2011 (1) TMI 892 - HC - Income Tax

Income escaping assessment - Time barred - As there was no case made out by the petitioner for quashing of the notice and consequential proceedings initiated thereupon, mere reliance upon a letter written by the Assistant Commissioner of Income-tax, Investigation Circle, Ambala, which is based upon his memory is neither here nor there - the matter needs to be considered by the competent authority at the first instance, who will consider the objections regarding initiation of re-assessment proceedings and decide the same before proceeding further to frame the assessment - The writ petition is disposed of

Summary

Issues involved:
1. Quashing of notices and proceedings initiated under Sections 147/148 of the Income-tax Act, 1961.
2. Refund of advance tax deposited by the petitioner.

Analysis:

Issue 1: Quashing of notices and proceedings under Sections 147/148 of the Act
The petitioner filed a petition seeking the quashing of notices (Annexures P4 and P5) and the proceedings initiated under Sections 147/148 of the Income-tax Act, 1961. The petitioner argued that no assessment was framed after submitting the return for the assessment year 1987-88, and any proceedings under Section 148 of the Act were time-barred as of 31.3.1990. The petitioner contended that no notice under Section 148 was received in March 1990, and challenged the re-assessment notice. The petitioner also requested a refund of the advance tax deposited. The department refuted the allegations and prayed for dismissal of the writ petition, asserting that the petitioner had an alternative remedy to raise objections to the initiation of proceedings under Sections 147/148. The revenue's counsel argued that the assessment was completed within the limitation period and that the re-assessment was based on incriminating documents found during a search and seizure operation. Despite a fire destroying some records, the department claimed to have evidence supporting the completion of assessment and the validity of the notice issued. The court found the case to be peculiar due to the lost records and directed the competent authority to consider objections before proceeding with the assessment, ultimately disposing of the writ petition accordingly.

Issue 2: Refund of advance tax
Regarding the refund of advance tax deposited by the petitioner, it was noted that the petitioner did not press for this relief, and the court deemed it inadmissible based on a Supreme Court judgment. The court cited the Commissioner of Income Tax v. Shelly Products case, stating that the refund of advance tax was not permissible. The petitioner's decision not to press for this relief was acknowledged, and the court did not grant the refund, in line with the legal precedent.

In conclusion, the court disposed of the writ petition, emphasizing the need for the competent authority to review objections before proceeding with the assessment, considering the peculiar circumstances of the case. The issue of refund of advance tax was addressed based on legal precedent, and the relief was not granted.