2019 (4) TMI 1826 - HC - Income Tax

Reopening of assessment u/s 147 - exercise of power to record reasons u/s 151 (1) read with Sections 147 148 (2) of the Act for issuance of re-assessment of notice u/s 148 (1) - survey under Section 133A - HELD THAT - We are fortified by the decision of this Court in Indo Asahi Glass Co. Ltd. v. ITO 2001 (9) TMI 5 - SUPREME COURT wherein the assessee had approached this Court against the judgment and order of the High Court which had dismissed the Writ Petition filed by the assessee wherein challenge was made to the show cause notice issued by the Assessing Authority on the ground that alternative remedy was available to the assessee. In the present case, the assessee has invoked the writ jurisdiction of the High Court at the first instance without first exhausting the alternate remedies provided under the Act. In our considered opinion, at the said stage of proceedings, the High Court ought not have entertained the Writ Petition and instead should have directed the assessee to file reply to the said notices and upon receipt of a decision from the Assessing Authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act. In view of the above discussion, the Principal, CIT, having recorded reasons that certain information found during survey under Section 133A of the Act was not available during the scrutiny assessment, the sanction appears to be in accordance with law. Moreover, the assessment proceeding having already been complete, the petitioners have remedy of preferring an appeal, therefore, both the writ petitions deserve to be and are hereby dismissed.

Summary

Issues Involved:
1. Legality of the approval under Section 151(1) of the Income Tax Act for issuance of notice under Section 148.
2. Validity of the reasons recorded under Section 148(2) for the belief that income has escaped assessment.
3. Whether the reassessment notice constitutes a mere change of opinion.
4. Availability and appropriateness of alternative remedies.

Detailed Analysis:

1. Legality of the approval under Section 151(1) of the Income Tax Act for issuance of notice under Section 148:
The petitioners challenged the approval accorded by the Principal Commissioner of Income Tax under Section 151(1) for issuing notices under Section 148, arguing that there was no proper reason to believe that income had escaped assessment. The court found that the Principal, CIT recorded cogent reasons as required under Section 151(1) read with Section 148(2) before granting sanction for reopening the assessment. The court cited the Supreme Court's decision in *Assistant Commissioner of Income-Tax v. Rajesh Jhaveri Stock Brokers Pvt. Ltd.*, emphasizing that the AO must have reason to believe that income has escaped assessment, which confers jurisdiction to reopen the assessment.

2. Validity of the reasons recorded under Section 148(2) for the belief that income has escaped assessment:
The petitioners argued that the reasons recorded under Section 148(2) were insufficient and merely based on suspicion. The court, however, noted that the reasons recorded by the Principal, CIT were based on information found during a survey under Section 133A, which was not available during the initial assessment. The court referenced the Supreme Court's decision in *Phool Chand Bajrang Lal v. Income Tax Officer*, which held that reassessment could be initiated based on fresh facts or information that exposes the untruthfulness of previously disclosed facts.

3. Whether the reassessment notice constitutes a mere change of opinion:
The petitioners contended that the reassessment notice was a mere change of opinion, which is not permissible. The court disagreed, stating that the reassessment was based on fresh information obtained during the survey, which was not available at the time of the original assessment. The court cited *Phool Chand Bajrang Lal*, highlighting that reassessment based on fresh information is not a mere change of opinion but acting on new facts.

4. Availability and appropriateness of alternative remedies:
The Revenue argued that the reassessment proceedings had already been completed and the petitioners had the remedy of filing an appeal, making the writ petitions not maintainable. The court supported this view, referencing the Supreme Court's decision in *Commissioner of Income Tax v. Chhabil Dass Agarwal*, which held that when a statutory forum is available for redressal, a writ petition should not be entertained. The court also cited *Indo Asahi Glass Co. Ltd. v. ITO*, emphasizing that the High Court should not interfere when alternative remedies are available.

Conclusion:
The court concluded that the Principal, CIT had recorded valid reasons for reopening the assessment based on new information found during the survey. The reassessment notice was not a mere change of opinion but based on fresh facts. Given that the reassessment proceedings were completed and alternative remedies were available, the writ petitions were dismissed. The court held that the petitioners should exhaust the statutory remedies before approaching the High Court.

Order:
Both writ petitions were dismissed, with no order as to costs.