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TMI Blog2004 (9) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... 94 under section 148 of the Income-tax Act, 1961 (for short "the Act"). It is appropriate to set out paragraph 2 of the recorded reasons for such reopening, which is as under: "As requested for I am intimating the recorded reasons for reopening of the assessments for the assessment years mentioned above which is as under: Because of incorrect interpretation of accounts by the Assessing Officer the assessee got the benefit of loss of Rs. 34,40,715 for the assessment year 1992-93 which was carried forward to subsequent years and adjusted as below: -------------------------------------------------------------------------------- Rs. Loss for the assessment year 1992-93 34,40,715 Less: Taxable income for the assessment year 1993-94 adjusted 4,39,719 -------------- 30,00,996 Less: Taxable income for the assessment year 1994-95 adjusted 1,17,295 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment for that assessment year. Explanation 1.- ... Explanation 2.-For the purposes of this section, the following shall also be deemed to be cases where income chargeable to tax has escaped assessment, namely:- (a) where no return of income has been furnished by the assessee although his total income or the total income of any other person in respect of which he is assessable under this Act during the previous year exceeded the maximum amount which is not chargeable to income-tax; (b) where a return of income has been furnished by the assessee but no assessment has been made and it is noticed by the Assessing Officer that the assessee has understated the income or has claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... initiate action under section 147 after the expiry of four years from the end of the relevant assessment years, there should have been either failure or non-disclosure on the part of the assessee. From the recorded reasons as aforestated, I find that the Assessing Officer is seeking to reopen the assessments since there was an "incorrect interpretation of accounts by the Assessing Officer" and for that "the assessee got the benefit of loss" for the assessment year 1992-93 which was carried forward to the subsequent years. Mr. R. N. Dutta, learned counsel appearing for the petitioner, submitted that the recorded reasons do not speak about any omission or failure on the part of the assessee to warrant the Assessing Officer to assume jurisdiction under section 147. Relying on the judgment of the apex court in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191 it was submitted that tests have been laid down by the Supreme Court and the same should be followed while reopening an assessment beyond four years. Mr. Dutta also relied on the judgments of Ajanta Pharma Ltd. v. Asst. CIT [2004] 267 ITR 200 (Bom) and Hindustan Lever Ltd. v. R. B. Wadkar, (Asst. CIT) (No. 1) [2004] 268 ITR 332 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ness on the part of the Income-tax Officer in not applying the law contained in clause (c) of the proviso to section 10(2)(vi) of the Act of 1922. As observed by Shah J. in CIT v. Bhanji Lavji [1971] 79 ITR 582 (SC), section 34(1)(a) of the Act of 1922 (corresponding to section 147(a) of the Act of 1961) does not cast a duty upon the assessee to instruct the Income-tax Officer on questions of law." Therefore, the Supreme Court held that where the Assessing Officer relies on his own records and commits mistakes, the same cannot be attributed to be the omission or failure on the part of the assessee. The judgment in the case of Parashuram Pottery [1977] 106 ITR 1 (SC) also considered the judgment of the five-judge Bench of the apex court in the case of Calcutta Discount Co. Ltd. [1961] 41 ITR 191. Thus, wrong interpretation of accounts by the Assessing Officer and grant of excess benefit cannot be a ground for reopening. The ratio of the judgment in Parashuram Pottery [1977] 106 ITR 1 (SC) equally applies in the case in hand. The reasons recorded, as noted, do not warrant assumption of jurisdiction by the Assessing Officer to issue notices under section 148. In my view, the law ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he jurisdiction under article 226 of the Constitution of India. Moreover, on the point of maintainability, besides the judgments as noted above and relied on by Mr. Datta, reliance was also placed on a recent judgment of this court in Berger Paints India Ltd. v. Asst. CIT [2004] 266 ITR 462 where the court while entertaining the writ petition challenging the notices under section 148 of the Act held as follows: "It is the settled position of the law that in exercise of extraordinary power under article 226 of the Constitution of India, the court will not interfere with any proceedings of a quasi-judicial nature particularly, when this is initiated under expressed provision of the statute and which in its turn provides for a complete code for adjudicating machinery, provided of course such action is initiated in lawful and proper exercise of jurisdiction." In the case in hand, as already noted, since the conditions for assumption of jurisdiction under section 147 were not fulfilled, the notices under section 148 of the Act were uncalled for and warrant interference by appropriate orders. In my view, if an authority assumes jurisdiction illegally which is not vested under the law ..... X X X X Extracts X X X X X X X X Extracts X X X X
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