2023 (4) TMI 957 - HC - Income Tax

Reopening of assessment u/s 147 - Maintainability / entertainability of writ petition - According to the respondents, first respondent had passed assessment order u/s 144 read with Section 147 and such draft assessment order is subject to the provisions of Section 144C - HELD THAT - An elaborate procedure is laid down in Section 144C of the Act. Assessing officer is under a mandate to forward a copy of draft order to the eligible assessee, whereafter the eligible assessee would have the opportunity to file objection. In the event objection is filed, the Dispute Resolution Panel shall issue directions to the assessing officer for his guidance to complete the assessment after considering, amongst others, the objections filed and evidence furnished by the assessee. The Dispute Resolution Panel has also the liberty to make further enquiry if it considers necessary. But before issuing such direction, the Dispute Resolution Panel shall have to provide an opportunity of hearing to the assessee if such directions are prejudicial to the interest of the assessee. As we have seen, the Dispute Resolution Panel is a high powered body comprising of three very senior officers of the Income Tax Department. The Dispute Resolution Panel is constituted by the Central Board of Direct Taxes. The eligible assessee, in this case the petitioner, has an effective remedy provided by the statute itself for ventilation of its grievance. Power of the High Court under Article 226 of the Constitution of India cannot be fettered by any statutory limitation, it being a constitutional power. The exceptions carved out are absent. Contentions raised by the first respondent that petitioner did not disclose fully and truly all material facts necessary for assessment and as a result, there is escapement of income from assessment for the assessment year 2011-2012, cannot simply be brushed aside. In such a case, it would be just and proper if the procedure prescribed under the statute is followed, in which event, petitioner would have all the opportunities and remedies to present its case. The present is not a fit case for invoking the writ jurisdiction under Article 226 of the Constitution of India and interdict the reassessment proceedings without allowing it to be proceeded as per procedure laid down under the law. However, since we have refused to entertain the writ petition on the point of statutory remedy available to the petitioner, we refrain from expressing any opinion on merit. Therefore, any observations made while coming to the aforesaid conclusion are only in the context of the present decision. Accordingly, all contentions are kept open.

Summary

Issues Involved:
1. Validity of the reassessment proceedings initiated under Section 147/148 of the Income Tax Act, 1961.
2. Alleged failure of the petitioner to disclose fully and truly all material facts necessary for assessment.
3. Availability and adequacy of alternative remedies under the Income Tax Act.

Summary:

1. Validity of the Reassessment Proceedings:
The petitioner challenged the reassessment proceedings initiated by the notice dated 27.03.2018 under Section 148 of the Income Tax Act, 1961, for the assessment year 2011-12. The petitioner argued that the reassessment proceedings were without jurisdiction as the earlier assessment was completed under Section 143(3) read with Section 147 of the Act on 31.03.2016. The petitioner contended that there was no failure on its part to disclose fully and truly all material facts necessary for the assessment, and the reassessment was based on a change of opinion by the same assessing officer.

The respondents, however, maintained that the reassessment proceedings were valid and initiated after recording reasons to believe that income had escaped assessment. The reasons were based on new material facts discovered during the assessment proceedings for the assessment year 2014-15. The respondents argued that there was no change of opinion, and all procedural requirements were duly complied with.

2. Alleged Failure to Disclose Material Facts:
The petitioner claimed that it had disclosed all necessary material facts, including receipts, details of payers, and reasons for claiming exemption from tax. The petitioner argued that the assessing officer did not call for specific agreements during the assessment year 2011-12, which were later furnished during the assessment year 2013-14. Therefore, it could not be said that there was a failure to disclose material facts.

The respondents countered that the petitioner had failed to disclose agreements such as the IT Domains Cost Sharing Agreement and other relevant documents during the assessment year 2011-12. The assessing officer discovered these agreements only during the assessment proceedings for the assessment year 2014-15, leading to the belief that income had escaped assessment.

3. Availability and Adequacy of Alternative Remedies:
The respondents raised a preliminary objection regarding the maintainability of the writ petition, arguing that the petitioner had an effective alternative remedy under Section 144C of the Act by filing objections before the Dispute Resolution Panel. The petitioner could further appeal to the Income Tax Appellate Tribunal if aggrieved by the Dispute Resolution Panel's decision.

The court observed that the petitioner had an effective remedy provided by the statute for ventilating its grievance. The court noted that the power of the High Court under Article 226 of the Constitution of India is not fettered by any statutory limitation, but as a measure of self-imposed limitation, a writ court would not ordinarily invoke its jurisdiction when an aggrieved party has adequate and efficacious remedy provided under the statute.

Conclusion:
The court concluded that the present case did not warrant invoking the writ jurisdiction under Article 226 of the Constitution of India. The court held that the contentions raised by the respondents regarding the petitioner's failure to disclose material facts could not be brushed aside and should be addressed through the statutory procedure. Consequently, the writ petition was dismissed, and the interim order was vacated. The court refrained from expressing any opinion on the merits of the case, keeping all contentions open for further proceedings.