2017 (1) TMI 1004 - HC - Income Tax

Validity of reopening of assessment - claiming of excessive loss - Held that - We find that the communication dated 11th March, 2016 received by the Assessing Officer along with the extract of the survey report as relevant to the Petitioner s case was, in fact, received by the Assessing Officer. This was the material on which he formed a reasonable belief that income chargeable to tax has escaped assessment. Assessing Officer on the basis of this analysis of the data has come to a reasonable belief that income chargeable to tax has escaped Assessment. This view/ belief on the part of the Assessing Officer is his subjective view which is not shown to be perverse. Therefore, the challenge to the above belief on the basis of the data could be made by the Assessing Officer at the time of hearing before the authorities under the Act. Thus, establishing that no amounts are to be added to declared the income. Absence of income chargeable to tax escaping Assessment we find that it is undisputed position that no Assessment Order under Section 143(3) of the Act was passed. This is admittedly only a case of an intimation under Section 143(1) of the Act. Therefore, ExplanationII (b) of Section 147 of the Act would apply and it would be a deemed that income chargeable to tax has escaped Assessment as the examination by the Assessing Officer of the information received from the ADIT (Inv.) Ahmedabad, reveals claiming of excessive loss. We are not inclined to entertain the Petition, as the Petitioner can raise these very issues before the authorities under the Act. We are satisfied that the Assessing Officer on the basis of material available before him and the reasons as recorded thereon had reasonable belief to conclude that income chargeable to tax has escaped assessment.

Issues:
1. Challenge to notice under Section 148 of Income Tax Act, 1961 seeking to reopen Assessment for the Assessment Year 2009-10.
2. Jurisdictional validity of the impugned notice based on reasons recorded.
3. Validity of reasons for reopening the assessment.
4. Dispute regarding the material received by the Assessing Officer.
5. Interpretation of data and formation of reasonable belief by the Assessing Officer.
6. Application of Explanation II (b) to Section 147 of the Act.
7. Authority of the Assessing Officer to reopen an Assessment based on recorded reasons.

Detailed Analysis:
1. The petition challenges a notice under Section 148 of the Income Tax Act, 1961, seeking to reopen the Assessment for the Assessment Year 2009-10.
2. The jurisdictional validity of the impugned notice is questioned, primarily focusing on the reasons recorded for reopening the assessment.
3. The dispute revolves around the material received by the Assessing Officer, specifically related to a survey report and client code modification leading to alleged income escapement.
4. The Assessing Officer's formation of a reasonable belief based on the received material is contested, with arguments regarding the interpretation of data and the sufficiency of grounds for income escapement.
5. The application of Explanation II (b) to Section 147 of the Act is crucial, as it deems income to have escaped assessment in cases of understated income or excessive loss without a formal assessment under Section 143(3).
6. The judgment emphasizes the Assessing Officer's authority to reopen an assessment based on the recorded reasons, barring improvements or additions post-issuance of the notice.
7. Ultimately, the court dismisses the petition, upholding the Assessing Officer's reasonable belief that income chargeable to tax had escaped assessment, thereby validating the notice's jurisdictional aspect and the reopening of the assessment for the specified year.

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