2016 (12) TMI 1806 - HC - Income Tax

Validity of reopening of assessment - notice for re-assessment being based solely on the report of DVO - HELD THAT - In the case at hand, notice u/s 147(2)/148 has been assailed only on the ground that the same is based on report of DVO, therefore, it is illegal and void. Jurisdiction of the Assessing Officer to issue notice has not been assailed on the ground that the notice is barred by limitation. As earlier discussed, notice is not based merely on the report of the DVO but having mentioned the same, the Assessing Officer has recorded its own satisfaction of existence of reason to believe that the income of the relevant assessment year has escaped assessment. Thus, the notice cannot be treated as without jurisdiction. Even otherwise, the petitioner would get full opportunity before the Assessing Officer to present his case as to why it is not a case of escapement of income. All the writ petitions being not maintainable against show cause notice deserve to be and are hereby dismissed.

Summary

Issues:
Assail legality and validity of notice under Section 148 of the Income Tax Act, 1961 and challenge re-assessment proceedings based on DVO report.

Analysis:
1. The petitioner contested the legality of the notice under Section 148 of the Income Tax Act, 1961, and the initiation of re-assessment proceedings solely on the District Valuation Officer (DVO) report. The argument was that the Assessing Officer did not apply independent judgment before issuing the notice and failed to satisfy the prerequisites for re-opening assessment proceedings under Section 147 of the Act, 1961. Legal precedents were cited to support the argument, emphasizing the need for the Assessing Officer to have a valid reason to believe that income has escaped assessment due to the assessee's omission or failure.

2. The Revenue's counsel opposed the writ petitions, asserting that the officer had jurisdiction under Sections 147 and 148 of the Act, 1961 to initiate re-assessment proceedings when income has escaped assessment. The notice issued to the petitioner for re-opening assessment was based on the DVO report, indicating a belief that the assessee had not fully disclosed taxable materials, justifying the re-assessment under Section 147(2)(C)(i).

3. The court noted that the notice was not issued solely on the DVO report but was backed by the Assessing Officer's belief that income had escaped assessment. Citing legal cases, it clarified that a writ petition challenging re-assessment is maintainable only when the notice lacks jurisdiction. The court highlighted that the Act provides a comprehensive mechanism for assessment and redressal of grievances, emphasizing the importance of exhausting statutory remedies before resorting to writ petitions.

4. The judgment emphasized that the petitioner would have the opportunity to present their case before the Assessing Officer to contest the alleged income escapement. As the writ petitions were deemed not maintainable against the show cause notice, they were dismissed. The court underscored the importance of following statutory procedures and exhausting available remedies before seeking relief through writ jurisdiction.

This analysis provides a detailed overview of the legal judgment, highlighting the arguments presented, legal precedents cited, and the court's reasoning in dismissing the writ petitions challenging the notice under the Income Tax Act, 1961.