2013 (12) TMI 1250 - HC - Income Tax

Whether reopening of assessment u/s 147 is permissible on the basis of audit report - Held that - The audit report was not the only information, which persuaded the assessing authority, to issue notice under Section 142 (1) of the Act - The audit report was submitted on 17.11.2008, and was available on record - The Assessing Officer after examining the judgments of the Supreme Court in Liberty India 2009 (8) TMI 63 - SUPREME COURT - The AO formed an opinion to issue notice under Section 142 (1) of the Act, fixing 15.06.2012 to submit the specified documents mentioned in the questionnaire attached with the notice dated 31.5.2012. The Assessing Officer did not commit any jurisdictional error in issuing the notices - Decided against petitioner.

Summary

Issues:
Challenge against notices under Section 147/148 of the Income Tax Act 1961 for Assessment Years 2005-06 and 2006-07.

Detailed Analysis:

1. Validity of Notice under Section 148:
The petitioners contested the notices issued by the Assistant Commissioner of Income Tax under Section 147/148 of the Income Tax Act for the Assessment Years 2005-06 and 2006-07. The petitioners argued that the returns filed by them were accepted, showing either nil tax payable or tax refundable. However, the Assistant Commissioner issued the notice based on reasons under Section 148(2), alleging that the petitioners incorrectly claimed deductions under Section 80 IB of the Act due to income received from export incentives. The Assistant Commissioner relied on legal precedents to support the decision to issue the notice.

2. Jurisdictional Validity of Reopening Assessment:
The petitioners raised objections regarding the jurisdiction of the assessing authority to reopen the assessment under Section 148 of the Act. They argued that the assessment was reopened based on an audit report from 2008, which they claimed was impermissible under the law. The petitioners contended that the audit report could not be the sole basis for reopening the assessment and cited legal precedents to support their argument.

3. Assessing Officer's Decision and Jurisdictional Error:
The assessing authority, after considering the audit report and relevant legal judgments, formed an opinion to issue the notices under Section 142(1) of the Act. The assessing officer fixed a deadline for the petitioners to submit specified documents. The court found that the assessing officer did not commit any jurisdictional error in issuing the notices, as the decision was based on a thorough examination of the facts and legal principles.

4. Failure to Respond to Notice under Section 142(1):
The petitioners failed to respond to the notice under Section 142(1) of the Act and did not provide the required information before challenging the notice in court. The court noted this failure to comply with the notice requirements before approaching the court for relief.

5. Dismissal of Writ Petitions:
The court dismissed the writ petitions without delving into the merits of the case, citing the availability of alternative remedies such as filing an appeal. The court emphasized the importance of exhausting all available legal remedies before seeking judicial intervention.

In conclusion, the court upheld the validity of the notices issued under Section 147/148 of the Income Tax Act for the Assessment Years 2005-06 and 2006-07, rejecting the petitioners' challenges based on jurisdictional grounds and procedural non-compliance. The judgment underscores the significance of following due process and exhausting statutory remedies before seeking judicial redress in tax matters.