2014 (2) TMI 994 - HC - Income Tax

Validity of Notice issued u/s 148 of the Act Validity of Letter issued by the AO Held that - The contentions of the petitioner deserve acceptance - Once the revenue found there was no basis to connect the petitioner with the May Fair Garden property, he ought to have dropped the reassessment proceedings - Nothing survived thereafter - He was acting outside jurisdiction when he issued a letter calling upon the petitioner to avail of the opportunity given to him to cross-examine the complainant i.e., the person who was the author of the tax evasion petition. Instead of terminating the proceedings initiated under Section 148 of the Act by dropping them the revenue chose inexplicably to keep those proceedings alive - This is illegal and impermissible in law - This amounts to nothing but harassment of the petitioner - There appears to be some vested interest in keeping the proceedings against the petitioner pursuant to the notice alive revenue have to act in accordance with law and not under any pressure - The AO, being a responsible officer should not be party or pressurised by someone to personal vendetta thus, the notice issued under Section 148 of the Act as well as the letter set aside Decided in favour of Assessee.

Summary

Issues involved:
1. Validity of notice under Section 148 of the Income Tax Act, 1961 and subsequent proceedings.
2. Jurisdiction of the Assistant Commissioner of Income Tax to issue the notice.
3. Compliance with court directions and legality of further proceedings.

Analysis:
1. The petitioner, a retired officer of the Indian Revenue Service, challenged a notice dated 31.03.2011 under Section 148 of the Income Tax Act seeking to reopen the assessment for the year 2004-05. The petitioner contended that the reasons recorded for reopening the assessment were insufficient and challenged the jurisdiction of the Assistant Commissioner. The High Court directed the Assistant Commissioner to pass a fresh order addressing the objections raised by the petitioner, particularly regarding the factual correctness of the allegations in the tax evasion petition.

2. Subsequently, the Assistant Commissioner, after considering objections raised by the petitioner, found no evidence connecting the petitioner to the property mentioned in the tax evasion petition. Despite this, the Assistant Commissioner issued a letter on 02.11.2011 calling the petitioner to cross-examine the complainant. The High Court held that once it was established that there was no basis to connect the petitioner with the property, the reassessment proceedings should have been dropped. The Court found the Assistant Commissioner's actions to be outside jurisdiction, illegal, and amounting to harassment of the petitioner.

3. The High Court emphasized that the tax authorities must act independently and in accordance with the law, free from any external pressure or personal vendettas. The Court quashed the notice dated 31.03.2011 and the subsequent letter dated 02.11.2011, ruling in favor of the petitioner and allowing the writ petition. The judgment highlighted the importance of upholding legal procedures and ensuring fair treatment in tax assessment proceedings.