2020 (5) TMI 331 - HC - Income Tax

Reopening of assessment u/s 147 - Period of limitation - HELD THAT - Last date for invoking Section 148 for the Assessment Year 2008-09 express only on 31/03.2015 and for the AY 2009-10 on 31.03.2016 since the impugned notice are dated 17.03.2013 they are well within time. Had there been a finding given on merits that there was no case for escaped assessment for the respective assessment years in response to Section 148 notice issued for the 1st time on 7.3.2011 it can be said that the 2nd notice dated 17.5.2015 u/s 148 would have been barred and therefore there were no reasons for invoking Section 148 again. Respondents are not precluded from invoking Section 148 for the 2nd time as the issue as to whether income had escaped assessment or not was decided by the CIT (Appeals) on merits. As pointed out that there a mandatory failure by the and further reassessment orders dated 31.12.2011 were set aside. Notices were not only in time but also in accordance with law. Therefore the consequential impugned orders passed by the respondent are sustainable and cannot be quashed. Therefore these writ petitions are liable to be dismissed. Dispute pertains to the assessment year 2008-09 and assessment year 2009-10. The re-assessment proceedings have been considerably delayed partly due to the lapse on the part of the respondents on an earlier occasion which resulted in the orders of the Commissioner of Income Tax (Appeals) on 12.11.2013 and partly on account of the petitioner due to pendency of the present writ petitions. Respondent is directed to complete the proceedings within a period of 3 months from the date of receipt of a copy of this order in accordance with law.

Issues Involved:
1. Validity of the impugned notices issued under Section 148 of the Income Tax Act, 1961.
2. Legality of the consequential orders rejecting the petitioner’s objections to the impugned notices.
3. Compliance with the mandatory requirement of Section 143(2) of the Income Tax Act, 1961.
4. Whether the reassessment for the second time constitutes a change of opinion.
5. Applicability of the limitation period under Section 149 of the Income Tax Act, 1961.

Detailed Analysis:

1. Validity of the Impugned Notices Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the impugned notices dated 17.3.2015 issued under Section 148 of the Income Tax Act, 1961, for the assessment years 2008-09 and 2009-10. The petitioner argued that there were no new materials available for invoking Section 148 for the second time, making the notices invalid. The respondent contended that the notices were issued in accordance with the law and were within the prescribed limitation period under Section 149, thus valid.

2. Legality of the Consequential Orders Rejecting the Petitioner’s Objections:
The petitioner’s objections to the impugned notices were rejected by the respondent through orders dated 16.7.2015. The petitioner argued that the reassessment was barred due to the absence of tangible material and constituted a mere change of opinion. The respondent maintained that the rejection of objections was lawful as the reassessment was based on the petitioner’s failure to disclose fully and truly all material facts necessary for assessment.

3. Compliance with the Mandatory Requirement of Section 143(2) of the Income Tax Act, 1961:
The petitioner’s initial reassessment orders dated 31.12.2011 were set aside by the Commissioner of Income Tax (Appeals) due to non-compliance with the mandatory requirement of Section 143(2). The reassessment was completed under Section 144 without issuing a notice under Section 143(2), leading to the setting aside of the orders on technical grounds, not on merits.

4. Whether the Reassessment for the Second Time Constitutes a Change of Opinion:
The petitioner argued that the reassessment for the second time, based on the same facts and AIR information, amounted to a change of opinion, which is impermissible. The respondent countered that the reassessment was justified due to the petitioner’s failure to disclose material facts initially, and the notices were issued within the permissible time frame.

5. Applicability of the Limitation Period Under Section 149 of the Income Tax Act, 1961:
The validity of the notices was also scrutinized in light of the limitation period prescribed under Section 149. The court noted that the last date for invoking Section 148 for the assessment years 2008-09 and 2009-10 was 31.03.2015 and 31.03.2016, respectively. Since the impugned notices were dated 17.03.2015, they were within the time limit.

Conclusion:
The court concluded that the respondent was not precluded from invoking Section 148 for the second time as the reassessment orders were set aside on technical grounds, not on merits. The impugned notices were within the limitation period and in accordance with the law. Consequently, the writ petitions were dismissed, and the respondent was directed to complete the proceedings within three months. The court emphasized that the reassessment proceedings had been delayed due to lapses on both the respondent’s and the petitioner’s parts.

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