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TMI Blog2023 (9) TMI 1344X X X X Extracts X X X X X X X X Extracts X X X X ..... the said notice it was proposed to re-assess the income/loss of the petitioner - a Co-operative Bank for the assessment year 2017-18. 3. The facts relevant for considering the challenge raised in the writ petition are that on 24.10.2017 the petitioner filed its return declaring its income for the assessment year 2017-18. The said return was selected for limited scrutiny by the Income Tax Officer. Accordingly on 26.09.2018, notice under Section 143(2) of the Act of 1961 came to be issued stating that the cash deposits made during the period of de-monetization were sought to be examined. The petitioner replied to the aforesaid notice on 25.06.2019 and stated that since the petitioner was in the business of banking it was accepting cash in old currency during the relevant period and was depositing the same with the Reserve Bank of India. It was further stated that the information of customers who had deposited cash in their accounts was submitted in AIR Information File. The details of the accounts maintained with other commercial banks was furnished alongwith copy of the bank statements during the period of de-monetization, Tax Audit Report as well as Balance-Sheet alongwith Profit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tated that though the petitioner had filed its return of income no assessment as stipulated under Section 2(40) of the Act of 1961 had been made and that the return of income had been processed only under Section 143(1) of the Act of 1961. It was also stated that since the period of four years had not lapsed from the end of the assessment year under consideration the sanction to issue notice under Section 148 of the Act of 1961 had been obtained from the Additional Commissioner of Income Tax under Section 151 of the Act of 1961. The petitioner was then issued a show cause notice dated 28.03.2022 calling upon it to show cause why the proposed variation with regard to cash deposits to the tune of Rs.40,49,97,000/- should not be made. The show cause notice was signed by the issuing Authority at 10.34.35 IST on 28.03.2022 and the petitioner was directed to submit its response by 23.59 hours on 28.03.2022. It is thereafter that the Income Tax Office proceeded to pass its assessment order on 29.03.2022 making an addition of the amounts indicated in the show cause notice to the amount of returned income of the petitioner. Consequential direction in the form of demand notice and challan a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was sought to be re-opened only on the basis of the information available on the Insight Portal. Without any independent verification and application of mind such re-opening was not permissible. The reasons supplied for re-opening of the assessment did not indicate any satisfaction, even prima-facie, being recorded by the Assessing Officer that the petitioner had failed to make a true and correct disclosure of its income. On the basis of borrowed satisfaction it was not permissible to re-open the assessment under Section 148 of the Act of 1961. The re opening had been done in a mechanical manner without due application of mind. Reliance was placed on the decision in Principal Commissioner of Income Tax Versus Shodiman Investments (P) Ltd. [(2020) 422 ITR 337 (Bom)]. (c) The re-opening of the proceedings by issuing notice under Section 148 of the Act of 1961 that too with gross incorrect facts was impermissible. While supplying the reasons for re-opening of the assessment it had been stated that the return of income filed by the petitioner had been processed only under Section 143(1) of the Act of 1961 while infact the assessment order dated 29.03.2022 had been passed under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Versus Deputy Commissioner of Income Tax & Another [2019 SCC OnLine SC 1500], United Bank of India Versus Satyawati Tondon & Others [(2010) 8 SCC 110] and Assistant Collector of Central Excise, Chandan Nagar, West Bengal Versus Dunlop India Ltd. & Others [(1985) 1 SCC 260] and submitted that the writ petition did not deserve to be entertained. Without prejudice to the aforesaid, it was submitted that the notice under Section 148 of the Act of 1961 had been issued after due application of mind and in accordance with law. The petitioner intended to avoid the enquiry into its income and hence a challenge was raised to the notice seeking to re-open the proceedings. On the basis of the information received on the Insight Portal the assessment was proposed to be re-opened. It could not be said that such re-opening was either on borrowed satisfaction or without recording due satisfaction in that regard. It was thus submitted that since the procedure prescribed by the Act of 1961 had been duly followed there was no reason to interfere in extraordinary jurisdiction. The writ petition therefore did not deserve to be interfered with and instead the petitioner could be directed to avail the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enge is to the notice under Section 148 of the Act of 1961 against which a statutory remedy for challenging the same is not available. 8. In the context of entertaining a challenge to notice issued under Section 148 of the Act of 1961 in a writ petition filed under Article 226 of the Constitution of India we may refer to paragraph 15 of the decision in Oracle Financial Services Software Ltd. Versus Deputy Commissioner of Income Tax & Others [(2022) 442 ITR 160], which reads as under :- "15. The principles which emerge from the aforesaid pronouncements and a plethora of decisions of this Court and the Supreme Court, can be summarized as under : Existence of the reason to believe that income chargeable to tax has escaped assessment is a jurisdictional condition for invoking the power under Section 147 of the IT Act, 1961, both within and beyond a period of four years from the end of relevant assessment year. The AO is enjoined to record reasons before a notice to reopen the assessment year. The AO is enjoined to record reasons before a notice to reopen the assessment under Section 148 of the Act is issued. In case, the assessment was completed under Section 143(3) of the Act, an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the bank statements of various customers. It was thereafter that the assessment order under Section 143(3) of the Act of 1961 came to be passed on 22.12.2019. It was thus urged that in these facts issuance of notice under Section 148 of the Act of 1961 was not warranted. On perusal of the notice dated 31.03.2021 issued under Section 148(1) of the Act of 1961 coupled with the reasons assigned by the respondents for seeking to re-open the proceedings it becomes clear that it is on the basis of the information shared on the Insight Portal with regard to high value cash deposits that has prompted the Assessing Officer to have a "reason to believe" that the said amount in the hands of the petitioner had escaped assessment. Except for stating that such information was available on the Insight Portal it has not been indicated in the said reasons as to how there was formation of belief by the Assessing Officer that income had escaped assessment. The reasons supplied do not indicate that any exercise of independent verification thereafter was undertaken resulting in consideration of the same with due application of mind by the Assessing Officer so as to re-open the completed assessment. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Act of 1961. Admittedly the assessment undertaken on 22.12.2019 was a regular assessment as defined by Section 2(40) of the Act of 1961 having been made under Section 143(3) of the Act of 1961. It is thus obvious that on the basis of incorrect facts, completed assessment was sought to be re-opened by the Assessing Officer. In Ankita A. Choksey (supra) notice of re-opening of the assessment came to be set aside after noting that the Assessing Officer had proceeded on fundamentally wrong facts to come to the reasonable belief that income chargeable to tax had escaped assessment. Though it is true that the assessment completed under Section 143(3) of the Act of 1961 could be reopened by issuing notice under Section 148 of the Act of 1961, the same can be done by referring to the correct facts that are available with the Assessing Officer. The reasons supplied indicate that the Assessing Officer has proceeded to re-open the proceedings on the premise that the return of income had been processed only under Section 143(1) of the Act of 1961 and hence there was no assessment as defined by Section 2(40) of the Act of 1961. 11. Yet another aspect that is evident from the record is the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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