2002 (1) TMI 41 - HC - Income Tax

Issues Involved:
1. Validity of notices issued u/s 148 for reopening assessments u/s 147.
2. Legality of approvals/satisfactions u/s 151(1) by the Commissioner of Income-tax.
3. Alleged failure of the petitioner to disclose fully and truly all material facts.
4. Applicability of Supreme Court judgments in reassessment proceedings.

Summary:

1. Validity of Notices Issued u/s 148 for Reopening Assessments u/s 147:
The petitioner challenged six notices dated July 29, 1994, issued by the respondent-Department u/s 148 for reopening assessments u/s 147 for the assessment years 1984-85 to 1989-90. The petitioner argued that the conditions precedent for assessment u/s 147 read with section 148 were not satisfied, and the requirements of law were not fulfilled. The petitioner contended that there was no omission or failure on their part to disclose fully and truly all material facts necessary for the assessments, making the notices illegal, invalid, and without jurisdiction.

2. Legality of Approvals/Satisfactions u/s 151(1) by the Commissioner of Income-tax:
The petitioner also challenged the approvals and/or satisfactions of respondent No.2, the Commissioner of Income-tax, West Bengal, Range-VIII, Calcutta, u/s 151(1) for all the said assessment years. The petitioner argued that the sanction was granted mechanically and not in accordance with law.

3. Alleged Failure of the Petitioner to Disclose Fully and Truly All Material Facts:
The petitioner claimed that all assessments were completed under section 143(3) and disclosed fully and truly all material facts necessary for the assessments. The petitioner further argued that the Assessing Officer had duly applied his mind and allowed the claims under sections 32A and 32AB, while the claims under sections 80HH and 80HHB were allowed on appeal, making the assessments final. The petitioner relied on judgments like Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC) and Indra Co. Ltd. v. ITO [1971] 80 ITR 559 (Cal), asserting that the condition precedent to the exercise of jurisdiction did not exist.

4. Applicability of Supreme Court Judgments in Reassessment Proceedings:
The respondents argued that the reliefs under sections 32A, 32AB, 80HH, and 80HHB were erroneously allowed and cited the Supreme Court judgment in CIT v. N.C. Budharaja and Company [1993] 204 ITR 412, which held that "article" or "things" used in sections 32A, 32AB, and 80HH refer only to movable assets. The respondents contended that the petitioner was engaged in civil construction works and not in the manufacture or production of any article or thing, making the reliefs under the said sections inadmissible. The respondents also relied on the judgment in Builders Associations of India v. Union of India [1994] 209 ITR 877 (SC).

Court's Decision:
The court accepted the contentions of the respondents, stating that the respondent-authorities had taken steps in accordance with the provisions laid down in the said Act. The court held that the Commissioner had duly applied his mind and issued the sanction order after becoming satisfied. The court found no lacuna on the part of the respondent-authorities to reconsider the order and the deductions granted to the petitioner, which were not legally admissible and were allowed erroneously. The court endorsed the opinion expressed by the Delhi High Court in Mahanagar Telephone Nigam Limited [2000] 246 ITR 173, concluding that if the Assessing Officer has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. The court directed the authorities to pass a final order after giving a hearing to the petitioner within eight weeks and communicate the same within two weeks. The application was disposed of accordingly.

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