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2022 (10) TMI 129 - HC - Income TaxValidity of reopening of assessment u/s 147 - notice issued u/s 148A - non- filing of ITR and escapement of income - As per assessee reason ascribed by the Assessing Officer is not only bereft of application of mind but also the same is outcome of blameworthy preconceived approach - as argued AO has failed to address the core issue as to whether there was requirement of furnishing return with reference to Section 139(4C)(e) for Assessment Years prior to 2016-17 - HELD THAT - The petitioner has ample opportunity to agitate issues before the Assessing Officer. Therefore, this Court holds entertainment of the writ petition at the stage of notice would be premature. Doing so would frustrate the tax administration and adjudication process. This Court is alive to the fact that the statute under consideration, viz., the IT Act and rules framed thereunder, provides sufficient safeguard for the assessee-petitioner, more so, when against the final orders of adjudication, appeal lies. Since the petitioner-College has already filed return in Form ITR- 7 on 30.04.2022 mentioning therein that it has been filed under Section 139(4A) of the IT Act for the Assessment Year 2015-16 after receipt of notice dated 31.03.2022 under Section 148, the Assessing Officer is required to verify the books of account of the relevant year and examine any other evidence that may be allowed to be adduced by the petitioner-College with reference to the materials available in record. While doing so, he will confront adverse material, if any, he wishes to utilize against the assessee- petitioner and record statement with regard to such verification. Needless to say that the petitioner shall be allowed reasonable opportunity for stating its case, which shall be considered by the Assessing Officer in the order of assessment including the grounds of challenge against the Order dated 31.03.2022 passed under Section 148A(d). The petitioner for the purpose of assessment may participate in the proceeding initiated under Section 148 of the IT Act and no unnecessary adjournment shall be granted. The writ petition challenging the Notice issued under Section 148 and the Order dated 31.03.2022 passed under Section 148A(d) of the Income Tax Act, 1961 with reference to Notice dated 22.03.2022 issued under Section 148A(b) is hereby dismissed.
Issues Involved:
1. Validity of the notice issued under Section 148A(b) of the Income Tax Act, 1961. 2. Validity of the order passed under Section 148A(d) of the Income Tax Act, 1961. 3. Requirement of filing a return under Section 139(4C)(e) for Assessment Years prior to 2016-17. 4. Examination of exemption claims under Section 10(23C)(iiiab) of the Income Tax Act, 1961. 5. Applicability of the principle of exhaustion of alternative remedies under Article 226 of the Constitution of India. Detailed Analysis: 1. Validity of the Notice Issued Under Section 148A(b) of the Income Tax Act, 1961: The petitioner-College challenged the notice dated 22.03.2022 issued under Section 148A(b) on the grounds that it was not required to file a return for the Assessment Year 2015-16 due to exemptions under Section 10(23C)(iiiab). The notice was based on information suggesting that income chargeable to tax had escaped assessment. The court observed that the Assessing Officer had information about cash deposits and interest income, which justified the issuance of the notice under Section 148A(b). 2. Validity of the Order Passed Under Section 148A(d) of the Income Tax Act, 1961: The petitioner contended that the order dated 31.03.2022 under Section 148A(d) lacked application of mind and was based on a preconceived approach. The court found that the Assessing Officer, after considering the petitioner's reply, had validly issued the notice under Section 148, as the petitioner had not filed the Income Tax Return (ITR) and had not satisfactorily explained the transactions in question. 3. Requirement of Filing a Return Under Section 139(4C)(e) for Assessment Years Prior to 2016-17: The petitioner argued that there was no requirement to file a return for the Assessment Year 2015-16 because the provisions of Section 139(4C)(e) were effective from AY 2016-17. The court noted that the petitioner had filed a return under Section 139(4A) after receiving the notice under Section 148, indicating compliance with the notice. The court also highlighted that the petitioner had the opportunity to present its case during the assessment proceedings. 4. Examination of Exemption Claims Under Section 10(23C)(iiiab) of the Income Tax Act, 1961: The court examined whether the petitioner-College was "wholly or substantially financed by the Government" and "existing solely for educational purposes and not for purposes of profit" as required under Section 10(23C)(iiiab). The court emphasized that these are matters of fact to be adjudicated by the Assessing Officer based on the evidence provided by the petitioner. The court found that the petitioner had not furnished the necessary return initially, justifying the issuance of the notice for assessment of escaped income. 5. Applicability of the Principle of Exhaustion of Alternative Remedies Under Article 226 of the Constitution of India: The court reiterated the principle that the existence of an alternative remedy does not bar the exercise of writ jurisdiction but emphasized that it should be exercised sparingly. The court held that the petitioner should first exhaust the statutory remedies available under the Income Tax Act before seeking judicial intervention. The court cited several precedents to support this view and dismissed the writ petition as premature, directing the petitioner to present its case before the Assessing Officer. Conclusion: The court dismissed the writ petition challenging the notices and orders issued under Sections 148A(b), 148A(d), and 148 of the Income Tax Act, 1961. The court held that the petitioner had ample opportunity to present its case during the assessment proceedings and that the writ petition was premature. The court emphasized the need to exhaust alternative remedies before seeking judicial intervention under Article 226 of the Constitution of India.
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