2018 (8) TMI 1755 - HC - Income Tax

Reopening of assessment - availing statutory alternative remedies - reasons to believe - Held that - It was not necessary for this Court to come to an independent finding to ascertain whether, by reason of any omission or failure on the part of the assessee to disclose fully and truly all materials facts necessary for his assessment for the assessment year in question, any income chargeable to tax has escaped or not, the Court observed that it is essentially a question of fact and because in the said case, the Tribunal, after examining the entire records, have recorded that, at the time of the original assessment, the facts were disclosed by the assessee and the Income-Tax officer found the investments shown to be reasonable, this Court proceeded to hold that the Tribunal had rightly quashed the entire assessment order. In the present case, we do not have benefit of concluded finding of facts because the petitioner has directly approached this Court in its writ jurisdiction. We agree with the submissions of Ms. Archana Sinha, learned counsel representing the Revenue that the Act of 1961 provides for certain statutory authorities vested with the powers to examine the materials based on which a finding may be recorded. Notice under Section 148 of the Act, granted liberty to the respondents to file an appropriate petition/appeal against the order of reassessment passed under Section 148 of the Act. In absence of any concluded facts being available before us, it would not be proper to interfere with the impugned notice and order in the present writ proceeding. We, therefore, dismiss the writ application giving liberty to the petitioner to avail statutory alternative remedies, if so advised, in the facts and circumstances of the case.

Summary

Issues:
Challenging notice under Section 148 of Income Tax Act for assessment year 2011-12 and rejection of objection to jurisdiction by Assessing Officer.

Detailed Analysis:
The writ application in question challenges a notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2011-12, along with the rejection of the petitioner's objection to the jurisdiction by the Assessing Officer. The petitioner argues that for reassessment proceedings to be initiated, the conditions of "reason to believe" and "income chargeable to tax has escaped assessment" must be satisfied. The petitioner contends that the disallowed deduction claimed under Section 35(2AB) during the original assessment proceedings does not constitute escaped assessment. The Assessing Officer's belief that income of a specific amount has escaped assessment is challenged as unfounded, especially since no irregularity was found by the Commissioner of Tax. The petitioner also cites relevant case laws to support their argument, emphasizing the need for a valid foundation for assumption of jurisdiction.

In response, the Revenue argues that the reassessment proceedings were initiated based on valid reasons to believe that income had escaped assessment. It is claimed that the petitioner did not meet the requirements for R&D expense benefits, leading to the disallowance of a portion of the claimed deduction. The Revenue asserts that the Assessing Officer had sufficient grounds to initiate the proceedings, which are factual in nature and not suitable for writ jurisdiction. Reference is made to the time limit under Section 149 of the IT Act for issuing the notice under Section 148. Additionally, the Revenue highlights the importance of exhausting statutory remedies before seeking relief through writ jurisdiction, citing relevant judgments to support this stance.

The Court, after hearing arguments from both sides and examining the records, finds that entertaining the writ application at this stage would not be appropriate. Drawing parallels with a previous case, the Court notes the significance of concluded findings of facts, which are absent in the current direct approach to the Court in writ jurisdiction. The Court agrees with the Revenue's position that statutory authorities are empowered to examine materials for factual determinations. Citing relevant paragraphs from a Supreme Court judgment, the Court emphasizes the importance of exhausting statutory remedies and not bypassing established procedures. Ultimately, the Court dismisses the writ application, granting the petitioner the liberty to pursue statutory remedies available to them.

In conclusion, the judgment underscores the importance of adhering to statutory procedures and exhausting available remedies before seeking relief through writ jurisdiction. The Court's decision not to interfere in the absence of concluded facts highlights the significance of factual determinations by statutory authorities in matters of reassessment under the Income Tax Act.