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TMI Blog2012 (4) TMI 494X X X X Extracts X X X X X X X X Extracts X X X X ..... r past years, it is for the assessee to substantiate its claim by furnishing the relevant pursuant to the impugned notices issued u/s 148 - when an efficacious alternative remedy is available under a statute, this Court would not exercise its extraordinary jurisdiction, under article 226 of the constitution of India - the writ petitions stand dismissed - open to the petitioner in the above writ petitions to raise its objections within a period of four weeks from date of Order. - Writ Petition Nos.14244 and 14245 of 2002 - - - Dated:- 17-2-2012 - MR.JUSTICE M.JAICHANDREN, J. For petitioner : M/s.Anitha Sumanth For respondents : Mr.J.Narayanasamy C O M M O N O R D E R These writ petitions have been filed praying that this Court may be pleased to call for and quash the records relating to the impugned notices issued by the respondent, for the assessment years 1995-96 and 1996-97, under Section 148 of the Income Tax Act, 1961 and quash the same. 2. It has been stated that the petitioner is a company manufacturing cement machinery/equipment and it is engaged in the business of turn key projects for the setting up of cement manufacturing units. The petition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rded for the said year. Item No.9 of the schedule related to the warranty and guarantee claims pertaining to the year that had ended on 31.3.1995, as well as for the year that had ended, on 31.3.1996. The warranty and guarantee claims had been duly explained in the statements of accounting policy and notes and in the accounts in item 9, wherein the petitioner had explained that the company s liability for warranty and guarantee claims had been accounted, on accrual basis, as per the terms of the contract and after adjusting the claims, which were no longer required. The income declared for assessment purposes, in the return filed by the petitioner, was based on the published accounts, which forms part of the documents filed before the respondent. 6. It has been further stated that, in respect of the assessment year 1996-97, the petitioner had filed a return, on 29.11.1996, admitting a total income of Rs.6,94,96,340/-. A revised return of income had been filed, on 27.1.1997, admitting an income of Rs.10,10,85,582/. The assessment had been completed, under section 143(3) of the Income Tax Act, 1961, after a due hearing, on 24.3.1999. Both the assessments relating to the years 199 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t proceedings, the respondent had examined the accounts and sought certain clarifications, with regard to the warranty and guarantee claims in the accounts relating to the said years. The petitioner had explained the position relating to the warranty and guarantee claims stating that provisions had been made for the warranty and guarantee, with regard to the consistent method of accounting followed by the petitioner. As and when the warranty and guarantee period expired, the excess provisions, if any, is reversed back to the profit and loss account. The net provisions or excess, if any, is carried to the profit and loss account. The provision, which is reversed back, as not required, is adjusted against the provision made for a year and the net amount is declared its accounts. Even though it had been stated by the petitioner that the said accounting method has been followed for many years and that it had been accepted by the assessing authorities concerned, the respondent took a decision stating that the provision for warranty and guarantee claims is not allowable, under the Income Tax Act, 1961. The assessing authority had also proposed to reopen the assessment for the earlier yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, for reopening the assessment already made, is without jurisdiction. The reopening of the assessment is only based on a change of opinion on the materials already on record. Thus, it is clear that the respondent is not vested with the jurisdiction, under section 148 of the Act, to issue a notice or to make a reassessment, under section 147 of the said Act. Further, the respondent does not have the power to reopen the assessment, as it is not the case of the respondent that there has been a change in the method of accounting followed by the petitioner, for the assessment years 1995-96 and 1996-97 or for the subsequent years. 12. The learned counsel had further stated that the petitioner had been following the consisting method of accounting over a number of years and it had been accepted by the revenue. The claim on account of warranties and guarantees is a part of the method of accounting. Since, the respondent had already taken a decision, with regard to a similar issue, for the assessment year 1999-2000, contrary to the decision taken by the various assessing authorities, over a number of years, the petitioner apprehends that the respondent could complete the assessment dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecessary for the assessment of the year. 14.4. In PALA MARKETING CO-OPERATIVE SOCIETY LTD., Vs. STATE OF KERALA AND ANOTHER (1999 VOL.236 ITR 604), the Kerala High Court had held that the material facts having been placed before the assessing officer, it was the duty of the officer concerned to draw the inference from the material facts disclosed. Section 147 is of special or extraordinary nature, as it empowers reopening of the assessment, after the period of limitation of four years and therefore, it must satisfy the test, strictly. 14.5. In GARDEN SILK MILLS PVT LTD., Vs. DEPUTY COMMISSIONER OF INCOME TAX (1999 VOL.237 I.T.R.668), the Gujarat High Court had held that the assessing authority should have reason to believe that certain income had escaped assessment. The reason must be based on materials available. A mere change of opinion would not justify the reassessment. 14.6. In FORAMER Vs. COMMISSIONER OF INCOME-TAX AND ANOTHER (2001 VOL.247 I.T.R.436), the Allahabad High Court had held that the notice issued by the assessing authority, under Section 148 of the Income Tax Act, 1961, for reassessment, after a lapse of more than 7 years, especially, when there was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be held to be valid, as the pre-condition for invoking proviso to Section 147 had not been satisfied, when the assessee had disclosed fully and truly, all material facts necessary for assessment. 14.13. In DULI CHAND SINGHANIA Vs. ASSISTANT COMMISSIONER OF INCOME TAX (2004 VOL.269 ITR 192), the Punjab and Haryana High Court had held that a bare perusal of Section 147 of the Income Tax Act, 1961, shows that the power to assess or reassess the escaped income, for any assessment year, has been conferred upon the Assessing Officer, subject to the provisions of Sections 148 to 153 of the Act, only if he has reasons to believe that income chargeable to tax has escaped assessment. However, the proviso places a further restriction on this power, in cases where assessments, under sub-section (3) of section 143 or section 147 of the Act, have been made for the relevant assessment years. It provides that, in such cases, no action shall be taken, under Section 147, after the expiry of four years from the end of the relevant assessment year, unless the escapement of income is on account of failure on the part of the assessee to make a return or to disclose, fully and truly, all materi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent year 1995-96 had been made, on 27.2.1998. The assessment for the assessment year 1996-97 had been made, on 24.3.1999. For the assessment year 1995-96, a notice under section 148 had been issued, on 22.3.2002, and it had been served on the assessee, on 27.3.2002. For the assessment year 1996-97, a notice under section 148 had been issued on 22.3.2002 and it had been served on the assessee, on 27.3.2002. As such, the notices issued under section 148 of the Act, for the assessment years 1995-96 and 1996-97, had been issued within the time, as specified by the relevant provisions of the Act and therefore, the said notices are valid in the eye of law. 18. It had been further submitted that the existence and satisfaction of the conditions, set out under Sections 147 and 148 of the Act, are fully satisfied. The notices issued are well within the jurisdiction of the authority concerned and therefore, they are not liable to be quashed. The reopening of the assessment is not based on a change of opinion, as alleged by the petitioner, but on the basis of the satisfaction of the assessing officer that income chargeable to tax has escaped assessment, for the assessment years 1995-96 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d been held as follows: "The income-tax Act provides a complete machinery for assessment of tax, and for relief in respect of improper or erroneous orders made by the revenue authorities. It is for the revenue authorities to ascertain the facts applicable to a particular situation, and to grant appropriate relief in the matter of assessment of tax. Resort to the High Court in exercise of its extraordinary jurisdiction conferred or recognised by the Constitution in matters relating to the assessment, levy and collection of income-tax may be permitted only when questions of infringement of fundamental rights arise or where on undisputed facts the taxing authorities are shown to have assumed jurisdiction which they do not possess." 21. He also relied on the decision made in GKN DRIVE SHAFTS (INDIA) LTD Vs. INCOME TAX OFFICER AND OTHERS (2003 259 ITR 19), wherein it had been held that, when a notice under Section 148 of the Income Tax Act, 1961, is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for the issuing of such notice. The assessing officer is bound to dispose of the same by passing a speaking order. In the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs 1995-96 and 1996-97, within the meaning of section 147 of the Income Tax Act, 1961. It is for the petitioner to raise its objections, if any, in respect of the impugned notices issued by the respondent. Even though the petitioner has claimed that it has been following certain established methods of accounting, for many years, and that the assessing authorities concerned had accepted the same, it is for the assessee to substantiate its claim by furnishing the relevant records before the respondent, pursuant to the impugned notices issued, under Section 148 of the Income Tax Act, 1961. 25. It is a well settled position in law that, when an efficacious alternative remedy is available under a statute, this Court would not exercise its extraordinary jurisdiction, under article 226 of the constitution of India, to interfere with the proceedings initiated by the authorities concerned. 26. It is also clear from the decisions of the Apex Court, relied on by the learned counsel for the respondent, that this Court would exercise its extraordinary jurisdiction, conferred by Article 226 of the constitution of India, in matters relating to assessment, levy and collection of income tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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