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2004 (2) TMI 54 - HC - Income TaxNotice u/s 148 for reopening of assessment - Upon a careful perusal of order of AO one does not find that the Assessing Officer has reached his satisfaction that the reason for reopening the assessment, is due to the failure on the part of the assessee to make a return under section 139 - Even the Commissioner has not recorded anywhere that there was a failure on the part of the assessee/petitioner to assume jurisdiction for reopening under section 147 Notice after a lapse of four years is not valid so it is quashed
Issues Involved:
1. Maintainability of writ petition due to existence of alternative remedy. 2. Validity of notice under section 148 of the Income-tax Act, 1961. 3. Jurisdiction of the Assessing Officer in issuing the impugned notice. 4. Compliance with statutory requirements for reopening assessment after four years. 5. Role of the Commissioner in satisfying the reasons recorded by the Assessing Officer. 6. Assessment of failure on the part of the assessee to make a return under section 139. 7. Legal implications of full disclosure of facts in the returns. 8. Court's interference based on jurisdictional issues in the notice under section 148. Analysis: 1. The High Court addressed the issue of maintainability of the writ petition, rejecting the argument based on the existence of an alternative remedy. The court exercised its discretion to entertain the petition, emphasizing that the theory of alternative remedy does not serve as an absolute bar, especially when the question of jurisdiction of a statutory authority is raised. The court held that the plea of lack of jurisdiction was waived by the Revenue, and thus, decided in favor of the writ petitioner. 2. The court examined the validity of the notice issued under section 148 of the Income-tax Act, 1961. The petitioner challenged the notice dated December 12, 1995, which alleged that income for the assessment year 1990-91 had escaped assessment. The court noted the absence of disclosure for the belief of the officer regarding the escaped income, leading to the conclusion that the notice was issued improperly and unlawfully. 3. Regarding the jurisdiction of the Assessing Officer in issuing the impugned notice, the court found that the officer failed to reach the necessary satisfaction that the assessee had not made a return under section 139 of the Act. The court emphasized the importance of the Assessing Officer's compliance with statutory requirements before assuming jurisdiction for reopening assessments. 4. The court analyzed the compliance with statutory requirements for reopening assessments after four years, emphasizing the significance of the proviso to section 147 of the Act. It highlighted the mandatory duty of the Assessing Officer to record reasons before issuing a notice under section 148, and the need for ratification by the Chief Commissioner or Commissioner. 5. The court discussed the role of the Commissioner in satisfying the reasons recorded by the Assessing Officer for issuing a notice under section 148. It noted that the Commissioner failed to examine whether the reasons recorded were sufficient and fit for the issuance of the notice, indicating a lack of lawful exercise of jurisdiction. 6. The court examined the assessment of failure on the part of the assessee to make a return under section 139, emphasizing the full disclosure of facts in the returns, including the audit report. It cited legal precedents to support the argument that when there is full disclosure of facts, there cannot be a case of failure on the part of the assessee. 7. In considering the court's interference based on jurisdictional issues in the notice under section 148, the court rejected the contention that interference should be based on the presence of materials or reasons. It clarified that when the assumption of jurisdiction is illegal, proceedings initiated in such a manner cannot be allowed to continue, leading to the setting aside and quashing of the impugned notices. This comprehensive analysis covers the various legal aspects and interpretations provided by the High Court in the judgment.
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