2014 (10) TMI 42 - HC - Income Tax

Reopening of assessment u/s 147 and 148 Reasons not communicated by revenue Held that - When a notice u/s 148 of the Act was issued, the proper course of action for the assessee was to file a return and if he so desired to seek reasons for issuing the notice - The AO was bound to furnish reasons within a reasonable time to which the assessee had the right to file objections - escapement of income should be given a strict construction - Not only should it not be used to justify a change of view it should not be used to reopen an assessment on facts, information, documents which were before the AO or could have been easily found by him while making the assessment - there would be no finality of assessment - It will go on and on and might become a tool in the hands of the department to cause harassment to the assessee revenue contended that the assessee refused to accept service and the envelope was returned - according to the assessee the reasons were not received by him and that the department is wrongfully trying to assess his income u/s 147 revenue cannot reassesses the case of the assessee as the initiation of Section 147 proceedings was without jurisdiction Decided in favour of assessee.

Issues:
1. Interpretation of Sections 147 and 148 of the Income Tax Act, 1961.
2. Requirement of reasons for reopening assessment under Section 147.
3. Validity of reopening assessment based on new facts discovered during assessment.
4. Jurisdiction of Assessing Officer in reassessment proceedings.
5. Compliance with Supreme Court guidelines on issuing notice under Section 148.

Analysis:
1. The judgment dealt with the interpretation of Sections 147 and 148 of the Income Tax Act, 1961, along with the guidance provided by the Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer. The Supreme Court clarified that when a notice under Section 148 is issued, the assessee has the right to request reasons for the notice and the Assessing Officer must provide these reasons within a reasonable time, allowing the assessee to file objections.

2. The petitioner in this case received a notice under Section 148 for the assessment year 2009-10 but was not provided with the reasons for reopening the assessment, leading to a dispute with the Income Tax authorities. The judgment emphasized the importance of the Assessing Officer providing reasons for reopening assessments, as per the guidelines set by the Supreme Court.

3. The court analyzed the validity of reopening the assessment based on new facts discovered during the assessment process. It was highlighted that the Assessing Officer should not use the concept of "escapement of income" to justify a change in opinion or to reopen assessments based on information that was already available or easily accessible during the initial assessment.

4. Jurisdiction of the Assessing Officer in reassessment proceedings was a crucial aspect of the judgment. It was noted that if all relevant information and documents were already before the Assessing Officer during the initial assessment, reopening the assessment based on the same facts would not be justified, as it could lead to prolonged harassment of the assessee.

5. Compliance with the Supreme Court guidelines on issuing notices under Section 148 was a key issue in this case. The court scrutinized the actions of the Income Tax department in providing reasons to the assessee and ensuring that the proper procedures were followed. Ultimately, the court allowed the writ application, emphasizing that the initiation of Section 147 proceedings was without jurisdiction, and directed the department to comply with the orders specified in the petition.

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