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TMI Blog2017 (6) TMI 1126X X X X Extracts X X X X X X X X Extracts X X X X ..... er Section 147 of the Act, 1961 by issuing notice under Section 148 of the Act which does not satisfy the jurisdictional pre-requirement for exercise of jurisdiction under Section 147. Therefore, unreservedly and unhesitatingly of the opinion for the reasons mentioned herein-above that the order passed by the Assessing Officer under Section 147 of the Act, 1961 seeking to reopen the assessment already made is without jurisdiction and without authority of law and the order disposing of the preliminary objections is also not in accordance with law. Consequently, the order finally passed making reassessment is also contrary to law. Proceeding for reassessment under Section 147-148 cannot be initiated on the basis of report of the Assistant Valuation Officer - Decided in favour of assessee. - Writ Petition (T) No. 177 of 2016 - - - Dated:- 19-6-2017 - Hon'ble Shri Justice Sanjay K. Agrawal For the Petitioner: Mr. Siddharth Dubey, Advocate For the Respondents: Mrs. Naushina Ali, Advocate ORDER 1. Invoking the jurisdiction of this Court under Article 226 of the Constitution of India, the petitioner herein calls in question the reassessment proceedings initiated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petition. In the aforesaid background, the writ petition has been filed. 2.2) The respondents have filed their joint return. A preliminary objection has been raised on behalf of the respondents that the petitioner has have an efficacious alternative remedy under Section 246A of the Act, 1961 and she has to prefer an appeal against the order of reassessment before the Commissioner of Income Tax (Appeals). The Assessing Officer has exercised the power conferred by virtue of the provisions of the Income Tax Act, 1961 and has duly followed the prescribed procedure for initiation of reassessment proceedings in the case of the petitioner and, therefore, the action of the Assessing Officer cannot be held to be without jurisdiction and without authority of law. It has also been submitted that reasons have duly been assigned and objections have been disposed of by a speaking order, as such, there is sufficient material for invoking Section 147/148 of the Act, 1961 for reopening the assessment. Therefore, the writ petition against the show cause notice seeking to reopen for reassessment is not maintainable in law. Thus, the writ petition deserves to be dismissed on merit as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exercise of jurisdiction under Section 147/148 of the Act, 1961 was clearly available to the Revenue at the time when Section 147 jurisdiction was exercised by the learned Assessing Officer and the objections of the petitioner have been effectively disposed of by the order passed by the Assessing Officer acting on the basis of the report of the Departmental Valuation Officer, it is not the case of change of opinion and as such, opening of reassessment proceedings and the order passed thereupon are strictly in accordance with law. She placed reliance on the decisions of the Supreme Court in the matters of Kalyanji Mavji Co. v. Commissioner of Income Tax (1976) 102 ITR 287 (SC), Assistant Commissioner of Income Tax v. Rajesh Jhaveri Stock Brokers Private Limited (2008) 14 SCC 208 and Commissioner of Income Tax and others v. Chhabil Dass Agarwal (2014) 1 SCC 603. 4.2) This instant writ petition challenging the show cause notice as well as the final reassessment order is not maintainable in law, as the petitioner has effective alternative remedy of filing appeal against that order before appellate authority. 5. I have heard learned counsel for the parties and considered their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... power to set aside a notice issued under Section 147 of the Income Tax Act, 1961, if the condition precedent to the exercise of the jurisdiction does not exist. The Court may, in exercise of its powers, ascertain whether the Income Tax Officer had in his possession any information: the Court may also determine whether from that information the Income Tax Officer may have reason to believe that income chargeable to tax had escaped assessment. But the jurisdiction of the Court extends no further. Whether on the information in his possession he should commence a proceeding for assessment or reassessment, must be decided by the Income Tax Officer and not by the High Court. The Income Tax Officer alone is entrusted with the power to administer the Act: if he has information from which it may be said, prima facie, that he had reason to believe that income chargeable to tax had escaped assessment, it is not open to the High Court, exercising powers under Article 226 of the Constitution, to set aside or vacate the notice for reassessment on a re-appraisal of the evidence. 10. The above-stated enunciation of law laid down in Calcutta Discount (supra) reiterated in M/s. A. Raman and C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... read with Section 148 of the Act, 1961 and accordingly, I overrule the first preliminary objection raised on behalf of the Revenue in that regard. 12. This would lead me to the next preliminary objection raised on behalf of the Revenue that once the final order of reassessment has been passed on 20-12-2016, the petitioner ought to have preferred appeal under Section 246A of the Act, 1961 before the appellate authority and writ petition challenging the final order of reassessment is not maintainable in law. 13. In order to decide this objection, some few facts deserve to be noticed. In the present case, after issuing notice for reassessment under Section 147 of the Act, 1961, reasons recorded were furnished to the petitioner on 15-11-2016 and the preliminary objections raised by her were decided on 13-12-2016 and immediately, the petitioner filed writ petition before this Court challenging the notice issued for reassessment as well as the order rejecting the preliminary objection, on 16-12-2016, but before the writ petition would come up for hearing before this Court on 21-12-2016, the order of reassessment was passed on 20-12-2016 by the Assessing Officer. 14. The Bombay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner has alternative statutory remedy of filing appeal before the appellate authority under Section 246A of the Act, 1961. 16. This would bring me to consider the merits of the matter. Notice for reassessment has been issued to the petitioner under Section 147 read with Section 148 of the Act, 1961. 17. In order to judge the plea raised at the Bar, it would be appropriate to notice Section 147 of the Act, 1961 which provides for income escaping assessment as well as Section 148 which provides for issue of notice where income has escaped assessment. Sections 147 and 148 of the Act, 1961 (relevant portion) provide as follows: - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... son to believe that income for any assessment year has escaped assessment. The word reason in the phrase reason to believe would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to believe to reason that an income had escaped assessment. The expression cannot be read to mean that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion. The function of the Assessing Officer is to administer the statute with solicitude for public exchequer with in-built idea of fairness to taxpayers. The Supreme Court in the matter of Central Provinces Manganese Ore Co. Ltd. v. Assessing Officer (1991) 191 ITR 662 (SC) while considering the provisions contained in Section 147(a) of the Act, 1961 (as the provision stood at the relevant time) held that for initiation of action under Section 147(a) fulfillment of the two requisite conditions in that regard is essential. It was further held that at the initial stage, what is required is reason to believe , but at the stage of issue of notice, the only question is whether there was relevant material on which a r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai on the basis of FMV determined as on 1-4-1981. Therefore, the Income Tax Officer has reason to believe that the said income under the head capital gain has escaped assessment within the meaning of the provisions of Section 147 of the Act, 1961. 23. Thus, from a careful perusal of reasons recorded under Section 148 (2) of the Act, 1961 for initiation of reassessment proceeding it appears that the entire basis for initiation of reopening reassessment is the report received from the Assistant Valuation Officer-II, Mumbai on 12-6-2015. 24. The argument in this behalf by learned counsel for the petitioner is that the opinion of the Assistant Valuation Officer per se is not information for the purpose of reopening the proceeding under Section 147 of the Act, 1961. Therefore, on the basis of such an information, reassessment proceeding cannot be initiated. 25. The Supreme Court in M/s. A. Raman and Co.'s case (supra) while considering Section 147 (1)(b) of the Act, 1961 (as then existed), has clearly held that under Section 147 (1) (b) reason to believe that income chargeable to tax has escaped assessment in consequence of information in the possession of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act on the strength of such valuation report, obtained subsequently. Similar is the proposition of law laid down by the High Court of Gujarat in the matter of Akshar Infrastructure Pvt. Ltd. v. Income Tax Officer Ward 1(1) Manu/GJ/0317/2017 following the principle of law laid down by the Supreme Court in Dhariya Construction Company's case (supra). 28. A valuation report is only an opinion of a valuer. The same does not amount to information within the meaning of Section 147(b) nor can it form a ground for reason to believe that the assessee had failed to disclose his income fully and truly within the meaning of Section 147(a) of the Act. The condition precedent for assumption of jurisdiction under Section 147(a) of the Act is reason to believe of the Income-tax Officer. If that be so, then a report or information of a valuer cannot substitute the words reason to believe of the Income-tax Officer. An opinion of a third person cannot be a reason to believe of the Income-tax Officer. It is the Income-tax Officer who has to assert on materials available that he has reason to believe that any income chargeable to tax has escaped assessment or that the same was due to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased only on the report received from the Assistant Valuation Officer and the assessing authority has not applied its mind and solely relied upon that opinion of the AVO to reopen the assessment under Section 147 read with Section 148 of the Act, 1961, which is in teeth of the decision of the Supreme Court in Dhariya Construction Company's case (supra) and as such, contrary to law. 31. This would bring me to the next submission raised on behalf of the petitioner that the order disposing of the preliminary objections is not a reasoned and speaking order, therefore, that order is liable to be quashed. 32. The petitioner raised preliminary objections after serving of reasons to believe furnished by the petitioner vide Annexure P-8 clearly stating that no independent satisfaction has been arrived by the assessing authority and therefore there is no jurisdictional facts available for initiation of proceeding under Section 147 of the Act, 1961 which was rejected by order dated 13-12-2016 by the Revenue. 33. In order to consider the question as to whether the preliminary objections were decided in accordance with law or not, it would be appropriate to notice the law on the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of law. 36. If the impugned order of the Revenue disposing of the preliminary objections is looked into, it is apparent that the Assessing Officer in the said order, which is in the shape of reply, mentioned the entire facts in the first page of the order and recorded as under: - Considering the request of the Assistant Valuation Officer, and since it was a time barring matter on 31.03.2015, the A.O. passed the order accepting the returned income subject to receiving the final valuation report (as mentioned in the office note dated 31.03.2015). On 18.06.2016 the Assessing Officer received the final valuation report of the said property after removing the objection by the AVO, raised by the assessee, vide AVO letter no. AVO-II/ Mum/ CGT/312/2015-16/84 dated 12.06.2016, and accordingly necessary action as per Income Tax Act, 1961 was initiated against the assessee for taxing the Capital Gain amount which had escaped the assessment. Your application for dropping the proceedings initiated u/s 147 of the income tax was considered and based on the facts mentioned above, the same is here by rejected, and you are requested to comply and attend the hearing on 20.12. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ower can also be exercised if the order passed by the Assessing Officer is erroneous and prejudicial to the interest of Revenue. 41. Thus, in the present case, if the order passed by the Revenue is perused, recourse to Section 263 of the Act, 1961 can certainly be made which the Assessing Officer did not do and proceeded to reopen the assessment under Section 147 of the Act, 1961 by issuing notice under Section 148 of the Act which does not satisfy the jurisdictional pre-requirement for exercise of jurisdiction under Section 147. Therefore, I am unreservedly and unhesitatingly of the opinion for the reasons mentioned herein-above that the order passed by the Assessing Officer under Section 147 of the Act, 1961 seeking to reopen the assessment already made is without jurisdiction and without authority of law and the order disposing of the preliminary objections is also not in accordance with law. Consequently, the order finally passed making reassessment is also contrary to law. 42. As a fallout and consequence of aforesaid discussion, the proceeding initiated under Section 147 of the Act, 1961 by issuing notice under Section 148 of the Act, 1961, order deciding preliminary ob ..... X X X X Extracts X X X X X X X X Extracts X X X X
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