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TMI Blog2018 (10) TMI 1906X X X X Extracts X X X X X X X X Extracts X X X X ..... areek and order passed by the CIT (Appeals) in the case of Munna Lal Pareek. The said material or information available with the Assessing Officer has led the Assessing Officer to think that petitioner is required to be confronted by giving notice to explain the income, which was to be assessed in the hands of petitioner as the same is correct or not. In the instant case that there is no issue of jurisdiction which can be said to be raised by the petitioner and it is only allegation in respect of cryptic order passed by the Assessing Officer without having any reasons to believe or to initiate the proceedings under Section 148 of the Act, 1961. This Court further finds that the petitioner, who is given notice under Section 142 (1) to further explain and to place before the Assessing Officer the relevant facts relating to income which is now sought to be assessed, can always satisfy the authorities that the income which is now taken to be the income of the petitioner instead of one Shri Munna Lal Pareek, is well explained by their own sources. Considering, all the facts, this Court finds that there is no infirmity in the orders passed by the Income Tax Authorities and if any order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for initiation of reassessment proceedings and it emerged that the proceedings under Section 148 of the Act, were initiated on the basis of order passed by CIT(A) in the case of one Shri Munna Lal Pareek, wherein it was held that petitioner was the actual beneficiary owner of the Bank A/c No. 1790101442770 and name of Munna Lal Pareek was used by the petitioner and amount of ₹ 43,81,500/- escaped from assessment for tax purpose. 6. The petitioner has pleaded that on receipt of reasons recorded for issuance of notice under Section 148 of the Act, a request was made to provide material available with the reference to Munna Lal Pareek and the respondents provided the copy of assessment order and appellate order passed in the case of Munna Lal Pareek by letter dt. 24th August, 2018. 7. The petitioner has further pleaded that in response to the notice received by him under Section 148 of the Income Tax Act, 1961, he filed objections on 11th September, 2018 and as many as 13 objections were raised. 8. The petitioner has pleaded that the respondents by the impugned speaking order dt. 13th September, 2018, has decided the objections in a cryptic manner and completely failed to ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. Hemant Traders Vs. ITO [2015] 59 Taxmann.com 234 (Bombay). 7. CIT Vs. Indo Arab Air Services [2015] 64 Taxmann.com257 (Delhi). 8. Hari Kishan Sunderlal Virmani Vs. DCIT [2017] 88Taxmann.com 548 (Gujarat). 9. Varshaben Sanatbai Patel Vs. ITO [2015] 64Taxmann.com 179 (Gujarat). 10. PCIT Vs. Meenakshi Overseas (P.) Ltd. [2017] 82Taxmann. Com 300 (Delhi). 11. PCIT Vs. Shodiman Investment Pvt. Ltd. [2018] 93 Taxmann.com 153 (Bombay). 15. Counsel has further placed reliance on the judgments in respect of two yardsticks, required to be considered by the Assessing Officer, for issuing notice under Section 148 i.e. reasons to suspect; or reason to believe. Counsel has placed reliance on circular/notice dt. 9th December, 2016, issued by CBDT and judgments of the Delhi High Court in the case of Sabh Infrastructure Ltd. Vs. ACIT reported in [2017] 398 ITR 198 (Delhi)], Krown Agro Food (P.) Ltd. Vs. ACIT reported in [2015] 57 Taxmann. Com 355 (Delhi) and other judgment passed by the Delhi High Court and Gujarat High Court. 16. I have heard the submissions made by learned counsel for the petitioner and perused the material on record. 17. It would be appropriate to quote Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 excessive loss, deduction, allowance or relief in the return; [(ba) where the assessee has failed to furnish a report in respect of any international transaction which he was so required under section 92E;] (c) where an assessment has been made, but- (i) income chargeable to tax has been underassessed; or (ii) such income has been assessed at too low a rate;or (iii) such income has been made the subject ofexcessive relief under this Act; or (iv) excessive loss or depreciation allowance or anyother 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 asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me limit for making the assessment, reassessment or recomputation as specified in subsection (2) of section 153, every such notice referred to in this clause shall be deemed to be a valid notice.] [Explanation.-For the removal of doubts, it is hereby declared that nothing contained in the first proviso or the second proviso shall apply to any return which has been furnished on or after the 1st day of October, 2005 in response to a notice served under this section.] [(2) The Assessing Officer shall, before issuing any notice under this section, record his reasons for doing so.]" 18. The perusal of Section 147 & 148 makes it clear that very object of the provisions under the Income Tax Act, 1961, is to ensure that the suppressed materials or facts and the new availability of material to the Department are also to be dealt with for the purpose of taxation. It is also very clear that in order to cover loopholes in the Tax Regime, and to control any evasion of tax by the individuals, the provisions of reopening of assessments are made and such provisions are to be invoked by following the procedures contemplated under the Act. 19. The purpose of sections 147 & 148 of the Act, 1961 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee and after supplying the reason, the Income Tax Officer is to adjudicate the matter in the manner known to law. 25. This Court finds that High Court cannot use the power of the Appellate Authorities in respect of the objections on the merits and demerits of the matter and the High Court cannot appreciate the question of law and facts at the initial stage, when notice under Section 148 of the Income Tax Act, 1961 is issued to the assessee for reopening the assessment. The complex facts and circumstances are required to be adjudicated by producing the documents and adducing evidences by the parties concerned and such an exercise can not be done by the High Courts under Article 226 of the Constitution of India. 26. This Court is also conscious of the legal principle that writ petition can be entertained, when the notices are issued by the Competent Authority having no jurisdiction or if the allegations of mala-fides are leveled or if the same is in violation of any statutory rules. 27. This Court after going through the ingredients of Section 147 of the Act, 1961 finds that the Assessing Officer has wider power, in respect of covering the escaped assessments for the purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated under the Act, enabling the Assessee to avail the opportunity and defend their case in accordance with law. 58. Thus, certain aspects which is contemplated under the provisions of the Act, cannot be interpreted, so as to defeat the purpose for which such a provision was enacted by the Legislators. Constructive interpretation of the Act and the Rules are of paramount importance. The Rule of constructive interpretation requires that the possible object and the purpose to be achieved is met out by adopting not only the balancing approach, but also by providing all reasonable opportunities to the persons, who all are connected or aggrieved 62. The amended phraseology of "reason to believe" must be interpreted that the Assessing Officer on receipt of any such new material or materials in relation to suppression of fact by the Assessee has made out a prima facie opinion that it is a case for reopening of the assessment, then he can issue notice under Section 148 and thereafter, the procedure of furnishing the reasons, receiving objections and conducting scrutiny and all other procedures contemplated under the provisions of the Act will suit as follow. Thus, it is not a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be aware of the income of the individual Assessees. They are assessing the tax based on the returns filed by the respective Assessees. Thus, the very concept of assessment is that the Officer who is scrutinising the returns did not aware of the income of an individual. For this reason only Act provides adequate power to deal with the cases, where there is evasion or suppression or otherwise by the Assessees. The very source of assessment is the returns filed by the Assessee concerned. Only after the filing of the returns, the Department of Income Tax came to understand that the income of the person concerned. Thus, the reassessment may arise on several occasions and on several grounds. The Income Tax Department may receive informations from many other sources. The Income Tax Department may get some external materials as well as from various other sources. It is the process of investigation. On receipt of such materials or informations from various other sources, in such circumstances, the authorities must be in a position to reopen the assessment and impose tax. In the absence of any such lucid provision, enabling the Department reopening a case, there is a possibility of escape ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch are the subject matters of any appeal, reference or revision. The wideness of the power has been further clarified in the said proviso clause. 89. In the present writ petition, this Court is of an opinion that undoubtedly notice was issued based on the reasons recorded by the Assessing Officer under Section 147 of the Act. However, the reasons arrived had not been communicated to the writ petitioner. But the writ petitioner requested the reasons to be furnished. Responding to the letter sent by the writ petitioner, the Assessing Officer communicated the reasons to the Assessee/writ petitioner and the objections were rejected. Thus, the writ petitioner has not been prejudiced in respect of the proceedings communicated by the Assessing Officer. Thus, this Court, has to consider the very fact that, whether any prejudice has been caused to the Assessee resulting any injustice or otherwise in the present writ petition on hand. The writ petitioner very well can respond to the Assessing Officer and establish his genuinity or otherwise by producing the materials available with him and by providing informations known to him. Without doing so, the writ petitioner filed the present writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to proceed further in accordance with law. Accordingly, the writ petition stands dismissed. However, there shall be no order as to costs. Consequently, connected miscellaneous petition is also dismissed." 30. The submission of learned counsel for the petitioner that the Assessing Officer undertakes the proceedings of reassessment, only on the basis of suspicion, without having any reasons to believe, this Court finds that the writ petition would not be maintainable against an order passed deciding the objections under Section 148 of the Income Tax Act, 1961. The Assessing Officer, if has "reasons to believe" that a particular income has escaped assessment and he is not proceeding only on hear say/conjectures, no fault can be found in such action, undoubtedly reopening is to be done cautiously & reasons for reopening is mandatory. In the absence of any substantial reason, the Assessing Officer cannot reopen the assessment which was closed long back. 31. The judgment cited by learned counsel for the petitioner in the case of Jeans Knit P. Ltd. Vs. DCIT (Supra), the Apex Court has though remanded the matter back to the High Court where it did not entertain the writ petition again ..... X X X X Extracts X X X X X X X X Extracts X X X X
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