2015 (7) TMI 917 - HC - Income Tax

Reopening of assessment - validity of notice - assessee has not offered any income arisen by way of transfer of capital asset on dissolution of Sant Trust for taxation - whether the sanction was not accorded by the Joint Commissioner but by officer superior in rank to the Joint Commissioner and therefore, the sanction is invalid? - Held that - In the present case the Joint Commissioner who was promoted as a Commissioner and has granted the sanction, was directed by the Board to so discharge duties of Joint Commissioner in the communication dated 20 February 2014. Thus the CBDT has in terms of Section 120(2) of the Act authorised Commissioner to exercise / or perform functions of an Income Tax authority subordinate to him i.e. of Joint / Addl. Commissioner. Consequently, the impugned Notice cannot be said to be without jurisdiction on account of lack of sanction. So far as the reasons recorded by the Assessing Officer in support of the impugned Notice is concerned, we find that it clearly indicates that the information leading to the impugned notice was received from the Assessing Officer of the beneficiaries. However it is also recorded in the Notice itself that the same was issued after verification of the information. Thus, we do not accept Mr.Toprani s submission that the Assessing Officer failed to apply his mind independently before issuing the impugned Notice. As far as the issue with regard to the Intimation under Section 143(1) of the Act being beyond the period of time provided is concerned or that all material facts have been truly and fully disclosed would all require adjudication of factual dispute between the parties. Similarly, issue with regard to the applicability of the decision of this Court in L.R.Patel Family would also require debate. These all issues can be decided and adjudicated upon by Assessing Officer during reassessment proceedings. These are not issues which go to the root of the jurisdiction in view of the disputed position between the parties. - Decided against assessee.

Summary

Issues:
Challenge to Notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for the year 2007-2008.

Analysis:
1. The petition challenges the Notice dated 20 March 2014 issued by the Assistant Commissioner of Income Tax under Section 148 of the Income Tax Act, seeking to reopen the assessment of the Petitioner for the year 2007-2008. The Petitioner, a trust dissolved in 2007, had filed its return of income for the relevant year, declaring the dissolution. The Assessing Officer alleges that income arising from the transfer of capital asset on dissolution was not declared for taxation, leading to an escape of assessment of more than Rs. One lakh. The Petitioner objected to the Notice, which was rejected by the Assessing Officer.

2. The Petitioner contends that the Notice lacks jurisdiction on several grounds. Firstly, it argues that the sanction for the Notice should have been from the Joint Commissioner of Income Tax as per Section 151(2) of the Act, not the Assistant Commissioner. Secondly, the Petitioner asserts that the original return was processed beyond the limitation period of Section 143(1), questioning the reopening while the return was pending assessment. Additionally, it is argued that the Assessing Officer did not independently apply his mind and relied on information from beneficiaries. Moreover, the Petitioner relies on a court decision to claim that Section 45(4) of the Act does not apply to the transfer in question.

3. In response, the Revenue argues that the sanction was validly obtained from the Joint Commissioner, who was promoted to Commissioner but directed to continue Joint Commissioner duties. The Revenue disputes the Petitioner's claims regarding the limitation of Section 143(1) and the adequacy of disclosure. It also differentiates the court decision cited by the Petitioner, stating it is not applicable to the present case involving a discretionary trust.

4. The Court analyzes the contentions and finds that the sanction was valid as the Joint Commissioner, despite promotion, was authorized to act as Joint Commissioner. It also notes that the Assessing Officer did consider the information before issuing the Notice. The Court declines to interfere with the Notice, stating that the issues raised can be addressed during reassessment proceedings by the Assessing Officer. The Petitioner is allowed to present all contentions before the Assessing Officer for consideration.

5. Ultimately, the Court dismisses the petition, with no order as to costs, maintaining that the impugned Notice was issued based on a prima facie view that warrants further consideration and adjudication during the reassessment proceedings.