2021 (9) TMI 1182 - HC - Income Tax

Reopening of assessment u/s 147 - whether the assumption of jurisdiction by the Assessing Officer invoking Section 147 of the Act is in accordance with law? - HELD THAT - What is required to be seen in the said writ petition is as to whether the alleged ground, on which, the reopening was done, was based on a new material, was there a sale transaction and more particularly when the assessee was not the owner of the property. The so called material, which was unearthed during search proceedings conducted in the premises of the Finance Manager of a company, has also been furnished to the assessee and the notings therein need to be considered as to whether any on money was received by the assessee. Unless these are decided and a finding is rendered, it cannot be held as to whether the reopening is valid or not. Since such an exercise has not been done by the learned Single Judge, we are inclined to interfere with the impugned order. This is more so unless and until such a finding is rendered, the Appellate Court cannot test the correctness of the findings. Therefore, in the absence of any such finding, the Appellate Court cannot be expected to convert itself into the Court of first instance and decide the writ petition on merits. Hence, while setting aside the impugned order passed in the said writ petition, we are inclined to restore the said writ petition to the file of the learned Single Judge to be heard and decided on merits - Writ appeal is allowed.

Summary

Issues involved:
Challenge to notice under Section 148 of the Income Tax Act for reopening assessment.

Analysis:
The appellant filed a writ petition to challenge a notice issued by the third respondent under Section 148 of the Income Tax Act, 1961, for reopening the assessment for the year 2011-12. The High Court noted that the grounds raised by the appellant challenging the reopening of assessment were not addressed by the learned Single Judge. The issue at hand was whether the assumption of jurisdiction by the Assessing Officer invoking Section 147 of the Act was in accordance with the law. The appellant contended that the reopening was a clear case of change of opinion, emphasizing that all material facts were already submitted during the original assessment under Section 143(3) of the Act. The Assessing Officer claimed to have discovered new information during search proceedings, alleging that the appellant received on money in a transaction. However, the appellant argued that this was not new information as the original assessment already covered the case, stating that the sale transaction did not materialize as expected.

The High Court highlighted the need for a detailed examination of whether the grounds for reopening the assessment were based on new material and if there was a valid sale transaction involved, especially considering that the appellant was not the property owner in question. It was crucial to evaluate the information unearthed during search proceedings and determine if any on money was received by the appellant. Since the Single Judge did not address these critical aspects and render a finding, the High Court decided to set aside the impugned order and restore the writ petition to be heard and decided on its merits by the Single Judge. The High Court emphasized that without such findings, the Appellate Court could not assess the correctness of the conclusions, highlighting the importance of a thorough examination before making a decision on the validity of the reopening of the assessment.