2022 (10) TMI 316 - HC - Income Tax

Reopening of assessment u/s 147 - addition u/s 68 - payment made towards purchase of edible oil - HELD THAT - Cash deposit which has been assessed in the hands of the appellant alleging that R.Srinivasan who had deposited the money, did not have any means to do so, has been simultaneously considered by the first respondent in the assessment order passed in the case of the said R.Srinivasan, wherein, the said sum was accepted to the effect that a sum relates to payment made towards purchase of edible oil and the balance sum was treated as unexplained investment of R.Srinivasan and assessed in his hands. Whereas, the first respondent treated the entire sum as unaccounted income in the hands of the appellant and levied tax for the same, by the order impugned in the writ petition, which is illegal and arbitrary. When the same was brought to the notice of the writ court, the learned Judge erred in considering the same and dismissing the writ petition, by relegating the appellant to file statutory appeal before the appellate authority. Such an argument advanced on the side of the appellant, cannot be countenanced by this court, as the same involves factual aspects of the case, which have to be determined by the appellate authorities, after analysing the material evidence produced before the same. The learned Judge, upon hearing the parties, has correctly opined that 'any error has been committed or mistake is committed by the assessing authority in considering such reply given by the appellant is a minute factual details, which cannot be gone into by this court under Article 226 of the Constitution, because if there is any procedural violation of principles of natural justice or for want of jurisdiction, then only, the extraordinary jurisdiction of this court become invokable, challenging the assessment order directly before this court and in respect of other cases, the assessee has to go before the Appellate Authority to file quantum appeal' and ultimately, dismissed the writ petition by the order impugned herein, which does not call for any interference at the hands of this court. The learned Senior counsel for the appellant would appeal to this court that the time granted by the learned Judge for filing the statutory appeal has already expired and hence, the same may be extended, for which, there is no serious objection on the side of the respondent authorities. This Court extends the time for filing a statutory appeal by the appellant by two weeks from the date of receipt of a copy of this judgment.

Summary

Issues:
1. Reassessment proceedings based on alleged unexplained income.
2. Dismissal of writ petition and direction to file statutory appeal.
3. Treatment of cash deposit as unexplained income under Section 68 of the Income Tax Act.

Issue 1: Reassessment proceedings based on alleged unexplained income
The appellant, engaged in the manufacture of edible oils, filed a return of income for the assessment year 2013-14. The respondent authority issued a notice under Section 148 of the Income Tax Act, stating that income chargeable to tax had escaped assessment. Subsequently, notices were issued for scrutiny, and the assessing officer passed an order treating a payment received as unexplained income under Section 68 of the Act. The appellant challenged this order in a writ petition, arguing that the reassessment was not based on valid grounds. The assessing officer reopened the assessment based on cash deposits made by another individual, which were later transferred to the appellant. The appellant contended that the amount in question was not unaccounted money and should not be treated as such. The writ petition was dismissed, prompting the appellant to file a writ appeal.

Issue 2: Dismissal of writ petition and direction to file statutory appeal
The appellant's senior counsel argued that the reassessment was flawed as the assessing officer did not consider the explanations and supporting documents provided by the appellant. The counsel contended that the writ petition was dismissed without proper consideration of the facts and circumstances of the case. On the other hand, the senior panel counsel for the respondents supported the decision of the learned Judge, stating that the contentions raised by the appellant were factual and should be addressed in a statutory appeal rather than a writ petition. The High Court heard arguments from both sides and extended the time for filing a statutory appeal by two weeks, ultimately disposing of the writ appeal.

Issue 3: Treatment of cash deposit as unexplained income under Section 68 of the Income Tax Act
The assessing officer treated a cash deposit made by another individual, which was subsequently transferred to the appellant, as unexplained income under Section 68 of the Act. The appellant argued that the assessing officer erred in considering the entire amount as unaccounted income, as a portion of the deposit was for the purchase of edible oil. The appellant contended that the assessment order was arbitrary and illegal. However, the High Court held that such factual disputes should be addressed by the appellate authorities, and the writ court could not delve into minute details under Article 226 of the Constitution. The court upheld the dismissal of the writ petition, emphasizing that errors in assessment details should be addressed through the appellate process rather than in a writ petition.