2013 (4) TMI 139 - HC - Income Tax

Notice U/s 148 & 142(1) - Non issuance of notice u/s 143(2) - of the Income-tax Act 1961 - The return filed by the assessee was not taken up for scrutiny and no notice under section 143(2) was issued - Subsequently the impugned notice U/s 148 was issued and served - Held that - Admittedly there were no original assessment pro-ceedings and no notice under section 143(2) was issued. The time for issue notice under section 143(2) had lapsed. The Assessing Officer therefore could have only examined the question/aspect after issue of notice under sections 147/148 of the Act. Whether or not notice can be issued in such cases is no longer res integra and has been decided by the Supreme Court in case of Asst. CIT v. Rajesh Jhaveri Stock Brokers P. Ltd. (2007 (5) TMI 197 - SUPREME Court ) So long as the ingredients of section 147 are fulfilled the Assessing Officer is free to initiate proceeding under section 147 and failure to take steps under section 143(3) will not render the Assessing Officer powerless to initiate reassessment proceedings even when intimation under section 143(1) had been issued. We do not find any merit in the writ petition and the same is dismissed - However it is clarified that in this order we have not expressed any opinion on the merits - It will also be open to the petitioner to explain and show that the orders of the Tribunal and this court for the assessment years 1990-91 and 1991-92 should not be applied to the assessment year in question due to change of facts/circumstances - In the facts of the case there will be no order as to costs.

Summary

Issues:
Challenge to notice under section 148 of the Income-tax Act, 1961 for the assessment year 2000-01 and quashing of notice under section 142(1) of the Act.

Analysis:
1. The petitioner, a corporation, filed a writ petition to challenge the notice under section 148 of the Income-tax Act, 1961, dated April 16, 2003, for the assessment year 2000-01. The petitioner also sought to quash the notice dated February 17, 2005, under section 142(1) of the Act. The petitioner's return of income was filed with a provisional tax audit report initially, which was later rectified with audited accounts. No scrutiny was conducted on the filed return, and subsequently, a notice under section 148 was issued, leading to objections from the petitioner regarding the reasons for reopening the assessment.

2. The Assessing Officer's reasons for reopening the assessment were related to the petitioner not including income earned on Infrastructure Utilization Fund (IUF) and interest in the total income. The petitioner contended that the amount deposited in the fund and interest earned were not income. However, the High Court had previously ruled on the taxability of the fund and upheld that the amount deposited and transferred to the fund constituted income. The petitioner also relied on a previous decision challenging a notice under sections 147 and 148 for other assessment years, emphasizing that reopening assessments based on change of opinion is impermissible.

3. The High Court, in its judgment, clarified that since there were no original assessment proceedings and no notice under section 143(2) was issued, the Assessing Officer had the authority to examine the matter after issuing notices under sections 147/148. Citing precedent, the court held that fulfilling the requirements of section 147 empowers the Assessing Officer to initiate reassessment proceedings, even if no steps were taken under section 143(3). The court dismissed the writ petition, emphasizing that no opinion on the merits was expressed, and allowed the petitioner to present explanations regarding the application of previous court orders to the assessment year in question based on changed circumstances.

4. Ultimately, the court dismissed the petition, leaving room for the petitioner to contest the application of previous judgments to the current assessment year. The judgment highlighted the Assessing Officer's authority to initiate reassessment proceedings under section 147 and refrained from awarding costs in the case.