2019 (12) TMI 1612 - HC - Income Tax

Reopening of assessment u/s 147 - case was reopened for assessment u/s 147 in respect of assessment year 2010- 2011 since the assessee had not filed return of income for the assessment year 2010-2011 - HELD THAT - The records of the case however reveals that the assessee in fact had filed return of income for the assessment year 2010-2011. As such non - filing of return by the assessee could not possibly have been the reason for re - opening of assessment under section 147 of the Income Tax Act 1961. If the assessee had not disclosed income or concealed income the reason for re - opening of assessment ought to have reflected otherwise in the notice dated 30th March 2017. In that view of the matter on a very short and narrow compass we are of the view that the notice dated 30th March 2017 issued under section 148 of the Income Tax Act read with order dated 05th September 2017 issued by Income Tax Officer-3 (4) Kanpur cannot be sustained in law and is liable to be set aside and is accordingly set aside. Setting aside of the notice dated 30th March 2017 read with the consequential order dated 05th September 2017 however shall not in any manner stand in the way of the Income Tax authorities to proceed further in the matter in accordance with law.

Issues:

1. Challenge to notice under section 148 of the Income Tax Act, 1961 for reassessment of income.
2. Reopening of assessment under section 147 for the assessment year 2010-2011.
3. Non-filing of return as a reason for reopening assessment.
4. Concealment of income as a reason for reopening assessment.
5. Legality and sustainability of the notice and order issued by the Income Tax authorities.

1. Challenge to Notice under Section 148:
The writ petitioner challenged a notice dated 30th March, 2017, issued under section 148 of the Income Tax Act, 1961, for reassessment of income for the assessment year 2010-2011. The notice was issued after obtaining necessary satisfaction of the Principal Commissioner of Income Tax-1, Kanpur. The case was reopened under section 147 since the assessee had allegedly not filed a return of income for the said assessment year. However, it was found that the assessee had indeed filed the return. The court held that if there was non-disclosure or concealment of income, the reason for reopening should have been different in the notice.

2. Reopening of Assessment under Section 147:
The case was reopened for assessment under section 147 of the Income Tax Act, 1961, for the assessment year 2010-2011. The reason cited was the alleged non-filing of the return by the assessee. However, it was established that the return had been filed. The court emphasized that if there was any issue of non-disclosure or concealment of income, it should have been explicitly mentioned in the notice of reopening.

3. Non-filing of Return as a Reason for Reopening Assessment:
The notice for reassessment was based on the premise that the assessee had not filed a return of income for the relevant assessment year. However, upon examination, it was revealed that the assessee had, in fact, filed the return. This discrepancy raised doubts about the validity of the reason cited for reopening the assessment under section 147.

4. Concealment of Income as a Reason for Reopening Assessment:
The court highlighted that if there was any issue of non-disclosure or concealment of income by the assessee, it should have been explicitly stated as the reason for reopening the assessment. The absence of such a reason in the notice dated 30th March, 2017, raised concerns about the validity and legality of the reassessment process initiated by the Income Tax authorities.

5. Legality and Sustainability of the Notice and Order:
After careful consideration, the court concluded that the notice dated 30th March, 2017, issued under section 148 of the Income Tax Act, read with the order dated 05th September, 2017, issued by the Income Tax Officer-3 (4), Kanpur, could not be sustained in law. Consequently, the court set aside the notice and the consequential order. However, it was clarified that the setting aside of the notice and order would not hinder the Income Tax authorities from proceeding further in accordance with the law.

In conclusion, the writ petition was disposed of accordingly, emphasizing the importance of adherence to legal procedures and the necessity for clear and valid reasons for initiating reassessment proceedings under the Income Tax Act, 1961.

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