2016 (7) TMI 704 - HC - Income Tax

Reopening of assessment - notices issued without jurisdiction - Held that - In the instant case, the fact is not in dispute that on the request of the petitioner the respondent has provided copy of the reasons recorded by respondent No. 3 as well as the copy of the order passed under section 151 of the said Act. So no case of prejudice caused to the petitioner has been made out. In the light of the discussion made in the foregoing paras, we are of the view that there is no merit in the petition filed. The impugned notices cannot be said to be issued without jurisdiction or bad in law. So also we find no infirmity in the impugned order dated September 16, 2015 passed by the Deputy Commissioner of Income-tax. In view of this, the petition filed by the petitioner is devoid of merits and substance therein and therefore the same is liable to be dismissed - Decided against assessee

Issues Involved:
1. Jurisdiction and authority to issue notice under Section 148 of the Income-tax Act, 1961.
2. Legality and validity of the impugned notices and orders.
3. Compliance with procedural requirements for reopening assessment under Sections 147 and 148 of the Income-tax Act, 1961.
4. Timeliness and jurisdictional objections raised by the petitioner.

Detailed Analysis:

1. Jurisdiction and Authority to Issue Notice under Section 148:
The petitioner argued that the assessment for the year 2010-11 was finalized by the Joint Commissioner of Income-tax, and thus, respondent No. 3 (an Income-tax Officer) had no authority to reopen the assessment and issue notice under Section 148 of the Income-tax Act, 1961. The petitioner relied on the definition of "Assessing Officer" under Section 2(7A) and the Delhi High Court's decision in Dushyant Kumar Jain v. Deputy CIT.

The court clarified that the definition of "Assessing Officer" under Section 2(7A) includes an Income-tax Officer, who is vested with the relevant jurisdiction by virtue of directions or orders issued under Section 120 or any other provision of the Income-tax Act. Respondent No. 3, being the Assessing Officer for the petitioner, had the jurisdiction to issue the notice after receiving information from the Director of Income-tax (Intell & Cr.Inv), Mumbai, about the escaped income during the assessment year 2010-11.

2. Legality and Validity of the Impugned Notices and Orders:
The court examined the procedural compliance and found that respondent No. 3 acted within the bounds of law. After receiving information about the escaped income, respondent No. 3 recorded reasons to believe that income had escaped assessment and sought necessary approval under Section 151 of the Income-tax Act from the Additional Commissioner of Income-tax. The Additional Commissioner granted sanction to reopen the assessment and issue notice under Section 148.

The court held that the impugned notices and orders were legal and valid, as they were issued by the Assessing Officer with the necessary jurisdiction and after following the prescribed procedure under the Income-tax Act.

3. Compliance with Procedural Requirements:
The petitioner contended that the reasons recorded for reopening the assessment and the order of sanction were not furnished along with the notice dated March 25, 2015, thus vitiating the entire proceedings. The court rejected this contention, referring to the Supreme Court's decision in GKN Driveshafts (India) Ltd. v. ITO, which clarified that it is not mandatory to furnish reasons along with the notice. The proper course of action for the noticee is to file a return and, if desired, seek reasons for issuing the notice. The Assessing Officer is then bound to furnish reasons within a reasonable time, allowing the noticee to file objections.

In this case, the petitioner was provided with the reasons recorded and the order of sanction upon request, and thus, no prejudice was caused to the petitioner.

4. Timeliness and Jurisdictional Objections:
The petitioner raised jurisdictional objections for the first time on September 7, 2015, well after the issuance of the notice under Section 148 on March 25, 2015. The court noted that under Section 124(3) of the Income-tax Act, a person is not entitled to call into question the jurisdiction of an Assessing Officer after the expiry of the time allowed by the notice issued under Section 148. Since the objection was raised beyond the permissible period, it was not entertained.

The court also found that the Deputy Commissioner of Income-tax, who dealt with the case after the file was transferred by respondent No. 3, had the necessary pecuniary and territorial jurisdiction to handle the reassessment.

Conclusion:
The court concluded that the impugned notices and orders were issued within the jurisdiction and in accordance with the law. The procedural requirements for reopening the assessment were duly followed. The petitioner's objections regarding jurisdiction and procedural lapses were found to be without merit. Consequently, the petition was dismissed with no order as to costs.

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