2007 (2) TMI 122 - HC - Income Tax

Revision u/s 263 with section 148 - there is no bar on parallel proceeding u/s 148 and u/s 263 i.e. income escaping assessment and revision by the commissioner respective if all conditions of relevant provisions satisfied

Issues Involved:

1. Challenge to notices under Section 148 and Section 263 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to issue notice under Section 148 when proceedings under Section 263 are pending.
3. Validity of reopening of assessment under Section 148.
4. Parallel proceedings under Sections 148 and 263.
5. Validity of the assessment order dated 29.12.2006.

Issue-wise Detailed Analysis:

1. Challenge to Notices under Section 148 and Section 263 of the Income Tax Act, 1961:
The petitioner challenged the proceedings initiated by the Commissioner of Income Tax under Section 263 for revision of the assessment order passed under Section 143(3) and by the Assessing Officer for reopening the same assessment order under Section 148. The petitioner sought to quash the notices issued on March 30, 2006, and July 19, 2006, under Section 148 and 142(1), and notices dated January 17, 2005, and February 17, 2005, under Section 263.

2. Jurisdiction of the Assessing Officer to Issue Notice under Section 148 When Proceedings under Section 263 are Pending:
The petitioner argued that the Assessing Officer has no jurisdiction to issue notice under Section 148 to reopen the same assessment order on the same grounds for which the notice under Section 263 was issued. However, the court found no direct decision supporting the claim that pending proceedings under Section 263 preclude the issuance of notice under Section 148.

3. Validity of Reopening of Assessment under Section 148:
The court examined the provisions of Section 147 and the reasons recorded for reopening the assessment. It was noted that the Assessing Officer had reason to believe that income had escaped assessment, as evidenced by discrepancies in disallowances, deductions under Section 80HHC, and other financial entries requiring verification. The court referenced the case of Praful Chunilal Patel v. M.J. Makwana, which clarified that the Assessing Officer needs only a cause or justification to believe that income had escaped assessment, not final proof. The court concluded that the reasons provided justified the reopening of the assessment.

4. Parallel Proceedings under Sections 148 and 263:
The court addressed whether parallel proceedings could occur under Sections 148 and 263. It was determined that there is no statutory bar against parallel proceedings. The Assessing Officer and the Commissioner operate under different provisions, both aiming to ensure that escaped income is taxed. The court cited the Supreme Court case of Commissioner of Income Tax, Bhopal vs. Ralson Industries Ltd., which allowed for concurrent jurisdictions under different sections of the Act.

5. Validity of the Assessment Order Dated 29.12.2006:
The petitioner challenged the assessment order dated 29.12.2006, arguing that it was passed despite an assurance from the Revenue's counsel that no final assessment would be made. The court noted that there was no stay on proceedings under Section 148, thus the Assessing Officer was free to proceed. The court allowed the petitioner to apply for a fresh order after a hearing, but emphasized that the petitioner has the right to appeal the assessment order before the Commissioner of Income Tax (Appeals).

Conclusion:
Both petitions were dismissed, and the court upheld the validity of the notices and the assessment order. The court found that the Assessing Officer had sufficient reason to reopen the assessment and that parallel proceedings under Sections 148 and 263 were permissible. The Civil Application was disposed of, with the petitioner given the liberty to seek further orders from the Assessing Officer.

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