2009 (7) TMI 95 - HC - Income Tax

Reassessment held that - the provisions of section 150(1) of the Act opens with a non obstante clause and overrides every other provision of the Act including sections 147, 149, 151, etc. It is thus evident that if circumstances exist so as to justify initiation of proceedings under section 150(1) of the Act, then other circumstances indicated in section 147 and the allied provisions of the Act are not required to be complied with - It is evident that certain items have been deleted from the assessed income of Sanjiv Kumar and have been directed to be considered in the petitioner s case. This is to give effect to the appellate order of an authority contemplated by section 150(1) of the Act. - it is open to the authorities to reopen the concluded assessment proceedings

Issues Involved:
1. Validity of the notice issued under Section 148 of the Income-tax Act, 1961.
2. Applicability of Section 150(1) of the Income-tax Act, 1961.
3. Bar of limitation under Section 149(1)(b) of the Income-tax Act, 1961.
4. Procedural safeguards before issuing notice under Section 148 of the Income-tax Act, 1961.
5. Maintainability of the writ petition.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income-tax Act, 1961:
The petitioner challenged the notice dated June 27, 2008, issued under Section 148, which initiated reassessment proceedings for the assessment year 2000-01. The petitioner argued that the notice was invalid due to procedural lapses and limitations. The court noted that the power to reopen a concluded assessment is subject to certain conditions, including the existence of reasons to believe that income has escaped assessment.

2. Applicability of Section 150(1) of the Income-tax Act, 1961:
The court examined whether the reassessment proceedings were justified under Section 150(1), which allows reopening of assessments to give effect to any finding or direction in an appellate order. The court referred to the appellate order against Sanjiv Kumar, a director of the petitioner company, which directed certain additions to be considered in the petitioner's case. The court concluded that the case fell within the purview of Section 150(1), which overrides other provisions such as Sections 147, 149, and 151.

3. Bar of Limitation Under Section 149(1)(b) of the Income-tax Act, 1961:
The petitioner contended that the notice was barred by the limitation period prescribed under Section 149(1)(b), which allows reopening within six years. The court clarified that Section 150(1) contains a non obstante clause that overrides the limitation period in Section 149 when reopening is to give effect to an appellate order. Thus, the limitation bar did not apply in this case.

4. Procedural Safeguards Before Issuing Notice Under Section 148 of the Income-tax Act, 1961:
The petitioner argued that the prescribed safeguards, such as recording reasons under Section 147(1) and obtaining satisfaction of the Joint Commissioner under Section 151(2), were not followed. The court held that Section 150(1) overrides these procedural requirements, as it allows reopening to give effect to appellate orders without adhering to the conditions in Sections 147 and 151.

5. Maintainability of the Writ Petition:
The respondents argued that the writ petition was premature and not maintainable. The court noted that the petitioner had the option to withdraw the petition and appear before the Assessing Officer but chose to proceed with the writ petition. The court referenced the Supreme Court judgment in Whirlpool Corporation v. Registrar of Trade Marks, affirming the maintainability of the writ petition.

Conclusion:
The court dismissed both writ petitions, holding that the reassessment proceedings were valid under Section 150(1) of the Income-tax Act, 1961. The court emphasized that the non obstante clause in Section 150(1) overrides other provisions, including the limitation period and procedural safeguards. The Assessing Officer was directed to proceed with the reassessment in accordance with the notices issued. The court clarified that any misdescription of the applicable legal provision would not affect the merits of the proceedings.

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