) of the Act however, no action was
taken by the respondent, thereafter.
Subsequently, a show- cause notice dated
28.03.2025 under section 148A(1) of the Act was
issued to the petitioner alleging that income
chargeable to tax amounting to Rs.8,47,384/- has
escaped assessment, for which the petitioner
replied vide letter dated 10.04.2025 contenting
that the proposed re- opening of the assessment
for the year under consideration is unjustified
and the assessment was already completed by
accepting the returned income of
Rs.1,04,31,37,610/-. The petitioner further
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submitted that the reasons recorded for re-
opening related to a proposed TP adjustment of
Rs.4,98,982/- and additional depreciation of
Rs.3,48,402/- on account of addition to fixed
assets, totaling Rs.8,47,384/- as alleged
escaped income. The petitioner asserted that
these issues were already examined during the
scrutiny proceedings under sections 143(2) and
143(3) of the Act and no fresh tangible material
suggesting escapement of income has been
provided by the respondent-Revenue.
6. Further, disregarding the submissions of the
petitioner in its letter dated 10.04.2025, the
respondent-Revenue passed the impugned order
dated 14.06.2025 under section 148A(3) of the Act
holding that the income chargeable to tax in the
hands of the petitioner for the A.Y. 2021-22
worth Rs.8,47,384/- has escaped assessment within
the meaning of section 147 read with section 148
of the Act. The reasons recorded included a
proposed adjustment of Rs.4,98,982/- in respect
of international transactions undertaken by the
petitioner and additional depreciation of
Rs.3,48,402/- claimed on account of addition of
fixed assets totaling Rs.8,47,384/- , which has
escaped assessment.
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SUBMISSIONS
7. Learned Senior Advocate Mr.Hemani has
submitted that Section 144C(4) of the Act
mandates that the AO "shall" pass the final
assessment order within one month from the end of
the month in which the assessee either
communicates acceptance of the draft order
or the period for filing objections expires and,
therefore, once an assessee files objections (or
accepts the draft, as the case may be), the AO
must complete the assessment by the statutory
deadline and in the facts of the present case,
the AO has not passed any such order. He has
submitted that in other words, the AO has
accepted the reply of the petitioner and has
chosen not to pass any order.
8. It is contended that after the Draft
Assessment Order dated 28.12.2023 was passed
under Section 144C(1) of the Act, the AO has
accepted the reply of the petitioner and has
chosen not to pass any adverse order or for that
matter no order at all. He has submitted that it
is a settled principle of law that if an issue is
raised and discussed in the earlier proceedings,
the same cannot be revisited in the reassessment
proceedings for assuming jurisdiction even when
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the issue is not discussed in the body of
assessment and in the present case, the AO has
not passed any order at all, either by accepting
the reply or simply an oversight and hence, Under
both the circumstances, reassessment cannot be
initiated.
9. Learned Senior Advocate Mr.Hemani thereafter,
has submitted that reopening of the assessment is
nothing but change of opinion as on the same
opinion Draft Assessment Order dated 28.12.2023
was passed, wherein the petitioner filed his
detailed response vide letter dated 24.01.2024
however, without passing further assessment
order, the AO resorted to issuance of notice
under section 148 of the Act. It is submitted
that such notice can only be issued if there is
any escapement of income chargeable to tax and
there must be a live link or close nexus between
material before the AO. It is submitted that in
the present case, the material before the AO was
already examined and the same has culminated
into the Draft Assessment Order. In support of
his submissions, learned Senior Advocate
Mr.Hemani has placed reliance on the decisions of
the Delhi High Court in the case of Commissioner
Income-tax of Vs. Ved & Co ., [2007] 162 Taxman
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366 (Delhi) and in the case of KLM Royal Dutch
Airlines Vs. Assistant Director of Income-tax,
[2007] 159 Taxman 19 (Delhi).
10. Opposing the present writ petition, learned
Senior Standing Counsel Mr.Patel at the outset,
has submitted that the decisions, on which
reliance is placed by the petitioner, will not
apply to the facts of the present case as it
cannot be said that the reopening of the
assessment and issuance of show-cause notice
under section 148A of the Act is change of
opinion as earlier proceedings which culminated
into the Draft Assessment Order, did not
culminate into the Final Assessment Order. It is
finally submitted that in fact, no order under
section 143(3) of the Act has been passed and
hence, it was always open for the AO to resort to
the provision of section 148(3) of the Act. Thus,
it is urged that the writ petition may not be
entertained.
ANALYSIS
11. We have heard the learned advocates
appearing for the respective parties and also
perused the documents, as pointed out by them.
12. The established facts from the pleadings and
documents on record, are that initially, the
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petitioner was roped into the proceedings by
issuing show-cause notice dated 13.12.2023 for
determining of the Arm’s Length Price of the
international transactions on the same amount
i.e. addition to plant and machinery to the tune
of Rs.3,10,91,411/- and Rs.8,37,09,902/-, for
which the petitioner had supplied all the copies
of invoices. Accordingly, the show-cause notice
dated 13.12.2023 issued for the AY 2021-22
proposed dis-allowance of expenditure.
13. The petitioner accordingly, responded to
such notice vide reply dated 19.12.2023 and
explained its depreciation claimed on addition
to fixed assets, unexplained expenditure on
account of contract payments, dis-allowance of
expenditure etc. The proceedings culminated into
the Draft Assessment Order under section 144C(1)
of the Act, which was passed on 28.12.2023 in
which variation was proposed on the basis of
inference drawn on account of adjustment
determined by the Transfer Pricing Officer
(TPO). Variation in respect of TP adjustment to
the extent of Rs.4,98,982/- and with respect to
dis-allowance of additional depreciation claimed
on fixed assets to the tune of Rs.3,48,402/-
were determined by holding that petitioner has
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under- reported his income and to such extent,
penalty proceedings were also initiated.
14. The petitioner vide communication dated
24.01.2024 written to the AO, clarified that he
would not like to raise any objection before the
DRP and instead intends to file an appeal before
the CIT(A) against the assessment order
passed under section 143(C) of the Act. The
things stopped at that stage and the proceedings
thereafter, lapsed due to expiry of limitation
as prescribed under section 144C(4) of the Act.
No final order under section 144C (13) read with
section 143(3) of the Act was passed.
15. Being conscious about lapse of proceedings,
the AO thereafter, resorted to reopening the
assessment by issuing notice under section 148
of the Act dated 20.03.2025 for the very same
transactions and the same amount, which was
already under scrutiny and culminated into Draft
Assessment Order. It was recorded in the notice
that proposed TP adjustment of Rs.4,98,982/-
instead of international transactions undertaken
by the petitioner and additional depreciation of
Rs.3,48,402/- claimed by the petitioner on
account of additional fixed assets were flagged
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in the system and on the basis of such amount,
reopening was undertaken.
16. The petitioner filed a detailed reply dated
on 10.04.2025 pointing out the Draft Assessment
Order dated 20.12.2023 having been passed under
section 144C(1) of the Act. Thus, the petitioner
categorically raised objections however, the
same were not considered and the AO passed the
order under section 148(3) of the Act on
14.06.2025.
17. Keeping in mind the aforementioned
established facts at this stage, we may refer to
the decision of the Delhi High Court in the case
of Ved & Co.(supra):
“10. We are of the opinion that in view of the
decisions that we have mentioned above, for the
purposes of initiating reassessment proceedings, the
Assessing Officer could not have made up his mind
that the income of the assessee has escaped
assessment while a valid return was still pending
before him. If the Assessing Officer had allowed the
time to elapse for taking action under section 143(2)
of the Act, it was entirely his own doing. What the
Assessing Officer is now trying to do in an indirect
(and incorrect) manner is what he could not have done
directly.
11. The further contention raised on behalf of the
revenue is that even if no assessment order was
framed, the Assessing Officer could issue a notice
for reassessment. We are of the view that if no
assessment had been made, there was no occasion for
the Assessing Officer to conclude that income had
already escaped assessment.”
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18. We may also refer to the another decision of
the Delhi high Court rendered in the case of KLM
Royal Dutch Airlines (supra):
“15. Applying this line of decisions to the facts of
the present case, the inescapable conclusion that
would have to be reached is that while assessment
proceedings remain inchoate, no fresh evidence or
material' could possibly be unearthed. If any such
material or evidence is available, there would be no
restrictions or constraints on its being taken into
consideration by the Assessing Officer for framing
the then current assessment. If the assessment is not
framed before the expiry of the period of limitation
for a particular assessment year, it would have to be
assumed that since proceedings had not been opened
under section 143(2), the return had been accepted as
correct. It may be argued that thereafter recourse
could be taken to section 147, provided fresh
material had been received by the Assessing Officer
after the expiry of limitation fixed for framing the
original assessment. So far as the present case is
concerned we are of the view that it is evident that,
faced with severe paucity of time, the Assessing
Officer had attempted to travel the path of section
147 in the vain attempt to enlarge the time available
for framing the assessment. This is not permissible
in law.”
19. Thus, in the present case, if the legal
precedent is applied, it can be presumed that if
no final assessment order has been passed within
the limitation period under section 144C(4) of
the Act; the explanation tendered by the
petitioner in the Return of Income, has been
accepted as correct. It is not the case of the
respondent-Revenue that it has come across any
other material or fresh material, apart from the
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material which was considered in detailed
scrutiny assessment. Instead of passing final
assessment order under section 143(3) of the
Act, and having allowed the proceedings to be
lapsed, the reopening of the assessment on the
very same material is impermissible under
section 148 of the Act. Thus, the Revenue cannot
be allowed to take benefit of its own wrong as
it was always open for the AO to take
proceedings under section 144C to its logical
end, after final reply was submitted by the
petitioner, more particularly, the petitioner
having clarified its intention not to question
the Draft Assessment Order before the DRP, but
to take recourse to file an appeal before the
CIT(A). Thus, without diligently finalizing the
assessment within limitation, the proceedings
were allowed to be lapsed. Hence, the Revenue by
reopening the assessment by issuing notice and
order under section 148 of the Act has in fact,
indirectly attempted to camouflage its
remissness of allowing to lapse the earlier
assessment proceedings, and consequently, to
further extend the limitation for finalizing the
assessment.
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20. Hence, it is not open for the AO to reopen
the assessment under section 147 of the Act on
the very same material, which was examined under
detailed scrutiny assessment having culminated
into a draft assessment order under section 144C
of the Act.
21. In light of the foregoing analysis and
observations, we are of the opinion that the
present writ petition deserves to be allowed and
the same is hereby allowed. The impugned
notice dated 16.06.2025 issued under section 148
of the Act and the order dated 14.06.2025 passed
under section 148A(3) of the Act are quashed and
set aside. Rule made absolute. There shall be no
order as to costs.
Sd/-
(A. S. SUPEHIA, J)
Sd/-
(PRANAV TRIVEDI, J)
NVMEWADA/3
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