2015 (11) TMI 1381 - HC - Income Tax

Reopening of assessment - misconception of law - Held that - In the present case no assessment has been framed under section 143(3) of the Act, under the circumstances, the proviso to section 147 of the Act would not be attracted. On an overall view of the matter, it appears that the petitioner has proceeded on a misconception of law and not in terms of the provisions of the Act and the principles laid down by judicial pronouncements in that regard. The petitioner should have been appropriately advised to file the return of income and ask for the reasons for reopening the assessment and thereafter, to file the objections in respect thereto as laid down by the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. ITO, (2002 (11) TMI 7 - SUPREME Court) In the present case, the petitioner has not followed the due procedure which is required to be followed for the purpose of challenging the notice under section 148 of the Act and has avoided filing return on income pursuant to the impugned notice. Besides, as noted earlier, except for a bare assertion, nothing has been pointed out on behalf of the petitioner to show as to why the second respondent lacked jurisdiction to issue the notice under section 148 of the Act. Thus no merit in any of the submissions advanced on behalf of the petitioner so as to warrant exercise of powers under Article 226 of the Constitution of India. Decided against assessee

Issues Involved:
1. Jurisdiction of the Income Tax Officer to issue notice under section 148 of the Income Tax Act, 1961.
2. Validity of service of notice.
3. Validity of the notice format.
4. Limitation period for issuing notice under section 148.
5. Requirement of permission under section 151 of the Act.
6. Procedural compliance by the petitioner.

Issue-wise Detailed Analysis:

1. Jurisdiction of the Income Tax Officer to issue notice under section 148 of the Income Tax Act, 1961:
The petitioner contended that the notice dated 27th March 2015 issued by the Income Tax Officer, Ward No.1, Mehsana, was invalid due to lack of jurisdiction. The court found that the notice was issued by the appropriate authority at the relevant time, and the subsequent transfer of the case to the Income Tax Officer, Ward No.4, Patan, was due to a change in territorial jurisdiction. The transfer was in accordance with section 127 of the Act. Hence, the contention regarding lack of jurisdiction was deemed misconceived in law and facts.

2. Validity of service of notice:
The petitioner argued that the notice was not properly served as it was delivered to his mother, Sitaben Viththalbhai Patel, rather than himself. The court referred to Rule 15 of Order V of the Code of Civil Procedure, 1908, which allows service on any adult family member residing with the defendant if the defendant is absent. The court concluded that the service of notice on the petitioner's mother was valid.

3. Validity of the notice format:
The petitioner claimed that the notice was not in the prescribed form and was vague. The court examined the notice and found it to be in the standard format used for notices under section 148 of the Act. Therefore, the contention that the notice was vague and not in the prescribed format was rejected.

4. Limitation period for issuing notice under section 148:
The petitioner argued that the notice was barred by limitation as it was issued beyond four years from the end of the relevant assessment year. The court noted that the notice was issued within six years, which is permissible under the Act when no assessment has been framed under section 143(3). Hence, the notice was not barred by limitation.

5. Requirement of permission under section 151 of the Act:
The petitioner contended that the notice was invalid as the Income Tax Officer, being below the rank of Assistant Commissioner, did not obtain the required permission from the Chief Commissioner or Commissioner. The court clarified that section 151 applies only when an assessment has been made under section 143(3) or section 147, which was not the case here. Thus, the provisions of section 151 were not applicable.

6. Procedural compliance by the petitioner:
The court observed that the petitioner did not follow the proper procedure for challenging the notice under section 148. Instead of filing a return and seeking reasons for the notice as laid down by the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO, the petitioner avoided filing a return and raised objections directly. The court emphasized the importance of following the due procedure and dismissed the petition for lack of merit.

Conclusion:
The court found no merit in the petitioner's submissions and dismissed the petition. The court upheld the validity of the notice issued under section 148, the jurisdiction of the Income Tax Officer, the service of notice, and the compliance with the limitation period. The petitioner was advised to follow the proper procedure for challenging such notices in the future.

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