2016 (3) TMI 877 - HC - Income Tax

Reopening of assessment - whether notice issued under Section 148 of the Act is perfectly correct and no notice will be issued under Section 143(2) of the Act for the return of income filed under Section 139 of the Act? - Held that - No notice will be issued under Section 143(2) of the Act prior to the issuance of notice under Section 148 of the Act. Only after filing of return, pursuant to the notice issued under Section 148 of the Act dated 04.12.2015, the question of issuing notice under Section 143(2) of the Act will arise. When the petitioner has not submitted their return pursuant to the notice issued under Section 148 of the Act, question of issuing notice under Section 143(2) of the Act, would not arise.

Summary

Issues involved:
1. Jurisdiction of the respondent to issue notices under Section 148 of the Income Tax Act, 1961.
2. Requirement of serving notice under Section 143(2) of the Act before issuing notice under Section 148.
3. Applicability of the judgment of the Hon'ble Supreme Court in (2003) 259 ITR 19 to the present case.

Analysis:

1. Jurisdiction to issue notices under Section 148:
The petitioner contended that the respondent lacked jurisdiction to initiate proceedings under Section 147 of the Act as there was no valid material available for reopening the proceedings. The petitioner argued that since a return was already filed under Section 139 and no action under Section 143 had been taken, invoking Section 147 was unwarranted. The petitioner further claimed that the notice under Section 148 was not maintainable as no action was taken on the earlier return filed under Section 143(2). However, the respondent argued that the notice under Section 148 was valid and that no notice under Section 143(2) was required for a return filed under Section 139.

2. Serving notice under Section 143(2) before Section 148:
The court observed that as per the submissions made by the respondent's counsel, a notice under Section 143(2) would not be issued before the notice under Section 148. It was clarified that only after filing a return in response to the notice under Section 148, the question of issuing a notice under Section 143(2) would arise. Since the petitioner had not submitted their return following the notice under Section 148, the court found that there was no requirement for a notice under Section 143(2) at that stage.

3. Applicability of Supreme Court judgment:
The respondent's counsel relied on a judgment of the Hon'ble Supreme Court (2003) 259 ITR 19, which emphasized the procedure to be followed when a notice under Section 148 is issued. The Supreme Court's ruling highlighted the necessity for the noticee to file a return and seek reasons for the notice, with the Assessing Officer obligated to provide reasons within a reasonable time. The noticee could then file objections, which the Assessing Officer must address before proceeding with the assessment. The court found that the principles laid down in the Supreme Court judgment were applicable to the present case.

In conclusion, the court dismissed the writ petitions, stating that the respondent had jurisdiction to issue the notices under Section 148, and there was no merit in the petitioner's arguments. The court also noted that the principles established by the Supreme Court's judgment were relevant to the case at hand.