2012 (5) TMI 146 - HC - Income Tax

Deduction u/s 80IB - work contractor versus developer - reassessment - notice u/s 148 - held that - in case of GKN Driveshafts India Ltd. 2002 -TMI - 6100 - SUPREME Court , the Supreme Court has clearly laid down the law that the Assessing Officer is bound to disclose the reason of reassessment within reasonable time and on receipt of the reasons, the assessee is entitled to raise objection and if any such objection is filed, the same must be disposed of by a speaking order before proceeding to reassess in terms of the notice earlier given. - in spite of repeated reminders by the assessee even pointing out the above law laid down by the Supreme Court, the Assessing Officer failed to dispose of the said objections and instead of that, straightaway passed the order of reassessment. - Assessing Officer acted without jurisdiction in initiating the proceedings for reassessment in spite of non-existence of the required conditions specified under the Act and even did not care to follow the norms laid down by the Supreme Court in the above decision by not disposing of the objections before passing the order of reassessment. - Decided in favor of assessee. Since we have decided to quash the notice under Section 148 of the Act itself on the ground of non-existence of valid ground as disclosed in the reasons, we quash initiation of proceedings itself and consequently, the subsequent order of reassessment is also quashed. Power of HC to entertain writ petition where alternative appellate remedy is available - held that - the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India (1996 -TMI - 44411 - SUPREME COURT OF INDIA), has specifically recognized the power of this court to entertain a writ-application by pointing out that such power cannot be circumscribed by the provisions of any enactment but while exercising such power, the writ-court will certainly have due regard to the legislative intent evidenced by the provisions of the concerned statute and would exercise their jurisdiction consistent with the provisions of the Act. Thus, in a given case, if the statutory authority exercises its power even in the absence of the conditions recognized by the Statutory provisions, a writ-court can definitely interfere to avoid prolonged alternative remedy. - Decided in favor of assessee.

Issues Involved:
1. Challenging the notice under Section 148 of the Income Tax Act, 1961.
2. Validity of the reassessment order passed by the Assessing Officer.
3. Jurisdiction and procedural compliance in reassessment proceedings.
4. Alternative remedy and maintainability of the writ petition.

Issue-wise Detailed Analysis:

1. Challenging the notice under Section 148 of the Income Tax Act, 1961:
The petitioner, an assessee under the Income Tax Act, 1961, challenged a notice under Section 148 of the Act, which was served on March 16, 2011, for the Assessment Year 2005-06. The petitioner argued that the conditions precedent for invoking the jurisdiction for reassessment were absent. The petitioner had complied with all the requirements of law for getting the benefit of Section 80IB(10) of the Act during the original assessment proceedings. The Assessing Officer had scrutinized all the details and passed the original assessment order on December 12, 2007. The notice under Section 148 was issued based on the same materials, which, according to the petitioner, did not authorize the reopening of the assessment.

2. Validity of the reassessment order passed by the Assessing Officer:
The reassessment order dated December 12, 2011, was challenged on the grounds that it was passed without disposing of the objections raised by the petitioner. The petitioner had repeatedly requested the Assessing Officer to provide a reasoned order and dispose of the objections before proceeding with the reassessment. The Supreme Court in the case of GKN Driveshafts (India) Ltd. had laid down that the Assessing Officer must dispose of the objections by a speaking order before proceeding to reassess. The failure to do so rendered the reassessment order invalid.

3. Jurisdiction and procedural compliance in reassessment proceedings:
The court examined whether the Assessing Officer had jurisdiction to initiate the reassessment proceedings. It was found that the Assessing Officer had reopened the proceeding merely on the ground that from the same materials available, the view earlier adopted was erroneous. The Supreme Court in CIT v. Kelvinator India had held that reassessment must be based on "tangible material" and not merely on a change of opinion. The court concluded that the reassessment was initiated without fulfilling the required conditions specified under the Act and was thus without jurisdiction.

4. Alternative remedy and maintainability of the writ petition:
The respondent argued that the writ petition should be dismissed due to the existence of an alternative remedy, as the petitioner had already filed an appeal against the reassessment order. The court held that the existence of an alternative remedy is a factor to be considered at the time of entertaining the application. Since the writ application was filed and entertained before the appeal, the subsequent filing of the appeal did not affect the maintainability of the writ petition. The court overruled the preliminary objection regarding maintainability.

Conclusion:
The court quashed the notice under Section 148 of the Act and the subsequent reassessment order. It held that the Assessing Officer acted without jurisdiction and failed to follow the procedural norms laid down by the Supreme Court. The writ petition was allowed, and the reassessment proceedings were set aside.

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