2019 (8) TMI 1425 - HC - Income Tax

Reopening of assessment u/s 147 - speaking order does not deal with the objections of the writ petitioner correctly - HELD THAT - In the instant case, there has been a survey and the writ petitioner has been called upon to produce certain documents. In one breath, the writ petitioner/assessee submits that adequate time has not been given for producing the documents and in same breath the writ petitioner/assessee submits that the very reopening itself raises a jurisdictional fact. With regard to tangible reasons for reopening and reopening pursuant to survey under Section 133A there is nothing to show that there cannot be reopening in cases of survey when the writ petitioner assessee is unable to explain excessive deductions claimed by producing supporting documents. In any event, in the instant case it is to be noted that the writ petitioner/assessee submits that sufficient time has not been granted for producing the documents. Furthermore, even in response to impugned notices II, the writ petitioner has written to the respondent asking for time till first week of September, 2019. A perusal of clause (ca) of Explanation 2 of Section 147 makes it clear that Section 133C survey and assessing officer noticing in such survey that excessive deduction has been claimed is brought within the sweep of income escaping assessment within the meaning of Section 147 of IT Act. In other words, a plain reading of aforesaid clause (ca) of Explanation 2 of Section 147 makes it clear that it cannot be gainsaid that Section 133C survey cannot be the basis for a Section 148 notice regarding escaped assessment (escaped assessment within the meaning of Section 147 of IT Act). This answers points (b) and (d) urged by the writ petitioner. Therefore, it comes out clearly that this is an attempt to derail the hearing before the respondent today i.e., 26.08.2019, as there is no explanation forthcoming from the writ petitioner for not coming before this Court between 02.08.2019 and 21.08.2019, more particularly, when during this period the writ petitioner was issued a reminder notice dated 17.08.2019 and writ petitioner responded to the same on 19.08.2019 requesting for time. This leaves this Court with the view that the writ petitioner has not approached this Court in the instant writ petitions with the requisite sincerity. On the contrary, these writ petitions has been moved at the 11th hour. This Court is of the opinion that it is not only the 11th hour but 59th minute of the 11th hour. In this backdrop, this Court is not inclined to interfere with the impugned notices. This Court is of the considered view that such 11th hour petitions will derail assessments process under fiscal law statues. It is made clear that this view is taken in the peculiar trajectory of this case, as the writ petitioner has approached this Court at the 11th hour particularly when the writ petitioner had all the time in the world to approach this Court earlier. These writ petitions are dismissed as bereft of bonafides and lacking in merits, albeit preserving rights of writ petitioner to the limited extent set out supra

Summary

Issues:
1. Reopening of assessments under the Income Tax Act, 1961 based on survey conducted.
2. Violation of principles laid down in GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Others.
3. Adequacy of time given to produce documents post-survey.
4. Legality of reopening assessments based on survey under Section 133A of IT Act.

Analysis:
1. The judgment addressed six writ petitions challenging the reopening of assessments under the Income Tax Act, 1961 for the assessment years 2012-13 to 2017-18. The notices under Section 148 were issued based on a survey conducted on the premises of the assessee. The central issue was the inability of the assessee to provide bills/invoices for expenses claimed, leading to the reopening of assessments.

2. The petitioners contended that the principles laid down in GKN Driveshafts (India) Ltd. case were violated in the impugned orders. However, the court found that the procedure outlined in the case was followed, as reasons for reopening were provided, objections were raised, and speaking orders were passed, even though the objections were not in line with the reasons given for reopening.

3. The issue of adequacy of time given to produce documents post-survey was raised by the petitioners. The court noted that the petitioners themselves requested additional time to furnish documents, indicating that they had not been diligent in their approach. The court found that the petitioners had sufficient time to approach the court earlier but chose to file the petitions at the last minute.

4. Regarding the legality of reopening assessments based on a survey under Section 133A of the IT Act, the court referred to relevant provisions and held that such surveys could form the basis for issuing notices under Section 148 for escaped assessment. The court emphasized that the petitioners had the opportunity to present supporting documents during assessment proceedings if they were able to establish their case.

In conclusion, the court dismissed the writ petitions as lacking in bonafides and merits, highlighting that the petitioners' approach was not sincere. The court preserved the petitioners' rights to present their case during assessment proceedings and directed the assessing authority to consider any documents submitted by the petitioners in support of deductions claimed.