2011 (7) TMI 653 - HC - Income Tax

Reassessment proceedings - Notice u/s 148 - claiming deduction under Section 80HHC of the Income-tax Act - business of manufacturing, assembling, processing and exporting goods to various parts of the world - concealment or wrong claim of deduction by the appellant rather it was as per law applicable on the date of filing of the Income Tax Return - Tribunal said that contention that the case has been reopened on change of opinion is patently erroneous and contrary to the statutory provisions because in the summary scheme, at the time of processing the return u/s 143(1) of the Act, there is no formation of opinion. Hence, the question of change of opinion, does not arise - As in the case of Supreme Court in Asstt. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. 2007 -TMI - 6563 - SUPREME Court prima facie adjustment under Section 143(1)(a) (now deleted), is no assessment - reason to believe that some income has escaped assessment i.e. Assessing Officer has cause or justification - relevant material on which a reasonable person could have formed a requisite belief, whether the materials would conclusively prove the escapement is not the concern at that stage - assessee was unable to demonstrate that conclusion of the Tribunal was against law in any manner - no merit in the appeal and the same is accordingly dismissed.

Summary

Issues:
1. Validity of proceedings under Section 148 and consequential order under Section 143(3) without proper service of notice.
2. Justification of Tribunal in confirming the issuance of notice u/s 148.
3. Tribunal's confirmation of notice u/s 148 without appreciating the absence of concealment or wrong claim of deduction.
4. Tribunal's confirmation of notice u/s 148 based on retrospective amendment beyond four years.
5. Concurring with the reason recorded by the A.O.
6. Perverseness of ITAT's findings against the evidence on record.
7. Misdirection by ITAT in deciding the issue for claiming deduction under Section 80HHC.

Analysis:

1. The first issue concerns the validity of proceedings under Section 148 and the order under Section 143(3) due to improper service of notice. The Court referred to Section 292BB of the Act, which presumes valid service of notice if the assessee cooperates in the proceedings. The provision applies to pending proceedings from 1.4.2008, and objections raised after completion of assessment do not justify challenging reassessment proceedings.

2. The Tribunal justified the issuance of notice u/s 148 by rejecting the assessee's contention of lack of material for reassessment. The Tribunal emphasized that under the summary scheme, processing under Section 143(1) does not imply the formation of opinion, thus negating the argument of change of opinion as a basis for reassessment.

3. The Tribunal's decision on the absence of concealment or wrong deduction by the appellant was upheld, as the Court found no demonstration of perverseness or illegality in the Tribunal's conclusion. The Court highlighted the necessity of a reason to believe for issuing a notice under Section 147, emphasizing the subjective satisfaction of the Assessing Officer.

4. Regarding the Tribunal's confirmation of the notice u/s 148 based on a retrospective amendment beyond four years, the Court found no merit in the appeal. The Court dismissed the appeal, stating that the judgments cited by the appellant were not applicable to the present case, as they were based on individual fact situations.

5. The Court deemed questions 5, 6, and 7 to be general in nature and not substantial questions of law requiring consideration. The Tribunal's decision was upheld, and the appeal was dismissed due to the lack of merit in challenging the reassessment proceedings.