2004 (5) TMI 38 - HC - Income Tax

Validity of notice under section 148 A bare perusal of the reasons recorded shows that the assumption of jurisdiction was clearly bad as the pre-requisite conditions as provided in section 147 have not been fulfilled - The entire thrust of the observations recorded by the Assessing Officer is to justify his satisfaction about escapement of income. There is not even a whisper of an allegation that such escapement had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for its assessment - Since the illegality of notice under section 148 of the Act is apparent from the reasons recorded for initiation of proceedings under section 147 of the Act, it is a fit case for interference in the exercise of our writ jurisdiction. - Impugned notice is without jurisdiction and is, accordingly quashed.

Summary

Issues:
Validity of notice under section 148 of the Income-tax Act, 1961 for reassessment of income alleged to have escaped assessment for the assessment year 1995-96.

Analysis:
The petitioner, a public limited company, challenged the validity of a notice under section 148 of the Income-tax Act, 1961, initiating proceedings under section 147 to reassess income for the assessment year 1995-96. The petitioner had claimed exemption under section 10B and deduction under section 80HHC in its return of income. The Assessing Officer issued the impugned notice on the grounds of alleged escapement of income. The petitioner requested the reasons recorded for the notice, which were not provided despite reminders. The respondent contended that the writ petition was not maintainable against the notice, arguing that the petitioner had not fully disclosed material facts. The petitioner cited judgments to support its claim that the notice was without jurisdiction due to the lack of satisfaction regarding non-disclosure of material facts.

The Assessing Officer's reasons for the notice highlighted the alleged double relief claimed by the petitioner under sections 10B and 80HHC for the same export sales, leading to excessive deduction under section 80HHC. The Assessing Officer believed that income had escaped assessment for the assessment year 1995-96 due to the allowed deduction under section 80HHC for the export turnover of the 100% EOU, despite claiming exemption under section 10B. The petitioner argued that the notice lacked the necessary finding of non-disclosure of material facts, rendering it without jurisdiction, as per previous judgments.

The court agreed with the petitioner, noting that the reasons recorded by the Assessing Officer did not establish non-disclosure of material facts by the petitioner, as required for jurisdiction under section 147. As the notice was found to be without jurisdiction, it was quashed, and the writ petition was allowed. The court emphasized that requiring the petitioner to return to the Assessing Officer to raise objections would unnecessarily prolong the proceedings. No costs were awarded in the case.