2021 (7) TMI 1270 - HC - Income Tax

Reopening of assessment u/s 147 or assessment u/s 153C - HELD THAT - In this case, the names of around 500 persons/entities figure in the IVMS data and the question of logistics or practicable application of the provisions cannot be lost sight of. If the law offers multiple options to an officer as to how to proceed in a matter, it is for that officer to determine and come to a conclusion as to the proper, appropriate and simplest method of proceeding further. The provisions of Section 147 and 148 provide for assessment of income that have escaped assessment. Nowhere in Section 147 are the provisions of Section 153 excluded. AO must, in choosing the provision to apply, bear in mind the statutory conditions set out and arrive at a decision having regard to the logistics and the efficacy of the provision chosen. In a case such as the present, the respondent has, in my view, arrived at the proper conclusion, bearing in mind the interests of revenue, to share the information found with the assessing officers of the third parties. He is in no position to arrive at statutory satisfaction in all the cases as to whether the name of the third party in the IVMS data is genuine/germane or otherwise. The decisions relied on by the petitioner proceed on the basis that the use of the non-obstante clause in Section 153C would limit the choice of the Assessing Officers only to a search assessment. Certainly satisfaction cannot be thrust upon the Assessing Officer. The requirement of recording of satisfaction requires independent application of mind by the officer upon his detailed examination of all relevant material. These writ petitions are dismissed. The petitioner is permitted to file appeals, if it so desires, before the Commissioner of Income Tax (Appeals) agitating merits of the matter.

Summary

Issues:
Challenge to reassessment orders under the Income Tax Act, 1961 for assessment years 2016-17 and 2017-18; Jurisdiction under Section 147 vs. Section 153C.

Analysis:
The petitioner, a company, challenged two reassessment orders dated 24.12.2019 under the Income Tax Act, 1961, arguing the jurisdiction of the Assessing Authority under Section 147 for re-assessment. The reassessments stemmed from search proceedings involving Laxmi Remote India Pvt. Ltd. (LRIPL) under Section 132 of the Act. The petitioner contended that Section 153C, not Section 147, should apply as information related to the petitioner was found during the search of LRIPL. Internal communications between assessing officers regarding the petitioner's engagement with LRIPL were presented in a sealed cover to the Court.

The search on LRIPL revealed the existence of two software systems, with the IVMS used for recording cash sales where the petitioner's name appeared. The Assessing Officer shared this information with the Chennai counterpart, suggesting examination under Section 69C or other relevant provisions. The petitioner argued that Section 153C, being a complete code, should have been invoked instead of Section 147, citing Tribunal decisions supporting this view.

The revenue counsel contended that Section 147, requiring prior sanction for re-assessment, was more stringent than Section 153C. With around 500 entities involved, invoking Section 153C for each case was impractical. The Court noted that both sections are distinct, with Section 153C applicable irrespective of prior assessment orders, and outlined the parameters for invoking Section 153C.

The Court emphasized the need for the Assessing Officer to consider statutory conditions and logistical aspects when choosing between Section 147 and Section 153C. In this case, sharing information with assessing officers of third parties was deemed appropriate, considering the volume of entities involved. The Court dismissed the writ petitions, granting the petitioner the right to file appeals before the Commissioner of Income Tax (Appeals) within four weeks from the order's publication on the Court's website.