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TMI Blog2017 (1) TMI 321X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. The petitioner has further stated in the Writ Petition that while the settlement proceedings were going on before the Settlement Commission, an application for intervention was preferred by the petitioner and the Settlement Commission has rejected the application preferred by the petitioner for intervention and has finally passed order dt. 10/5/2016 in respect of respondent No.5. The petitioner's grievance is that based upon the order passed by the Settlement Commission, proceedings have been initiated by issuing notice u/S. 148 of the Income Tax Act, 1961 and as the petitioner was not heard by the Settlement Commission, the notice issued by the Assessing Officer deserves to be quashed. Petitioner has further stated that the order passed by the Settlement Commission is bad in law as the petitioner was not heard at any point of time and certain income of respondent No.5 has been excluded from his total income on the ground that it belongs to the petitioner and, therefore, the order passed by the Settlement Commission is bad in law, being violative of principles of natural justice and fair play. The petitioner also stated that the order passed by the Settlement Commission is i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .5 has stated that certain part of income receipts were in respect of amount received by the petitioner and the Settlement Commission has dismissed the intervention application. The intervention application was filed on 28/2/2016. The intervention application was dismissed by the Settlement Commission and the Settlement Commission has passed a final order in the matter. Sec. 147 and 148 of the Income Tax Act, 1961 reads as under : Section 147. If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this section has been made for the relevant assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r depreciation allowance or any other allowance under this Act has been computed; (d) where a person is found to have any asset (including financial interest in any entity) located outside India. Explanation 3.-For the purpose of assessment or reassessment under this section, the Assessing Officer may assess or reassess the income in respect of any issue, which has escaped assessment, and such issue comes to his notice subsequently in the course of the proceedings under this section, notwithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148. Explanation 4.-For the removal of doubts, it is hereby clarified that the provisions of this section, as amended by the Finance Act, 2012, shall also be applicable for any assessment year beginning on or before the 1st day of April, 2012. Section 148. (1) Before making the assessment, reassessment or recomputation under section 147, the Assessing Officer shall serve on the assessee a notice requiring him to furnish within such period, as may be specified in the notice, a return of his income or the income of any other person in respect of which he is assessable un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ME TAX (CENTRAL)-I "Aayakar Bhawan (Main)" Room No.101, Opp. White Church, A.B.Road, Indore NOTICE UNDER SECTION 148 OF THE INCOME TAX ACT, 1961 PAN.AAFFG5813Q dated 31/03/2016 To, M/s. Goyal Developers INDORE Sir/Madam, Whereas I have reasons to believe that your income chargeable to tax for the assessment year 2010-11 has escaped assessment within the meaning of section 147 of the Income Tax Act 1961. I, therefore, propose to assess/re-assess/re-compute the income/loss/depreciation allowance for the said assessment year and I hereby require you to deliver to me within 30 days from the date of service of this notice, a return in the prescribed form of your income for the said assesment year. (Amit Kumar Soni) Assistant Commissioner of Income Tax(Central)-I Indore The other Show Cause Notice is per verbatim identical and it is in respect of the financial year 2011-2012. Petitioner's grievance is that because of the order passed by the Settlement Commission the aforesaid Show Cause Notice has been issued and it is a non speaking Show Cause Notice. It is pertinent to note that the assessing officer has later on communicated "Record of reasons to believ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Receipts collected on behalf of and paid to M/s Goyal Developers 2010-11 37 17,16,77,580/- 17,16,77,580/- 2011-12 48 22,78,32,433/- 18,64,46,687/- Therefore, it is clear and evident that M/s Goyal Developers have received accounted on-money of Rs. 17,16,77,580/- for A.Y. 2010-11. In view of the above, I have reason to believe that income earned on account of on-money receipts in respect of the project "Uptown Apollo" which has not been incorporated in the books of account of the assessee M/s Goyal Developers and the same Rs.17,16,77,580/- for A.Y. 2010-11 has been escaped from assessment as normal income within the meaning and scope of section 147 subject to 148 of the I.T. Act to assess of reassess income of the assessee for the concerned A.Y. in accordance with the provision of section 147 r.w.s. 143(4) of the IT Act. Accordingly notice u/s 148 shall be issued after obtaining approval from the authority as prescribed u/s 151 of the Income Tax Act, 1961. (Amit Kumar Soni) Asstt. Commissioner of Income Tax (Central)-1, Indore" This Court has carefully gone through the Show Cause Notice issued by the Assessing Officer and the Record of reasons to believe. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered by a settlement application made by an applicant before us. In the settlement application, an applicant is required to make a full and disclosure of his income not disclosed to the AO, by bringing on record all material facts relevant for determination of his undisclosed income along with manner of having earned such income. The application is regarding settlement of applicants case and the proceedings before the Commission are not in the nature of appeals as an applicant can file settlement application only during the pending of assessment proceedings. Hence there does not arise any question of permitting intervention by another tax payer. As per provision of Sec. 245D(4) the commission can pass an order which deems fit, which has to be in accordance with the provisions of the Act, there is no provision to add intervener to settlement application filed by an applicant. There is no provision to allow an opportunity of being heard to third party with whom the applicant had business dealings. In terms of Income Tax Settlement Commission (Procedure) Rules, 1997, the proceedings before the commission are not open to the public and other than applicant or his authorised represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Income Tax Act. It was held by the Hon'ble Supreme Court in the said case that in the stage of assessment of the proceeding the High Court ought not to have entertained the writ petition, instead should have directed the assessee to appear before the AO, permit him to take a decision and after framing of assessment order, the assessee should seek indulgence into the matter. In para 16 and 17 of the said judgment, Hon'ble Supreme Court has dealt with the matter in the following manner :- "16. In the present case, the assessee has invoked the Writ jurisdiction of the High Court at the first instance without first exhausting the alternate remedies provided under the Act. In our considered opinion, at the said stage of proceedings, the High Court ought not have entertained the Writ Petition and instead should have directed the assessee to file reply to the said notices and upon receipt of a decision from the Assessing Authority, if for any reason it is aggrieved by the said decision, to question the same before the forum provided under the Act. 17. In view of the above, without expressing any opinion on the correctness or otherwise of the construction that is place ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court took the view that the appellant could have taken all the objections in its reply to the notices and that, at that stage, the writ petition was premature. Accordingly, the writ petition was dismissed on 31st January, 2001. Aggrieved by that order, the appellant is in appeal before us. Mr. M.L. Verma, learned senior counsel appearing for the appellant, submits that the impunged notices relate to seven assessment years; that during the pendency of these appeals, in respect of two assessment years, viz., 1995-96 and 1996- 97, assessment has been completed against which appeals have been filed. Notices relating to the other five assessment years, viz., 1992-93, 1993-94, 1994-95, 1997-98 and 1998- 99, are now the subject-matter of these appeals. We see no justifiable reason to interfere with the order under challenge. However, we clarify that when a notice under Section 148 of the Income tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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