2021 (11) TMI 571 - HC - Income Tax

Reopening of assessment u/s 147 - eligible reasons to believe - maintainability of the petition on the ground of existence of an alternative remedy - HELD THAT - A complete machinery having been provided under the Act for reassessment and for obtaining relief in respect of impugned order passed by the respondent, the petitioner Assessee could not be permitted to abandon the said remedy and to invoke the jurisdiction of this Court under Article 226 of the Constitution of India. Though it is sought to be pointed out by Mr. Patel that the adjournment application submitted by him was not considered by the respondent before passing the impugned order of reassessment, the same cannot be accepted at this juncture, in view of the contention raised by the respondent in the affidavit-in-reply that the said request for adjournment was received by the office of the respondent on 14.10.2019 when the impugned order was already passed. Even if the said request was not considered by the respondent, the same could be treated at the most as an irregularity which would not warrant interference of this Court for setting aside the assessment order, more particularly, when an efficacious and alternative statutory remedy is provided under the Act. Since we are not inclined to entertain the petition on the ground of existence of alternative remedy, as such we need not go into the merits of the petition. Eligible reasons to believe - AO has power to reopen if there is tangible material to believe that there was an escapement of income from assessment and that when such material has a live link with the formation of the belief. In the instant case, as stated by the respondent in the affidavit-in- reply, the petitioner had not deducted the TDS as detailed in Annexure 6 to form 3CD and therefore, the same was not taken into consideration by the Assessing Officer while passing the order under Section 143(3) of the Act. When the said material was not considered at the time of original assessment on 30.12.2016, the consideration of the same by the respondent could not be said to be a change of opinion or review of earlier order. - Decided against assessee.

Issues Involved:
1. Maintainability of the petition under Article 226 due to the existence of an alternative remedy.
2. Legality of reopening the assessment under Section 148 of the Income Tax Act, 1961.
3. Alleged violation of principles of natural justice by not considering the petitioner's request for adjournment.
4. Whether the reopening of the assessment was based on a mere change of opinion.

Detailed Analysis:

1. Maintainability of the Petition under Article 226:
The court emphasized that when a statutory alternative remedy is available, the courts should be loathe in entertaining petitions under Article 226 of the Constitution of India. The Income Tax Act provides a complete machinery to challenge an order of assessment, and the petitioner should have exhausted this remedy by filing an appeal. The court cited several precedents, including the Supreme Court's decision in *Commissioner of Income-Tax and Others v. Chhabil Dass Agarwal*, which held that the High Court should not entertain writ petitions if an adequate and efficacious alternative remedy is available, unless exceptional circumstances warrant such interference.

2. Legality of Reopening the Assessment under Section 148:
The petitioner argued that the reopening of the assessment was impermissible as it was based on a mere change of opinion, citing the Supreme Court's decision in *Commissioner of Income-Tax v. Kelvinator India Limited and Others*. The court noted that post-1st April 1989, the power to reopen assessments is much wider, provided there is "tangible material" indicating escapement of income. In this case, the respondent contended that the petitioner had not fully disclosed material facts, specifically the non-deduction of TDS as detailed in Annexure 6 to form 3CD, which was not considered in the original assessment. The court found that this constituted tangible material justifying the reopening of the assessment.

3. Alleged Violation of Principles of Natural Justice:
The petitioner claimed that the reassessment order was passed without considering their request for adjournment, thus violating the principles of natural justice. The court acknowledged this claim but noted that the respondent contended the adjournment request was received after the impugned order was passed. The court held that even if the request was not considered, it would constitute an irregularity rather than a violation warranting the setting aside of the assessment order, especially given the availability of an alternative statutory remedy.

4. Whether the Reopening of the Assessment was Based on a Mere Change of Opinion:
The petitioner argued that the reopening was based on a mere change of opinion, which is impermissible. The court reiterated the Supreme Court's stance that the Assessing Officer has the power to reopen assessments if there is tangible material indicating escapement of income, and this material must have a live link with the formation of the belief. In this case, the non-consideration of TDS details in the original assessment constituted new tangible material, and therefore, the reopening was not based on a mere change of opinion.

Conclusion:
The court dismissed the petition, stating that the petitioner should have availed the alternative remedy provided under the Income Tax Act. The court also found that the reopening of the assessment was justified based on tangible material and was not merely a change of opinion. The alleged procedural irregularity regarding the adjournment request did not warrant setting aside the reassessment order.

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