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TMI Blog2012 (5) TMI 146X X X X Extracts X X X X X X X X Extracts X X X X ..... re passing the order of reassessment. - Decided in favor of assessee. Since we have decided to quash the notice under Section 148 of the Act itself on the ground of non-existence of valid ground as disclosed in the reasons, we quash initiation of proceedings itself and consequently, the subsequent order of reassessment is also quashed. Power of HC to entertain writ petition where alternative appellate remedy is available - held that:- the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India (1996 -TMI - 44411 - SUPREME COURT OF INDIA), has specifically recognized the power of this court to entertain a writ-application by pointing out that such power cannot be circumscribed by the provisions of any enactment but while exercising such power, the writ-court will certainly have due regard to the legislative intent evidenced by the provisions of the concerned statute and would exercise their jurisdiction consistent with the provisions of the Act. Thus, in a given case, if the statutory authority exercises its power even in the absence of the conditions recognized by the Statutory provisions, a writ-court can definitely interfere to avoid prolonged alternative ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t No. 14, called for brief note on how the deduction under Section 80IB was allowable. The petitioner provided those and drew the attention to all details vide letter January 10, 2007 and for specific query on Section 80IB deduction, the petitioner once again furnished all the agreements as well as the approvals etc and clarified that it had fulfilled all the requirements for the purpose of claiming deduction under Section 80IB[10] of the Act. 2.5 The petitioner received a notice dated March 23, 2007 on March 29, 2007 under Section 143[2] of the Act. The petitioner vide its letter dated April 11, 2007 replied to the said notice informing the Assessing Officer that it had already furnished all the details in response to the notice under Section 142[1] dated December 11, 2006. 2.6 Another notice under Section 143[2] dated June 14, 2007 was received by the petitioner on June 18, 2007. In response to the said notice, the petitioner furnished its reply dated July 22, 2007, wherein, at Point No. 2, the petitioner once again explained the activity carried out by it along with certain annexures showing the funds provided by it for purchase of land to the society. 2.7 The respon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as the members on behalf of the society. 3] The assessee was allowed to collect the consideration for land as well as super-structure from the buyers on behalf of the society. 4] The assessee was allowed to retain the consideration received for construction and charge the land cost to the society. In other words, the society was formed for group housing of the members and was supposed to construct and transfer the houses to the members. 5] According to the Development Agreement, since the society had no experience of construction, the assessee was allowed to construct the houses on behalf of the society as per the terms narrated in the agreement according to the approval plan of the society. Further, the land owner is M/s. MAHIMA [Satellite] Co.Op. Housing Society Ltd. The assessee is came into project only after "Development agreement" which is a work contract, entered by it with the land owner. Therefore, it is very much clear that the assessee is not satisfying the conditions laid down in the Section 80IB[10] of the Act. In view of the above facts, it is very much clear that the land is not on the name of the assessee. The permission of local authority to construct the buil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the terms of the agreement: [i] The assessee was given possession of the land for construction of housing units as per the plan. [ii] The assessee was allowed to enroll prospective buyers as the members on behalf of the society. [iii] The assessee was allowed to collect the consideration for land as well as super-structure from the buyers on behalf of the society. [iv] The assessee was allowed to retain the consideration received for construction and charge the land cost to the society. In other words, the society was formed for group housing of the members and was supposed to construct and transfer the houses to the members. [v] According to the development agreement, since the society had no experience of construction, the assessee was allowed to construct the houses on behalf of the society as per the terms narrated in the agreement according to the approved plan of the society. Further, the landowner is M/s. Mahima [Satellite] Co-operative Housing Society Ltd. The assessee had come into the project only after the development agreement, which was a work contract, was entered with the landowner. Therefore, it is very much clear that the assessee had not sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th the return. [b] A specific query vide notice under Section 142[1] at Point No. 14 in the notice asking for details of deduction claimed under Section 80IB[10] from the petitioner was replied vide reply dated January 10, 2007 and the development agreement with Mahima [Satellite] Co.Op. Housing Society Ltd. along with all details were once again pointed out to the respondent. [c] The respondent incorrectly stated that the petitioner came into the project only after the development agreement, because, in fact, the petitioner had given the first installment for purchase of the land in question even before the existence of the society which is mentioned in the opening para of the development agreement. [d] Over and above, the entire chart along with the balance consideration being given by the petitioner to the society and in turn, being paid by the society to the landowner was demonstrated to the respondent at the time of assessment proceedings. Those materials were annexed at pages 100 to 105 of the petition. After considering all the details furnished in reply to the notices on the specific queries during scrutiny assessment, an order of assessment was passed clearly m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns advanced on behalf of the petitioner and has submitted that this writ-petition should be dismissed as the petitioner has the alternative remedy of appeal against the order of reassessment. She points out that the petitioner has already availed of such remedy by filing such an appeal. Mrs. Bhatt further contends that in the case before us, the petitioner did not disclose the true and correct facts and thus, the Assessing Officer, in view of the existence of tangible materials on record decided to reopen the assessment. In support of her contention, Mrs. Bhatt has relied upon the following decisions: [1] ISPAT INDUSTRIES LTD. VS. DEPUTY COMMISSIONER OF INCOME TAX reported in 253 ITR 274 [2] TOLIN RUBBERS (P) LTD, VS. ASSISTANT COMMISSIONER OF INCOME TAX reported in 264 ITR 439 [3] Dishman Pharmaceuticals and Chemicals Limited. V. Deputy Commissioner of Income Tax [OSD], reported in 2011 [2] GLH 699. Mrs. Bhatt, thus, prays for dismissal of the writ-application. 7. First of all, we propose to dispose of the preliminary objection raised by Mrs. Bhatt as to maintainability of the present application under Article 226 of the Constitution of India in view of the exi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arte decree would become infructuous. (See Bhanu Kumar Jain v. Archana Kumar and another reported in AIR 2005 SC 626 for detail discussion). 13. Therefore, in the case before us, the petitioner filed the present application under Article 226 of the Constitution on the allegation that he is entitled to the benefit of law laid down by the Supreme Court in case of CALCUTTA DISCOUNT COMPANY LTD. V. I.T.O., reported in 41 ITR 191. The petitioner has also challenged the consequent order of reassessment on the ground of violation of law laid down by the Supreme Court in the case of GKN Driveshafts [India] Ltd. [supra]. 14. If the petitioner can convince this Court that the case comes within the purview of the above two decisions, the petitioner would be entitled to the remedy under the law of the land laid down by the Supreme Court. On the other hand, if the petitioner fails to convince this Court on the above ground, for that reason, the petitioner should not be deprived of the right of challenging the order of reassessment on merit before the regular appellate forum. However, the points decided in this court will not be available to the Assessee in the Regular Appeal. Similarly, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfilment of the said conditions alone conferred jurisdiction on the assessing officer to make a back assessment, but in Section 147 of the Act (with effect from1-4-1989), they are given a go-by and only one condition has remained viz. that where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words "reason to believe" failing which, we are afraid, Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of "mere change of opinion", which cannot be per se reason to reopen. 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of "change of opinion" is removed, as contended on behalf of the Department, then, in the garb of reopening the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Thus, such fact cannot be a ground for reassessment. 19. Apart from the aforesaid fact, we find that Mr. Shah was justified in contending that in case of GKN Driveshafts [India] Ltd. [supra], the Supreme Court has clearly laid down the law that the Assessing Officer is bound to disclose the reason of reassessment within reasonable time and on receipt of the reasons, the assessee is entitled to raise objection and if any such objection is filed, the same must be disposed of by a speaking order before proceeding to reassess in terms of the notice earlier given. 20. In the case before us, in spite of repeated reminders by the assessee even pointing out the above law laid down by the Supreme Court, the Assessing Officer failed to dispose of the said objections and instead of that, straightaway passed the order of reassessment. 21. Thus, we find that the Assessing Officer acted without jurisdiction in initiating the proceedings for reassessment in spite of non-existence of the required conditions specified under the Act and even did not care to follow the norms laid down by the Supreme Court in the above decision by not disposing of the objections before passing the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act after recording reasons there. 27. In our opinion, His Lordship having specifically found that the court had no territorial jurisdiction, the other finding was regarding alternative remedy was finding of a court having no jurisdiction and thus, cannot be treated as precedent. Moreover, the said decision cannot be put forward as a precedent to the facts of the present case where we have specifically found that conditions precedent for exercising jurisdiction under Section 148 of the Act are not in existence. Therefore, the said decision does not help Mrs. Bhatt in any manner. 28. In the case of Tolin Rubbers [P.] Ltd. vs Assistant Commissioner of Income-tax, reported in [1993] 264 ITR 0439, a learned Single Judge of Kerala High Court was considering a writ-application under Article 226 of the Constitution of India, challenging the order passed by the Assessing Authority under Section 147 read with Section143 of the Act. The main grievance of the writ-petitioner in that case was that the impugned order had been passed in violation of the principles of natural justice and notices were issued under Section 148 of the Act based on the belief that certain income had ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . From the above observation it is clear that the Supreme Court in the case of Mafatlal Industries Ltd. v. Union of India (supra), has specifically recognized the power of this court to entertain a writ-application by pointing out that such power cannot be circumscribed by the provisions of any enactment but while exercising such power, the writ-court will certainly have due regard to the legislative intent evidenced by the provisions of the concerned statute and would exercise their jurisdiction consistent with the provisions of the Act. Thus, in a given case, if the statutory authority exercises its power even in the absence of the conditions recognized by the Statutory provisions, a writ-court can definitely interfere to avoid prolonged alternative remedy. 32. Lastly, in the case of Dishman Pharmaceuticals and Chemicals Limited. V. Deputy Commissioner of Income Tax [OSD], reported in 2011 [2] G.L.H. 699, the writ-petitioner challenged the notice dated March 24, 2010 issued by the Deputy Commissioner of Income Tax for reassessment of income and to file return of income. 33. In the facts of the said case, the Division Bench on consideration of the entire materials came to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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