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2018 (9) TMI 352 - HC - Income TaxReopening of assessment - eligibility of reason to believe - escaped assessment amounts to, or is likely to be ₹ 1,00,000/- or more - Held that - The reasons assigned by the respondent No.1 for invoking Section 147 of the Act do not specify that the escaped assessment amounts to or is likely to amount to ₹ 1,00,000/- or more for the relevant assessment year as evinced from the reasons placed on record by the petitioner before the Court. Section 151(1) provides that no notice shall be issued under Section 148 of the Act by an Assessing Officer, after the expiry of a period of four years from the end of the relevant assessment year, unless the Principal Chief Commissioner of Chief Commissioner or Principal Commissioner or Commissioner is satisfied, on the reasons recorded by the Assessing Officer, that it is a fit case for the issue of such notice. It is mandatory for the Assessing Officer in his reasons recorded, to state that the escaped assessment amounts to, or is likely to be ₹ 1,00,000/- or more, to bring it within the ambit of Section 149(1)(b) of the Act. The mandatory requirement of Section 149(1)(b) of the Act is not complied with. Hence, the assumption of jurisdiction by respondent No.1 under Section 147 of the Act is untenable - Decided in favour of assessee
Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961. 2. Legitimacy of the order passed under Section 152 of the Act. 3. Validity of the consequential notice issued under Section 143(2) of the Act. 4. Compliance with statutory requirements under Section 149(1)(b) of the Act. 5. Applicability of amendments introduced by the Finance Bill 2012 to the assessment year 2006-07. Detailed Analysis: 1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961: The petitioner challenged the notice dated 28.3.2013 issued under Section 148 of the Act, which initiated re-assessment proceedings on the grounds that the petitioner’s income had escaped assessment under Section 147. The petitioner argued that the notice did not meet the statutory requirements, specifically under Section 149(1)(b), which mandates that if more than four but less than six years have elapsed since the end of the relevant assessment year, the escaped income must amount to or be likely to amount to one lakh rupees or more. The court found that the reasons recorded by the Assessing Officer did not specify that the escaped income met this threshold, thus invalidating the notice. 2. Legitimacy of the order passed under Section 152 of the Act: The petitioner also contested the order dated 12.03.2014 passed under Section 152 of the Act. Since the court found the foundational notice under Section 148 to be invalid due to non-compliance with Section 149(1)(b), the subsequent order under Section 152 was also deemed unsustainable. 3. Validity of the consequential notice issued under Section 143(2) of the Act: The notice dated 6.2.2014 issued under Section 143(2) was a consequence of the re-assessment proceedings initiated by the invalid notice under Section 148. Given the invalidity of the initial notice, the consequential notice under Section 143(2) was also quashed. 4. Compliance with statutory requirements under Section 149(1)(b) of the Act: The court emphasized the importance of adhering to the statutory requirements under Section 149(1)(b), which necessitates that the reasons for re-assessment must clearly state that the escaped income amounts to or is likely to amount to one lakh rupees or more if the time elapsed is between four and six years. The failure to meet this requirement rendered the re-assessment proceedings invalid. 5. Applicability of amendments introduced by the Finance Bill 2012 to the assessment year 2006-07: The petitioner argued that the amendments brought by the Finance Bill 2012, which introduced the concept of deemed escapement of income for international transactions not reported under Section 92E, were not applicable to the assessment year 2006-07. The court noted that these amendments came into effect from 1.7.2012 and were not applicable retrospectively to the assessment year in question. Therefore, the initiation of proceedings under Section 147 based on these amendments was not justified. Conclusion: The court concluded that the initiation of re-assessment proceedings under Section 147 was not sustainable due to non-compliance with Section 149(1)(b). Consequently, the notice under Section 148, the order under Section 152, and the notice under Section 143(2) were all quashed. The court did not find it necessary to adjudicate on other grounds raised by the petitioner, as the main ground of assuming jurisdiction under Section 147 was held to be invalid. Order: 1. The writ petition was allowed. 2. The notice dated 28.03.2013 issued under Section 148, the order dated 12.03.2014, and the notice dated 06.02.2014 were quashed. 3. No order as to costs.
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