9911796707
TMI Blog2004 (12) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1961 ("the Act"), relating to the assessment year 1996-97. Since all the four petitions raise a common question of law, they are being decided together by a common judgment and order. Briefly stated, the facts giving rise to Civil Misc. Writ Petition Nos. 539 to 540 of 2001 are as follows:- 2. Arun Kumar Maheshwari and Ajay Kumar Maheshwari are brothers whereas Amit Kumar Maheshwari is the son of Arun Kumar Maheshwari. Arun Kumar Maheshwari and Amit Kumar Maheshwari are assessed to tax in the status of Hindu Undivided Family whereas Ajay Kumar Maheshwari is assessed in the status of individual. For the assessment year 1995-96 all the three petitioners filed their return of income on 31-3-1996 disclosing the following income:- Arun Kumar Maheshwari Rs. 29,850 Ajay Kumar Maheshwari Rs.1,50,990 Amit Kumar Maheshwari Rs.29,850 3. The Income-tax Officer, Ward Bijnor made assessment under section 143(1)(a) of the Act on various dates falling in the financial year 1996-97. They had also filed return under the Wealth-tax Act disclosing the following wealth:- Arun Kumar Maheshwari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Niti Agrawal are assessed in their individual capacity f or the assessment year 1996-97. Each of the petitioners filed Wealth Tax return with the Income-tax Officer, Ward Bijnor on 19-7-1996 declaring the following wealth:- Lalit Kumar Agrawal Rs. 5,92,000 Raj Kamal Agrawal Rs. 4,95,500 Atul Kumar Agrawal Rs. 4,97,000 Smt. Radha Agrawal Rs. 4,56,000 Smt. Rachna Agrawal Rs. 7,04,500 Smt. Niti Agrawal Rs. 7,04,500 They had also disclosed the amount of gift which they had received during the assessment year in question as under:- Lalit Kumar Agrawal Rs. 5,02,000 Raj Kamal Agrawal Rs. 5,00,500 Atul Kumar Agrawal Rs. 5,02,000 Smt. Radha Agrawal Rs. 5,01,000 Smt. Rachna Agrawal Rs. 5,02,000 Smt. Niti Agrawal Rs. 5,02,000 8. It is alleged that the returns were processed. Subsequently, the Wealth-tax Officer, Ward Bijnor issued notices under section 16(2) of the Wealth-tax Act, 1957 as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lth-tax Officer being the same person, it would be presumed that the gifts in question have been duly explained and accepted by the Department and, therefore, no income has escaped assessment. The proceedings under section 147/148 of the Act are, therefore, bad and without jurisdiction. According to him, the Assessing Authority had full knowledge of the gifts received by the petitioners and if he had any doubt, the assessment under the Income-tax Act would not have been made. According to him, assessment under section 143(1)(a) of the Act is an assessment for all purposes and, therefore, the re-assessment proceedings are not permissible under law. He further submitted that there was no material which could lead the Income-tax Officer to have reasons to believe that the income of the petitioners have escaped assessment to tax. According to him, there is no such procedure for giving a notice prior to initiating proceedings under section 147 of the Act and the entire proceedings have been taken for making a roving and fishing enquiry and upon a change of opinion, which is not permissible under law. In support of his aforesaid submissions, he has relied upon the following decisions:- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Officer could not have formed any belief that any part of the income has escaped assessment to tax which is the prerequisite condition for assuming the jurisdiction of the Assessing Authority to initiate proceedings under section 147/148 of the Act. 14. Under section 147 of the Act the proceedings for the assessment can be initiated only if the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. The question whether the Assessing Officer had reasons to believe is not a question of limitation only but is a question of jurisdiction, a vital thing, which can always be investigated by the Court in an application under Article 226 of the Constitution as held in Daulat Ram Rawatmal v. ITO [1960] 38 ITR 301 (Cal.); Jamna Lal Kabra v. ITO [1968]69 ITR 461 (All); Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 (SC); C.M. Rajgharia v. ITO [1975] 98 ITR 486 (Pat.) and Madhya Pradesh Industries Ltd. v. ITO [1965] 57 ITR 637 (SC). 15. The words "has reason to believe" are stronger than the words "is satisfied". The belief entertained by the Assessing Officer must not be arbitrary or irrational. It must be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no rational and intelligible nexus between the reasons and the belief, so that, on such reasons, no one properly instructed on facts and law could reasonably entertain the belief, the conclusion would be inescapable that the Assessing Officer could not have reason to belief. In such a case, the notice issued by him would be liable to be struck down as invalid as held in the case of Ganga Saran & Sons (P.) Ltd. 18. In the case of GKN Drives hafts (India) Ltd. the Apex Court has held as follows: "When a notice under section 148 of the Income-tax Act, 1961, is issued, the proper course of action for the notice is to file the return and, if he so desires, to seek reasons for issuing the 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 issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. On receiving notices under section 148 the appellant filed the returns. The appellant also received notices under section 143(2) calling for further information on certain points in connection with the returns. Thereupon the appellant fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dado of Chicalim v. ITO [2001] 247 ITR 271 (SC), the Apex Court had held that when an assessee challenges a notice to reopen an assessment under section 147 of the Act on the ground that no reasons under section 148 had been recorded or disclosed, the Court must call for and examine the reason, and, in fact, ordinarily, the reasons are set out by the respondents to the writ petitioner in their counter. 23. In the case of Foramer v. CIT [2001] 247 ITR 436 (All.), this Court has held that notice under section 147 should not be given on mere change of opinion and if notice under section 148 was without jurisdiction the petitioner should not be relegated to the alternative remedy and the writ petition was maintainable, which has been upheld by the Apex Court in the civil appeal filed by the Department reported in CIT v. Foramer France [2003] 264 ITR 566 (SC). 24. In the case of Ajanta Pharma Ltd. v. Asstt. CIT [2004] 267 ITR 200 (Bom.), the Bombay High Court has held that GKN Driveshafts (India) Ltd.'s case nowhere lays down that the party is totally debarred from approaching the High Court under Article 226 of the Constitution of India when the exercise of power by the authority und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from taking appropriate steps under the Income-tax Act. It may be mentioned here that under the Wealth-tax Act an assessee is required to disclose his wealth only. How that wealth has been formed, is not to be gone into and, therefore, the question of disclosing the gifts in the return of wealth tax and its scrutiny in the assessment under the Wealth-tax Act, is of no consequence. It may be mentioned here that, according to the own showing of the petitioners, the return filed under the Act had been processed under section 143(1)(a) of the Act. 28. Under section 143(1)(a) of the Act the Assessing Officer makes an assessment of the total income or loss of the assessee after making such adjustment to the income or loss declared in the return as are required lo be made under clause (b) with reference to the return and documents accompanying it. The presence of the assessee is not required nor any document or evidence in support of the return is required to be produced. In the assessment under section 143(1)(a) of the Act detailed inquiry relating to the income of an assessee is not made but is confined to the provisions of adjustments specified in clause (b) of section 143(1) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer that the two cash credits represented income from undisclosed source but that is not material. In spite of the efforts of the assessee to conceal the true nature and source of the cash credits the Income-tax Officer had become aware of the true facts on February 22,1947. Once the primary facts were before him it was for him to draw a proper inference both of facts and law and to apply appropriate legal provisions. 31. In the case of Madnani Engineering Works Ltd. the Apex Court has held that the respondent had produced all the hundis on the strength of which it had obtained loans from creditors as also entries in the books of account showing payment of interest and it was for the Income-tax Officer to investigate and determine whether these documents were genuine or not. The respondent could not be said to have failed to make a true and full disclosure of the material facts by not confessing before the Income-tax Officer that the hundis and the entries in the books of account produced by it were bogus and that there was no failure on the part of the respondent to disclose fully and truly all material facts necessary for its assessment and the condition for the applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for formation of the requisite belief." 36. In the case of Citibank N.A., the Bombay High Court has held that mere production of evidence before the Income-tax Officer is not enough. There may be omission or failure to make a true and full disclosure, if some material for the assessment lay embedded in the evidence which the Revenue could have uncovered but did not, then it is the duty of the assessee to bring it to the notice of the Assessing Authority. If there are some primary facts from which a reasonable belief could be formed that there was some non-disclosure or failure to disclose fully and truly all material facts, the Income-tax Officer has jurisdiction to reopen the assessment. 37. Applying the principles laid down in the aforesaid case to the facts of the present case, we find that in the return filed under the Income-tax Act, none of the petitioners has disclosed the amount of gift received by them nor there had been any scrutiny by the Income-tax- Officer. The assessment have been made under section 143(1)(a) of the Act and as already mentioned earlier, these assessments are to be made within the framework of the provisions of section 143(1) of the Act itself. Unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
