1996 (9) TMI 85 - HC - Income Tax

Assessing Officer Assessment Year Fixed Deposit High Court Income Escaping Assessment Income From Other Sources Reason To Believe Writ Jurisdiction

Summary

Issues:
Challenge to assessment order under section 147 of the Income-tax Act, 1961 and notice under section 148 dated February 2, 1993.

Analysis:
The petitioner, engaged in the business of export of rugs and druggets, challenged an assessment order dated January 31, 1994, passed under section 147 of the Income-tax Act, 1961, and a preceding notice under section 148 dated February 2, 1993. The petitioner contended that the interest earned on fixed deposit receipts should be considered for deduction under section 80HHC. The Assessing Officer initially disallowed the deduction, leading to appeals and rectification orders. Subsequently, a notice under section 148 was issued based on the belief that income had escaped assessment due to interest income from fixed deposit receipts. The court analyzed the grounds for initiating reassessment under section 147 and found that the reasons provided were not sufficient. The court highlighted that the Assessing Officer's rectification order under section 154 was improper and could not be a basis for reassessment. The court emphasized that the Tribunal's decision for a different year could not automatically apply to the current assessment year without proper justification.

The court further scrutinized the assessment process and found that the assessment order was finalized before the scheduled hearing date, depriving the petitioner of a fair opportunity to be heard. The court deemed this action as improper and illegal, aimed at preventing the petitioner from challenging the assessment. The court emphasized that the Assessing Officer's conduct was inappropriate and lacked proper procedural adherence. The court concluded that the notice under section 148 and the assessment order were unauthorized and illegal. The court rejected the argument that the petitioner should seek remedy through appeal under section 246, stating that the circumstances warranted intervention under article 226 of the Constitution of India. Consequently, the court allowed the writ petition, quashing the assessment order and notice dated February 2, 1993, for the assessment year 1988-89.