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2016 (11) TMI 542 - HC - Income TaxReopening of assessment - period of limitation - change of opinion - Held that - In the light of the arrangement between the respondent Department and Department of Posts, it is held that the despatch having been done in terms of business post arrangement is sufficient to hold that the notice was despatched well within the period of limitation. Accordingly the first contention raised by the petitioner is rejected. Nevertheless to examine as to whether there is any prima facie case made out by the petitioner on this ground, the Court examined the submissions. On a perusal of the reasons recorded, it is evident that it is not restricted to dis-allowance under Section 40(a)(i) of the Act, alone. The statements recorded from their Vice President (Finance), Deputy Managing Director and Secretary of the petitioner have been referred to and the reasons for reopening have been set out. The statements have been recorded during the course of enquiry under Section 131 of the Act, and the assessee s contention is that the enquiry was completed in 2011, the statements very much available on the date of assessment was finalised by the Assessing Officer and therefore, there is no cause for reopening and the respondent has taken a stand that the enquiry report was received only during 2013. There would be no necessity to go into these aspects of the matter, and if done, it would amount to prejudging the issue and giving a go-by to the directives issued by the Hon ble Apex Court in the case of GKN Driveshafts (India) Ltd., (2002 (11) TMI 7 - SUPREME Court ). Thus, this Court having come to the conclusion that the impugned notice is not barred by limitation, is not inclined to examine the adequacy of the reasons assigned by the respondent for reopening, as the petitioner has to comply with the directives issued in GKN Driveshafts (India) Ltd., (supra).
Issues Involved:
1. Limitation period for issuance of notice under Section 148 of the Income Tax Act. 2. Validity of reopening assessment based on alleged change of opinion and absence of suppression. Issue-wise Detailed Analysis: 1. Limitation Period for Issuance of Notice: The petitioner argued that the notice issued under Section 148 of the Income Tax Act, dated 31.03.2015, was barred by limitation since it was received after the statutory period of six years, which ended on 31.03.2015. The petitioner highlighted that the postal franking was done on 01.04.2015, the cover was booked on 02.04.2015, and received on 06.04.2015. The petitioner relied on the Gujarat High Court's decision in Kanubhai M.Patel (HUF) vs. Hiren Bhatt, which stated that the process of issue is complete only when the envelopes are properly stamped with adequate postal stamps. The respondent countered by stating that the notice was dispatched on 31.03.2015, as evidenced by the Despatch Register and a letter from the Department of Posts dated 25.09.2015. The respondent explained the business post arrangement, where designated personnel from the Department of Posts collect documents from the Income Tax Department and acknowledge them in the Despatch Register. The court concluded that the decision in Kanubhai M.Patel (HUF) was factually distinguishable and did not apply to the present case. The court accepted the business post arrangement and the Despatch Register entries, confirming that the notice was dispatched on 31.03.2015. Therefore, the notice was held to be within the limitation period, and the petitioner's first contention was rejected. 2. Validity of Reopening Assessment: The petitioner contended that the reopening of the assessment was based on a change of opinion and lacked any allegation of suppression. The petitioner referred to the original assessment order dated 30.12.2011, which had already considered the disallowance under Section 40(a)(i) of the Act. The petitioner argued that the reopening was based on statements recorded in 2011, prior to the finalization of the original assessment, and hence, there was no new ground for reopening. The respondent argued that the reopening was not based on disallowance under Section 40(a)(i) but on an enquiry conducted under Section 131 of the Act in 2011. The respondent received the enquiry report in 2013, and the reopening was based on the materials collected during this enquiry. The respondent emphasized that the reasons for reopening were not a change of opinion but due to the assessee's failure to provide details, as evidenced by the recorded statements. The court referred to the Supreme Court's decision in GKN Driveshafts (India) Ltd., which outlined the procedure for challenging reassessment jurisdiction. The court noted that the petitioner should have submitted objections to the reopening reasons, as required by the GKN Driveshafts procedure, before approaching the court. The court examined the reasons recorded for reopening and found that they were not limited to disallowance under Section 40(a)(i) but included statements from the petitioner's officers. The court concluded that the reopening was not prima facie a change of opinion and that the petitioner should follow the procedure laid down in GKN Driveshafts. Conclusion: The writ petition was dismissed, and the petitioner was granted 15 days to submit objections to the reopening reasons. The respondent was directed to pass a speaking order on merits and in accordance with the law. The court emphasized that the impugned notice was not barred by limitation and that the petitioner should comply with the procedural directives issued in GKN Driveshafts. No costs were awarded, and connected miscellaneous petitions were closed.
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