2018 (11) TMI 1617 - HC - Income Tax

Reopening of assessment u/s 148 - Time Limit for Notice - change of opinion - dis-allowance of depreciation on the equipments - HELD THAT - In the event of change of an opinion by the Assessing Officer, the same cannot constitute ground for reopening of the assessment beyond the period of 4 years u/s 147. However, while deciding the case, the Assessing Officer is bound to consider the materials available on record and the reasons recorded for the purpose of reopening the closed assessment. Thus, this Court is of an opinion that the present case on hand is one that of the mixed question of law and facts and therefore, the Assessment Officer has to consider all these aspects, including the objections submitted by the writ petitioner for the purpose of passing an assessment order under the provisions of the Income Tax Act, 1961. This Court cannot come to the conclusion that the notice u/s 148 was issued beyond the period of limitation with reference to Section 149(1)(b). The procedures prescribed by the Supreme Court of India in G.K.N.Driveshafts (India) Limited case, 2002 (11) TMI 7 - SUPREME COURT are to be followed by the Competent Authorities scrupulously. As contended that the Assessing Officer had passed an order, rejecting the objections submitted by the writ petitioner. AO has to complete the process of assessment and accordingly, take a decision and pass final orders by providing further opportunity to the assessee concerned. The writ petitioner, who is an assessee, is entitled to submit all his further objections, documents or materials available with him, enabling the Assessing Officer to consider his case independently and with reference to the documents and materials produced by the writ petitioner and also the documents and materials available with the Income Tax Department. AO is empowered to consider the issue relating to jurisdiction, time limit and all other legal grounds raised by the writ petitioner at the time of passing the final orders. This Court has no hesitation in coming to the conclusion that the writ petitioner is entitled to submit all his objections and legal grounds and materials, enabling the AO to consider the same and pass an assessment order under the provisions of the Income Tax Act, 1961, without causing any undue delay - writ petitions dismissed

Summary

Issues Involved:
1. Validity of notices issued under Section 148 of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to reopen the assessment beyond four years.
3. Applicability of Section 149(1)(b) regarding the time limit for issuing notices.
4. Compliance with procedural requirements as per Section 147 and related provisions.
5. Consideration of mixed questions of law and fact by the High Court.

Detailed Analysis:

1. Validity of Notices Issued Under Section 148:
The petitioner challenged the notices issued under Section 148 of the Income Tax Act, 1961, arguing that the reopening of the assessment was beyond four years. The petitioner contended that the Assessing Officer lacked jurisdiction to issue the notice, claiming the procedures contemplated were not followed and there was no valid reason recorded for reopening the assessment for the year 1996-1997. The respondents countered that the Assessing Officer is empowered to reopen the assessment if he has reason to believe that any income chargeable to tax has escaped assessment.

2. Jurisdiction to Reopen Assessment Beyond Four Years:
The petitioner argued that the reopening of the assessment was beyond the permissible four-year period, making the notice invalid. However, the respondents pointed out that Section 149(1)(b) allows reopening within six years if the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more. The Court found that the notice was issued within six years, making it valid under Section 149(1)(b).

3. Applicability of Section 149(1)(b):
The Court clarified that Section 149(1)(a) was inapplicable as the petitioner fell under the category of beyond one lakh rupees, thus Section 149(1)(b) applied. The reopening of the assessment was done within the six-year period from the assessment year, and there was no infirmity in issuing the notice under Section 148.

4. Compliance with Procedural Requirements:
The petitioner cited the Supreme Court's judgment in GKN Driveshafts (India) Ltd. vs. Income Tax Officer, emphasizing the need for the Assessing Officer to furnish reasons for issuing the notice and dispose of objections by passing a speaking order. The respondents assured that the procedures laid down by the Supreme Court were followed. The Court reiterated that the Assessing Officer must consider all materials and reasons recorded before reopening the assessment and that the High Court should exercise restraint in interfering with such notices when mixed questions of law and fact are involved.

5. Consideration of Mixed Questions of Law and Fact:
The Court noted that certain mixed questions of law and fact could not be decided in favor of the petitioner or against the department without further probing. It emphasized that the Assessing Officer must consider all aspects, including the objections submitted by the petitioner, before passing an assessment order. The Court cannot conclude that the notice under Section 148 was issued beyond the period of limitation with reference to Section 149(1)(b).

Conclusion:
The Court dismissed the writ petitions, stating that the petitioner is entitled to submit all objections and legal grounds to the Assessing Officer, who must consider them and pass an assessment order under the provisions of the Income Tax Act, 1961. The Court found no merit in the petitioner's arguments and upheld the validity of the notices issued under Section 148, allowing the Assessing Officer to proceed with the reassessment process.