M/s Schwing Setter (India) Pvt. Ltd. v. Assistant Commissioner of Income Tax/Income Tax Officer [WP No. 6230/2022]
The Madras High Court has set aside the reassessment proceedings initiated against an engineering equipment manufacturer after finding that the IT Deptt. reopened the assessment based on material that had already been disclosed and examined during the original assessment. Schwing Setter (India) Pvt. Ltd. (‘Petitioner’) challenged the notice reopening its assessment, the order rejecting its objections and the consequential reassessment year. During the original assessment, the AO sought details of large expenses reflected in P&L A/c. The Petitioner furnished the requested information. The Original Assessment was completed without making any disallowance on that issue. After two years later, the IT Deptt. reopened the assessment. The reason recorded stated that the company had claimed a net loss on foreign currency and transaction which department considered notional in nature and liable to be disallowed. The company argued that the documents relied on for reopening had accompanied the original return and had also been furnished in response to the assessing officer’s queries during the original assessment. The IT Deptt. contended that the reopening was justified. Rejecting the contention, the court found that the financial statements accompanied the original return and that the assessing officer had specifically sought details regarding large expenses before completing the assessment. The court held that the issue relating the provision for warranty had already been expressly considered in the original assessment order.
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