2020 (1) TMI 695 - HC - Income Tax

Reopening of assessment u/s 147 - whether the Assistant Commissioner of Income-Tax, Visakhapatnam, before reopening the assessment under the first proviso to Section 147 of the IT Act, had got approval of the Commissioner under Section 151 of the IT Act or not? - whether the Assistant Commissioner of Income-Tax, Visakhapatnam, before reopening the assessment under the first proviso to Section 147 of the IT Act, had got approval of the Commissioner under Section 151 of the IT Act or not - HELD THAT - Admittedly, in the present case, reassessment proceedings were initiated by issuance of notice under Section 148 of IT Act and the petitioner was granted 30 days time for filing its return. If the petitioner was oversure that it was not a case of intentional escape of taxable income on nondisclosure, the petitioner would have satisfied the Assessing Authority by way of filing its return in compliance with the impugned notice but, in the present case, except filing return, the petitioner had taken all other course such as filing of objection and invoking the writ jurisdiction of this Court. If this Court interferes at the initial stage of reopening proceedings, certainly, it will amount to stay of proceedings for recovery of tax. Obviously, learned counsel for the petitioner even though had placed facts of the case, but on examination, we do not find that the present case can be termed as an exceptional case for interference at initial stage of a reopening proceedings. Even if an order is passed after reopening pursuant to the notice, dated 19.03.2019, the petitioner will have a statutory remedy as provided in the IT Act. we are of the considered opinion that the prayer sought for by the petitioner in the instant writ petition cannot be acceded to and Writ Petition may not be entertained. Accordingly, the Writ Petition stands dismissed. See AUTHORIZED OFFICER, STATE BANK OF TRAVANCORE AND ANOTHER VERSUS MATHEW K.C. 2018 (2) TMI 25 - SUPREME COURT - We are of the considered opinion that the prayer sought for by the petitioner in the instant writ petition cannot be acceded to and Writ Petition may not be entertained

Summary

Issues Involved:
1. Jurisdiction of the Assistant Commissioner of Income Tax to reopen assessment after four years.
2. Compliance with procedural requirements under Sections 147, 148, 149, and 151 of the Income Tax Act.
3. Validity of the reasons to believe that income had escaped assessment.
4. Maintainability of the writ petition in the presence of statutory remedies.

Detailed Analysis:

1. Jurisdiction of the Assistant Commissioner of Income Tax to Reopen Assessment After Four Years:
The petitioner argued that the Assistant Commissioner of Income Tax, Visakhapatnam, lacked jurisdiction to reopen the assessment after four years, as per Section 143(3) of the Income Tax Act. The petitioner contended that the notice under Section 148 and subsequent order were issued beyond the permissible time limit, making the reassessment proceedings time-barred and based on incorrect factual errors.

2. Compliance with Procedural Requirements Under Sections 147, 148, 149, and 151 of the Income Tax Act:
The petitioner asserted that the notice under Section 148 and the reasons for reopening the assessment did not comply with the mandatory procedural requirements. Specifically, the petitioner argued that:
- The reasons to believe that income had escaped assessment were not adequately detailed and were based on borrowed satisfaction from the investigation wing.
- The notice did not specify the quantum of escaped income, which is essential for obtaining sanction under Section 151 and assuming jurisdiction.
- The Assessing Officer's reasons did not state in categorical terms that income chargeable to tax had escaped assessment due to the petitioner's failure to disclose all material facts.

3. Validity of the Reasons to Believe That Income Had Escaped Assessment:
The petitioner challenged the validity of the reasons provided for reopening the assessment, arguing that they were based on incorrect assumptions. The petitioner claimed that:
- The alleged sale of shares of M/s Ecowave Infotech Limited and the receipt of ?19,53,899.55 were factually incorrect, as the petitioner had never held or sold shares of that company.
- The petitioner had declared Long Term Capital Gain (LTCG) in the return of income, contrary to the allegations in the notice.
The court examined the original record and found that the reasons for reopening the assessment were duly recorded and approved by the Commissioner, in compliance with Section 151 of the Income Tax Act.

4. Maintainability of the Writ Petition in the Presence of Statutory Remedies:
The respondent raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner had not exhausted the available statutory remedies. The court emphasized that the proper course of action for the petitioner, upon receiving a notice under Section 148, was to file a return and raise objections during the reassessment proceedings. The court cited precedents, including the Supreme Court's judgment in GKN Driveshafts (India) Limited v. ITO, which clarified that the noticee should file a return and seek reasons for the notice, and the Assessing Officer must dispose of the objections by passing a speaking order.

Conclusion:
The court concluded that the reopening of the assessment was conducted in accordance with the provisions of the Income Tax Act and that the petitioner had not demonstrated any exceptional circumstances warranting interference at the initial stage of the reassessment proceedings. The court dismissed the writ petition, emphasizing the availability of statutory remedies for the petitioner to address any grievances arising from the reassessment order.