2012 (4) TMI 494 - HC - Income Tax

Exercise of extraordinary jurisdiction conferred by Article 226 of the Constitution Of India- Petitioner is engaged in the business of turn key projects - a warranty clause providing for warranty of performance - a notice u/s 143(2) of the Act issued in respect of the assessment years 1995-96 and 1996-97 stating that there were reasons to believe that the petitioner s income, chargeable to income tax, as estimated assessment for the aforesaid assessment years, within the meaning of Section 147 of IT Act - petitioner submitted that the said notices had been issued beyond the period of four years and the present assessment proceedings are based only on a change of opinion Writ was filed - Held that - the assessing authority had issued the impugned notices on the ground that there were reasons to believe that certain income chargeable to tax had escaped assessment within the meaning of section 147 - It is for the petitioner to raise its objections, if any, in respect of the impugned notices - Even assessing authorities concerned had accepted the methods of accounting for past years, it is for the assessee to substantiate its claim by furnishing the relevant pursuant to the impugned notices issued u/s 148 - when an efficacious alternative remedy is available under a statute, this Court would not exercise its extraordinary jurisdiction, under article 226 of the constitution of India - the writ petitions stand dismissed - open to the petitioner in the above writ petitions to raise its objections within a period of four weeks from date of Order.

Issues Involved:
1. Reopening of assessment under Section 148 of the Income Tax Act, 1961.
2. Validity of notices issued beyond the period of four years.
3. Jurisdiction of the assessing authority to reopen assessments based on a change of opinion.
4. Disclosure of material facts by the petitioner.
5. Availability of an alternative remedy under the Income Tax Act.

Detailed Analysis:

Reopening of Assessment under Section 148:
The petitioner, a company involved in manufacturing cement machinery and turnkey projects, challenged the reopening of assessments for the years 1995-96 and 1996-97 under Section 148 of the Income Tax Act, 1961. The petitioner argued that the reopening was based on a mere change of opinion by the assessing authority, which is not permissible under the law. The assessments had been completed earlier under Section 143(3) after detailed scrutiny and had become final.

Validity of Notices Issued Beyond Four Years:
The petitioner contended that the notices issued on 22.3.2002 were beyond the statutory period of four years as prescribed under Section 147. The petitioner argued that the reopening of assessments beyond this period is permissible only if there is a failure on the part of the assessee to disclose fully and truly all material facts necessary for the assessment, which was not the case here.

Jurisdiction of the Assessing Authority:
The petitioner asserted that the reopening of assessments was based on a change of opinion regarding the allowance of provisions for warranty and guarantee claims, which had been consistently accepted by the assessing authorities in previous years. The petitioner cited several judicial precedents to support the argument that a mere change of opinion does not justify reassessment.

Disclosure of Material Facts:
The petitioner maintained that all necessary particulars relating to the accounts, including the warranty and guarantee claims, were fully disclosed during the original assessment proceedings. The petitioner argued that there was no omission or failure to disclose material facts, and hence, the reopening of assessments was without jurisdiction.

Alternative Remedy:
The court noted that the petitioner has an efficacious alternative remedy under the Income Tax Act to challenge the reassessment proceedings. The court emphasized that it would not exercise its extraordinary jurisdiction under Article 226 of the Constitution of India to interfere with the proceedings initiated by the tax authorities unless there is an infringement of fundamental rights or a clear lack of jurisdiction by the tax authorities.

Conclusion:
The court dismissed the writ petitions, stating that the impugned notices issued under Section 148 of the Income Tax Act, 1961, could not be quashed at this stage based on the grounds raised by the petitioner. The court held that the petitioner should raise its objections before the assessing authority, which would then consider and pass appropriate orders on merits, after providing an opportunity for a hearing. The court reiterated that it would not interfere with the tax proceedings when an alternative remedy is available, unless there is a clear jurisdictional error or infringement of fundamental rights.

← Previous Next →