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TMI Blog2019 (11) TMI 1192X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 26.03.2015 under Section 148 of the Act proposing to reassess the petitioner for the assessment year 2011-12. The assessee/petitioner after addressing a letter dated 09.04.2015 calling upon the authority to furnish a copy of the reasons recorded for initiating proceedings under Section 147 of the Act, filed its return of income on 01.05.2015. The petitioner also submitted a letter dated 06.01.2016 objecting to the initiation of the proceedings and requesting the Assessing Officer to drop the same. According to the petitioner, without responding to the requests made earlier, the authority passed an order dated 22.03.2016 under Section 143(3) r/w. Section 147 of the Act reassessing the petitioner for the assessment year 2011-12. Questioning the same, the petitioner has filed an appeal. 3.While so, the petitioner received another notice dated 09.03.2018 from the first respondent under Section 148 of the Act proposing to initiate proceedings under Section 147 and calling upon the petitioner to file its return of income in response to the said notice. The petitioner submitted a letter dated 11.07.2018 raising their objections for reopening of assessment under Section 147 of the Act. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fined only to the notice dated 09.03.2018 and the order dated 08.11.2018. In as much as the order dated 29.11.2018 has not been put to challenge, this writ petition is not maintainable. He also wanted this Court to non suit the petitioner for straightaway availing the writ remedy. Placing reliance on the decision of the Hon'ble Supreme Court reported in (2008) 14 SCC 218 (Raymond Woollen Mills vs. ITO), he contended that sufficiency or insufficiency of the reasons assigned in the notice of reopening of assessment cannot be the subject matter of an adjudication in a writ petition. 7.The pointed contention of the learned standing counsel for the respondents is that the assessee did not disclose fully and truly all material facts in respect of the expenditure towards earning the income which does not form part of the total income. Disallowance under Section 14 A of the Act could not be correctly computed as a result. Even though the statutory provision clearly states that the method for determining the amount of expenditure in relation to income not includable in total income must be done in accordance with Rule 8 D of the Income Tax Rules, 1962, in the assessment order dated 14. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 sub-section (1) of section 14 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year: Provided further that nothing contained in the first proviso shall apply in a case where any income in relation to any asset (including financial interest in any entity) located outside India, chargeable to tax, has escaped ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 4 years from the end of the assessment year i.e., 31.03.2012. Since an attempt to reopen the assessment is made after the expiry of 4 years from the end of the relevant assessment year, the first Proviso to Section 147 of the Act kicks in. It must therefore be seen whether the escapement of income was occasioned by failure on the part of the assessee to disclose fully and truly all material facts necessary for carrying out the assessment. 11.In my view, the key to the problem lies in a proper reading of Section 14 A (2) of the Act. Section 14 A of the Income Tax Act, 1961 reads as under : "Expenditure incurred in relation to income not includible in total income. 14A.(1) For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act. (2)The Assessing Officer shall determine the amount of expenditure incurred in relation to such income which does not form part of the total income under this Act in accordance with such method as may be prescribed, if the Assessing Officer, having regard to the accounts of the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such re-assessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the Assessing Authorities to re-assess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order. 15.Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to re-assess and not the power to review. 16. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any opinion on the questions that are raised in the proposed re-assessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the re-assessment proceedings." In a recent decision pertaining to land acquisition proceedings, the Hon'ble Supreme Court held that the power of review must be expressly conferred (2019) 9 SCC 416 (Naresh Kumar vs. State). 13.In this case, there is no failure on the part of the assessee. On the other hand, there appears to be a failure on the part of the assessing officer to make an appropriate determination of the amount of expenditure in terms of Section 14 A of the Income Tax Act. In such a case, the remedy for the Revenue is elsewhere and not in assuming jurisdiction under Section 147 of the Act. That would amount to exercising the power of review which the statute has not conferred on the authority. This is particularly because the attempt to reopen is made after the expiry of 4 years from the end of the assessment year and the origi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;ble Supreme Court made in Maxopp Investment Limited case. 17.I can hardly blame the first respondent. There is an explosion in the matter of law reporting. There are too many law journals. We have web editions and e-libraries. In the deluge of decisions, pearls get lost in the heap of pebbles. Lord Neuberger in his talk while commemorating the ICLR's 150th Anniversary remarked that in the legal world, just as in most other fields, a significant present day problem is information overload. As early as in 1863, Lindley identified the four criteria for reporting a case. They are 1.it must introduce a new principle, 2.modify an existing principle, 3.settle a disputed or uncertain issue, 4.or particularly instructive. 18.T.S.Eliot asked "where is the knowledge we have lost in information?". This pitfall can be avoided if the law officers of the various departments bring it to the notice of their respective heads of the departments the rulings that meet the aforesaid criteria laid down by Lindley. The same could then percolate down the line. Such a sharing of knowledge will definitely go a long way in improving the quality of adjudication. 19.For the foregoing reasons, the imp ..... X X X X Extracts X X X X X X X X Extracts X X X X
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