2019 (10) TMI 476 - HC - Income Tax

Reopening on the basis of the statement of a tainted person - notice clearly beyond a period of four years - As emphatically argued that in the case of the petitioner there was a search pursuant to which proceedings under section 153A came to be initiated and assessment came to be made under section 143(3) read with section 153A of the Act. HELD THAT - As submitted that once an assessment is made under section 153A of the Act it is not permissible for the Assessing Officer to reopen such assessment under section 147 of the Act. In support of such submission reliance was placed upon the decision of Ramballabh Gupta v. Assistant Commissioner of Income Tax Inspector Indore 2005 (8) TMI 99 - MADHYA PRADESH HIGH COURT as held that the only fetter put on the power of the Assessing Officer in taking recourse to section 148 is that it cannot be issued in relation to those six assessment years as defined in section 153A of the Act. Having regard to the submissions advanced by the learned counsel for the petitioner issue Notice returnable on 18.11.2019. By way of ad-interim relief further proceedings pursuant to the impugned notice dated 28.03.2019 issued under section 148 of the Act for the assessment year 2013-14 are hereby stayed.

Summary

Issues: Reopening of assessment based on statement of a tainted person, Jurisdiction of Assessing Officer beyond the statutory period, Permissibility of reopening assessment made under section 153A of the Income Tax Act, 1961

In the judgment delivered by the Gujarat High Court, the petitioner challenged the reopening of assessment based on the statement of a tainted person. The Senior Advocate for the petitioner argued that relying solely on such a statement does not constitute tangible material for reopening the assessment. Furthermore, it was contended that the notice issued to reopen the assessment for the year 2013-14 was beyond the statutory period of four years from the end of the relevant assessment year. The petitioner emphasized that without any failure to disclose material facts, the Assessing Officer lacked the authority of law to assume jurisdiction in this case.

The petitioner also raised a crucial legal point regarding the permissibility of reopening an assessment made under section 153A of the Income Tax Act, 1961. It was argued that after an assessment is conducted under section 153A, the Assessing Officer is not allowed to reopen such assessment under section 147 of the Act. The petitioner cited a decision of the Madhya Pradesh High Court in support of this argument, highlighting that the power of the Assessing Officer to issue a notice under section 148 is restricted in relation to the assessment years defined in section 153A of the Act.

In response to the submissions made by the petitioner's counsel, the Gujarat High Court issued a notice returnable on a specified date. Additionally, as an ad-interim relief, the court stayed further proceedings related to the impugned notice issued under section 148 of the Income Tax Act for the assessment year 2013-14. The court permitted direct service and scheduled the case to be heard along with other related Special Civil Applications.

This judgment underscores the importance of adhering to statutory limitations on the jurisdiction of the Assessing Officer, the necessity of tangible material for reopening assessments, and the restrictions on reopening assessments made under specific sections of the Income Tax Act.