9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2017 (4) TMI 188 - HC - Income TaxValidity of reopening of assessment - Held that - Having regard to the contents of the notice for AY 2003-04, the court is unable to agree with the findings of the ITAT. It constitutes reference to tangible material outside the record, i.e. information based upon the investigation of the Commissioner of Central Excise with respect to the purchases made by the assesses. However, as far as the second issue is concerned, the Court is of the opinion that even the rectified order does not address the issues squarely. Thus, arguendo such arguments could be validly raised. At the same time, the court notices that for both AYs 2004-05 and 2005-06, the note discloses the source of the information, i.e. DRI Local Unit at Jaipur, sending information based upon the Commissioner of Central Excise s investigations. To require the Revenue to disclose further details regarding the nature of documents or contents thereof would be virtually rewriting the conditions in section 147. After all, Section 147 merely authorises the issuance of notice to reopen with conditions. If the Court were to dictate the manner and contents of what is to be written, the statutory conditions would be added as it were. In this context, it needs to be emphasized that the court would interpret the statute as they stand in their own terms, but at the same time being conscious of the rights of the citizens. So viewed, Kelvinator (2010 (1) TMI 11 - SUPREME COURT OF INDIA) strikes just balance. To add further conditions to the nature of discussion/reasons that the officer authorising the notice would have to discuss in the note or decision would be beyond the purview of the Courts and would not be justified. For the above reasons, this Court is of the opinion that the impugned order and the consequential order of 05.01.17 cannot be sustained. They are accordingly set aside. The question of law urged by the Revenue is answered in its favour.
Issues:
1. Validity of reassessment orders for AYs 2003-04, 2004-05, and 2005-06. 2. Sufficiency of reasons recorded for reopening completed assessments. 3. Authorization requirement under Sections 147/148 for issuing reassessment notices. 4. Interpretation of "reasons to believe" and conditions for valid reassessment proceedings. 5. Application of mind by higher authority while granting permission for reassessment. Issue 1: Validity of Reassessment Orders The Revenue challenged the ITAT's decision that the reassessment orders for the mentioned assessment years were unwarranted. The ITAT held that the reasons recorded were insufficient for valid reassessment proceedings, citing precedents like Haryana Acrylic Manufacturing Co. v. CIT and WEL Intertrade Pvt. Ltd. v. ITO. The CIT(A) had granted relief to the assessee, leading to the Revenue's appeal to the ITAT. Issue 2: Sufficiency of Reasons for Reopening The Court noted that the reassessment notices for AYs 2004-05 and 2005-06 were not issued under the proviso to Section 147(1) but completed under Section 143(3). The Revenue argued that the reasons recorded, such as information on bogus purchases, constituted tangible material indicating income escapement. However, the Court emphasized the need for valid reasons beyond mere incantation to issue a notice under Sections 147/148. Issue 3: Authorization Requirement The contention was raised regarding the authorization requirement under Sections 147/148 for issuing reassessment notices. The Court highlighted the importance of the higher authority's application of mind while granting permission, as a safeguard against arbitrary exercise of powers by the Assessing Officer. Issue 4: Interpretation of "Reasons to Believe" The Court analyzed the nature of power to reopen assessments, emphasizing the need for tangible material or information indicating income escapement, as per the judgment in CIT v. Kelvinator of India. The Court found the reasons for AY 2003-04 referred to tangible material outside the record, justifying the reassessment. Issue 5: Application of Mind by Higher Authority The Court observed a lack of proper application of mind by the higher authority in granting permission for reassessment, leading to an invalid notice under Section 147. The ITAT's relief lacked recorded reasons, prompting a rectification order. The Court emphasized interpreting statutory conditions as they stand, balancing statutory requirements and citizens' rights. In conclusion, the Court set aside the impugned order and directed the parties to appear before the ITAT for further proceedings, emphasizing the need for valid reasons and proper authorization in reassessment proceedings.
|
