2016 (7) TMI 754 - HC - Income Tax

Validity of reopening of assessment - petitioners contention that no notice was issued to the petitioners - Held that - The submission made before us about the notice of reopening being properly addressed in view of the computer generated notice and window envelope, not requiring the writing of the address, prima facie stand belied. Normally, one proceeds on the basis that the acts done by the Officers of the State in normal course of its activities is validly done. But in this case a cloud of uncertainty covers the actual facts. Therefore, in these peculiar facts, the suggestion made by the Addl. Solicitor General of appointing a Senior Officer of Income Tax to determine this issue bearing in mind that the Assessing Officer has already taken a stand on the issue that a reopening notice has been issued prior to 31st March, 2015. In the above view, Mr.Singh, on instructions informs us that the Principal Commissioner of Income Tax-15 would decide whether or not the alleged impugned notice was issued and of the date of its issue within a period of eight weeks from today. Needless to state as pointed out above, the Principal Commissioner of Income Tax-15 would decide the issue in consonance with principles of natural justice which would include allowing the leading of affidavit-evidence and cross examination of persons who would tender evidence and the evidence already tendered before this Court, by the other side. We must make it clear that the Commissioner of Income Tax-15 would only determine the factual aspect of issuance of notice to the assessee. If he decides the issue in favour of the Revenue, the notice would be restored to the Assessing Officer to proceed further from that stage. The alleged notice dated 27th or 28th March, 2015 will be stayed for a period of 12 weeks from today. The impugned notices dated 9th February, 2016 and 18th March, 2016 will not be acted upon till expiry of 12 weeks as aforesaid from today.

Summary

Issues:
Challenge to show cause notices for reassessment for A.Y. 2008-09 based on jurisdiction due to lack of initiation of reopening of assessment under Section 148 of the Income Tax Act, 1961 before 31st March, 2015.

Detailed Analysis:

1. Challenge to Jurisdiction:
The petition under Article 226 challenges show cause notices issued by the Assessing Officer for reassessment for A.Y. 2008-09, contending that the notices lack jurisdiction due to the absence of initiation of reopening of assessment under Section 148 of the Income Tax Act, 1961 before 31st March, 2015. The petitioner's Senior Counsel highlighted that no notice under Section 148 was received by the petitioners before the end of six years from the relevant assessment year, as a notice was allegedly issued to a different entity, not the petitioners. The petitioners argued that the entire proceedings were without jurisdiction due to the lack of a valid notice under Section 148.

2. Respondent's Submission:
The Additional Solicitor General argued against entertaining the petition, emphasizing that the petitioners responded to the reopening notice only after a significant delay, despite being informed of it earlier. The Respondent submitted that the notice was correctly addressed and handed over to postal authorities, supported by an acknowledgment receipt. The Respondent further stated that the notices under Section 148 are computer-generated and placed in window envelopes to prevent misaddressing. The Respondent pointed out an order sheet noting forwarded to the petitioners, indicating a different state of affairs regarding the issuance of the reopening notice.

3. Investigation into Facts:
Acknowledging the conflicting claims, the Court noted the need for an investigation into factual aspects to determine whether the notice was issued as claimed by the revenue or disputed by the petitioners. The Additional Solicitor General proposed appointing a Senior Officer of the Income Tax Department to investigate and determine the issuance and date of the notice under Section 148. The Senior Counsel for the petitioners agreed to this proposal, leading to an agreement to have the Principal Commissioner of Income Tax-15 decide on the alleged impugned notice within eight weeks, ensuring principles of natural justice, including affidavit evidence and cross-examination.

4. Decision and Stay Order:
The Court disposed of the petition based on the above terms, with no order as to costs. The Principal Commissioner of Income Tax-15 would decide on the alleged notice issuance within eight weeks, and if in favor of the Revenue, the notice would be restored to the Assessing Officer. The impugned notices were stayed for 12 weeks from the decision date, and all contentions were kept open for further proceedings.

This detailed analysis of the judgment highlights the key arguments, submissions, and decisions made by the Court regarding the challenge to the jurisdiction of the show cause notices for reassessment for A.Y. 2008-09.