2009 (2) TMI 26 - HC - Income Tax

Notice u/s 148 - petitioner contend that he had disclosed all material facts necessary for assessment and, therefore, there was no reason to believe that the income relating to gift had escaped assessment - Tribunal gave a categorical finding that the gift cannot be treated to be genuine tribunal was justified in holding that impugned gift was a matter for consideration in the Regular Assessment and not in Block Assessment and, therefore, notice issued u/s 148 is valid petition is dismissed

Summary

Issues Involved:
1. Legality and jurisdiction of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Validity of reopening the assessment based on the order of the Income Tax Appellate Tribunal.
3. Applicability of Section 150(1) of the Income Tax Act, 1961.
4. Whether the income had escaped assessment under Section 147 of the Income Tax Act, 1961.

Detailed Analysis:

1. Legality and Jurisdiction of the Notice Issued Under Section 148:
The petitioner, a medical practitioner, challenged the notice dated 13th March 2008 issued under Section 148 of the Income Tax Act, 1961, and the subsequent rejection of objections by the order dated 12th November 2008. The petitioner argued that the gift of Rs. 3,00,000/- from Madhu Agrawal was disclosed in the Cash Flow Chart filed with the return of income on 27th August 2001 and was considered in the assessment order dated 23rd February 2004. Therefore, reopening the assessment under Section 147 was not permissible as the petitioner had fully and truly disclosed all material facts necessary for assessment.

2. Validity of Reopening the Assessment Based on the Order of the Income Tax Appellate Tribunal:
The court noted that the Income Tax Appellate Tribunal, in its order dated 31st August 2006, found the gift of Rs. 3,00,000/- from Madhu Agrawal to be not genuine. However, it was observed that this issue should be considered in the Regular Assessment and not in the Block Assessment. The court held that the order of the Tribunal could form the basis for reopening the assessment under Section 148 read with Section 150 of the Act. The Supreme Court's decision in Maharaj Kumar Kamal Singh Vs. Commissioner of Income-Tax was cited, which stated that "information" under Section 34(1)(b) of the Income Tax Act, 1922, includes judicial decisions, and such information can be the basis for reopening an assessment.

3. Applicability of Section 150(1) of the Income Tax Act, 1961:
The petitioner contended that Section 150(1) was not applicable as there was no direction in the Tribunal's order to assess the petitioner for the gift of Rs. 3,00,000/-. The court disagreed, stating that the Tribunal's order contained a categorical finding that the gift was not genuine and should be considered in the Regular Assessment. Thus, the provisions of Section 150(1) were clearly attracted, and the notice issued under Section 148 was valid.

4. Whether the Income Had Escaped Assessment Under Section 147:
The court examined whether the income had escaped assessment under Section 147. It was noted that the petitioner had disclosed the gift in the Cash Flow Chart, and the Assessing Officer had considered it in the assessment order dated 23rd February 2004. However, the Commissioner of Income Tax (Appeals) had deleted the addition of Rs. 3,00,000/- based on the petitioner's statement that the gift should be assessed in the Block Assessment. The court concluded that the amount of Rs. 3,00,000/- was not assessed in the Regular Assessment proceedings for the Assessment Year 2001-02. Therefore, reopening the assessment was justified as the income had indeed escaped assessment.

Conclusion:
The court dismissed the petition, upholding the validity of the notice issued under Section 148 and the applicability of Section 150(1) of the Income Tax Act, 1961. The court found that the reopening of the assessment was justified based on the Tribunal's order and that the income had escaped assessment.