2000 (8) TMI 53 - HC - Income Tax

Summary

Issues Involved:
1. Validity of Notice u/s 148 of the Income-tax Act, 1961.
2. Whether the notice was issued based on a mere change of opinion.
3. Impact of section 143(1) as it stood before and after amendment.
4. Jurisdiction of the Assessing Officer to reassess income.
5. Requirement of reasons to believe for issuing notice u/s 148.

Summary:

1. Validity of Notice u/s 148 of the Income-tax Act, 1961:
Mahanagar Telephone Nigam Limited (MTNL) challenged the notice issued u/s 148 on the grounds that there was no underassessment or escapement of income necessitating reassessment. The court found that the notice was valid and the reasons provided by the Assessing Officer were relevant and sufficient to initiate proceedings under section 147.

2. Whether the notice was issued based on a mere change of opinion:
MTNL argued that the notice was issued due to a mere change of opinion regarding the allowability of an expenditure. The court held that the concept of "change of opinion" was not applicable in this case as there was no assessment under section 143(1)(a), only an intimation, which did not preclude the Assessing Officer from initiating reassessment proceedings.

3. Impact of section 143(1) as it stood before and after amendment:
The court discussed the changes in section 143(1) before and after the amendment effective from June 1, 1999. It was clarified that up to March 31, 1989, the Assessing Officer could make an assessment without requiring the presence of the assessee. However, after the amendment, the intimation under section 143(1)(a) was not considered an assessment order, and the Assessing Officer retained the right to proceed under section 143(2).

4. Jurisdiction of the Assessing Officer to reassess income:
The court noted that under the amended section 147, the Assessing Officer could reassess income if he had "reason to believe" that income had escaped assessment. The court emphasized that the formation of belief by the Assessing Officer was within the realm of subjective satisfaction and did not require conclusive proof at the initiation stage.

5. Requirement of reasons to believe for issuing notice u/s 148:
The court examined the reasons recorded by the Assessing Officer, which included the discovery during the finalization of the assessment for the assessment year 1996-97 that the claim of Rs. 1,24,85,60,000 as license fee for the assessment year 1994-95 was erroneous. The court found these reasons to be relevant and sufficient for issuing the notice u/s 148.

Conclusion:
The court dismissed the writ petition filed by MTNL, upholding the validity of the notice issued u/s 148 of the Income-tax Act. The court concluded that the notice was not issued based on a mere change of opinion and that the Assessing Officer had the jurisdiction to reassess the income. The court also emphasized that the requirement of "reasons to believe" was fulfilled in this case. No order as to costs was made due to the peculiar circumstances of the case.