2023 (3) TMI 267 - HC - Income Tax

Reopening of assessment u/s 147 - Rejection of objection - huge amount of cash transaction in Bank of India - HELD THAT - The impugned proceedings suffers from error apparent on the face of the record. Reliance placed on Anshul Jain's 2022 (10) TMI 3 - SC ORDER case by the learned Senior Standing Counsel appearing for the Respondent is misconceived. The above judgment was a case were it was found as a matter of fact that the objections were considered. However, in the instant case this Court finds that objection have been rejected without even applying its mind to factors that are relevant and more importantly the facts stated in the counter would clearly show that the reasons furnished for reassessment suffers from error apparent on the face of the record inasmuch as admittedly reference was made to the wrong Bank and Account Number, while proposing reassessment on the basis of alleged deposits to the said account thereby vitiating the entire proceeding under Section 147. Yet another reason which would warrant interference is the fact that the Respondent has in its counter set up a case rather material particulars, different from the reasons given for reassessment, which is impermissible. It is well settled that public orders must be tested on the basis of what is stated in the order and subsequent counter affidavit cannot improve the order as held by the Hon'ble Supreme Court in the following decisions - Commissioner of Police v. Gordhandas Bhanji . 1951 (11) TMI 17 - SUPREME COURT and Mohinder Singh Gill v. Chief Election Commr. 1977 (12) TMI 138 - SUPREME COURT Applying the above decisions to the present case, this Court is inclined to set aside the impugned order, on the ground that the reasons furnished suffers from error apparent nor can the counter be called in aid to improve the impugned order. However, this would not preclude the Respondent from exercising the power of assessment, if there are reasons / circumstances which would warrant such exercise.

Summary

Issues:
Challenging notice and order relating to reopening of assessment under Section 147 of the Income Tax Act, 1961 for the assessment year 2015-2016.

Analysis:
The writ petition challenges the notice and order related to the reopening of assessment under Section 147 of the Income Tax Act, 1961 for the assessment year 2015-2016. The primary grounds of challenge include the assertion that the proceedings are a mere change of opinion and beyond the permissible four-year period for invoking Section 147. The petitioner, a partnership firm, had filed its return of income for the said assessment year, which was accepted after scrutiny under Section 143(3) of the Act. Subsequently, a notice under Section 148 was issued, citing substantial cash transactions in a bank account allegedly belonging to the petitioner. The petitioner denied having any such account and provided evidence to support this claim. The respondent's counter mentioned a different account holder and transactions, raising doubts about the accuracy of the reasons for reassessment. The court found errors apparent on the face of the record, noting discrepancies in the reasons furnished for reassessment and the subsequent counter filed. The court cited legal precedents emphasizing that public orders must be judged based on what is stated in the order itself. Consequently, the impugned order rejecting the objection was set aside, allowing the respondent to initiate proceedings again if warranted, but emphasizing compliance with the Income Tax Act's procedures.

In conclusion, the court disposed of the writ petition without costs, allowing the petitioner to raise all available grounds in case of a re-initiation of assessment proceedings. The judgment highlights the importance of accurate and valid reasons for reassessment under Section 147 of the Income Tax Act, emphasizing the need for procedural compliance and objective assessment based on the information provided during the proceedings.