2019 (11) TMI 312 - HC - Income Tax

Reopening of assessment u/s 147 - validity of reasons to believe - HELD THAT - Under section 148, if the assessing officer has reasons to believe that income has escaped assessment he can issue a notice for passing order under Section 147. The sufficiency of those reasons cannot be gone into by this Court. If relevant germane reasons exist and have been communicated to the assessee that is enough for reassessment proceedings to hold the field. In this case, during scrutiny the appellant was further asked to furnish the details of the invoices for the expenses incurred vide letters dated 31.07.2019 However, the appellant failed to furnish the same. Therefore, it would be improper to hold that the respondent Income Tax Officer had erred in invoking the reassessment jurisdiction vested with him under Section 147/148 in the facts and circumstances case. Only when there are no grounds at all for invoking the reassessment jurisdiction under Section 148 of the Act, the notices can be challenged. The appellant has himself replied and participated in the impugned proceedings. The reasons were also communicated to the appellant to which the appellant has also replied. Therefore, it is not open for the appellant to question the same to scuttle the proceedings initiated under the Act. Therefore, we find no reasons to interfere with the order of the learned Single Judge while dismissing the above Writ Appeals.

Summary

Issues:
Dismissal of Writ Petitions against Notices under Section 148 of the Income Tax Act, 1961 for Assessment Years 2012-13 to 2017-2018.

Analysis:
The High Court of Madras delivered a common judgment disposing of six Writ Appeals challenging a common order passed by the Learned Single Judge against Notices issued under Section 148 of the Income Tax Act, 1961. The impugned order dismissed the Writ Petitions, emphasizing that last-minute petitions could disrupt the assessment process under fiscal law statutes. The Court noted that the petitioner had ample time to approach the Court earlier and raised concerns about the timing of the petitions. The Court directed that if the petitioner sought an adjournment and provided necessary documents, the assessment process would proceed impartially. The dismissal of the Writ Petitions led to the filing of the present Writ Appeals for review.

The appellant, a film actor, argued that the Notices issued for the Assessment Years were contrary to established legal principles as they lacked reasons for invoking Section 148 of the Income Tax Act, 1961. The appellant requested the Income Tax Officer to provide reasons for reopening the assessments to enable filing objections. The respondent later furnished reasons for the reopening, citing discrepancies in claimed expenses during a survey under Section 133A of the Act. Despite requests for details, the appellant allegedly failed to provide necessary documents, leading to the Notices under challenge.

The appellant relied on legal precedents, including the decision in CIT vs Kelvinator of India, to argue that tangible material must exist to reopen assessments under Section 147. Mere suspicion was deemed insufficient, and the Notices were criticized for not explicitly stating income escapement. The appellant contended that non-furnishing of information did not automatically imply income escapement, and assessments could have been conducted under Section 143(3) after scrutiny.

In response, the revenue's counsel defended the reassessment proceedings as well-reasoned and urged the dismissal of the Writ Appeals. The Court reviewed the records and found that all six Notices under Section 148 were similar in content, with variations in dates and assessment years. The Court highlighted that relevant reasons for reassessment had been communicated to the appellant, and failure to provide requested details further justified invoking the reassessment jurisdiction under Section 147/148.

Ultimately, the Court held that the Income Tax Officer had not erred in initiating reassessment proceedings, as germane reasons were communicated to the appellant, who participated in the process. The Court emphasized that challenging reassessment required a complete absence of grounds, which was not the case here. The appellant's participation and responses precluded questioning the validity of the reassessment, leading to the dismissal of the Writ Appeals. Consequently, all Writ Appeals were dismissed, and no costs were awarded, with connected Miscellaneous Petitions closed.