2021 (6) TMI 1067 - HC - Income Tax

Reopening of assessment u/s 147 - Reliance on new information unearthed - whether very initiation of reopening proceedings is not in consonance with the conditions stipulated under Section 147? - HELD THAT - When there is a new information of material on the record, the Assessing Officer is empowered to initiate reopening proceedings under Section 147 of the Act. Various circumstances are contemplated under Section 147 of the Act and based on any one of such circumstances, the Assessing Officer has reason to believe, then he is empowered to reopen the assessment. Even under-assessment is a ground for reopen. Thus, this Court is of the considered opinion that the reopening of assessment in the present case is done based on new information unearthed and such an information is to be clarified by the assessee, by participating in the adjudicating process and this Court cannot go into the details regarding transactions or the intricacies involved in such transactions. All such disputes on facts are to be adjudicated with reference to the original documents and evidences made available between the parties and the scope of the jurisdiction cannot be extended to conduct a roving enquiry in these aspects. The power of judicial review under Article 226 of the Constitution of India is to scrutinise the processes through which the decision is arrived by the competent authority by following the procedures as contemplated under the law, but not the decision itself. Thus, the petitioner-assessee has to participate in the adjudication. It is needless to state that the respondents are bound to provide opportunities to defend the case by the petitioner. By affording the opportunities, as contemplated, the proceedings are to be concluded. In this view of the matter, the case on hand is not a fit one for the purpose of quashing of the proceeding.

Summary

Issues:
Challenging notice under Section 148 of the Income Tax Act for reopening of assessment and order disposing objections filed by the petitioner.

Analysis:
The petitioner, an Assessee, filed his Return of Income for the Assessment year 2011-12. Subsequently, a notice under Section 148 of the Act was received for reopening the assessment, which led to objections being filed by the petitioner. The petitioner contended that all relevant materials and information were submitted during the original assessment, including details of transactions involving significant amounts. The Assessing Officer justified the reopening based on new information regarding a transaction of ?30.19 Lakhs, which was not disclosed earlier.

The High Court opined that the Assessing Officer is empowered to initiate reopening proceedings under Section 147 of the Act upon discovering new material information. The Court emphasized that the grounds for reopening assessment are clearly defined in the Act, and if the Assessing Officer has a reason to believe based on new information, such action is permissible. The Court clarified that disputes regarding facts and transactions should be resolved through the adjudication process by examining original documents and evidence, rather than conducting a detailed inquiry during the reopening proceedings.

Regarding judicial review under Article 226 of the Constitution of India, the Court highlighted that the focus is on scrutinizing the procedural aspects of the decision-making process rather than the decision itself. The petitioner was directed to participate in the adjudication process and defend their case as per the law. The Court dismissed the Writ Petition, emphasizing that the petitioner should be provided with opportunities to present their case during the assessment reopening, and directed the respondents to proceed with the assessment reopening while ensuring due process.

In conclusion, the judgment upheld the Assessing Officer's authority to reopen assessments based on new information, emphasizing the need for the petitioner to engage in the adjudication process to defend their case effectively. The Court's decision focused on procedural fairness and adherence to legal requirements during the assessment reopening process.