2012 (9) TMI 16 - HC - Income Tax

Challenge against reopening of assessment - reasons were not recorded before issuance of notice - Held that:- It cannot be stated that the AO had not recorded reasons before issuance of the notice. Firstly, the reasons recorded are found on the file immediately after the original notice u/s 148. Though such reasons are not dated, the note-sheet maintained by the AO concerned recorded that the notice is issued after recording reasons.

The power u/s 147 cannot be exercised to circumvent the proceedings under section 143(3) - Held that:- On recalling that the return filed by the petitioner was not taken in scrutiny. No assessment, thus, took place. The AO without any assessment, merely issued an intimation under section 143(1) accepting such return. In that view of the matter, it cannot be stated that the AO formed any opinion with respect to any of the aspects arising in such return. In such a case, scope for reopening such assessment u/s 147 as compared to an assessment which was previously framed u/s 143(3), whether beyond or within four years from the end of the relevant assessment year, is substantially wider.

The intimation under section 143(1)(a) was deemed to be a notice of demand under section 156, for the apparent purpose of making machinery provisions relating to recovery of tax applicable. By such application only recovery indicated to be payable in the intimation became permissible. And nothing more can be inferred from the deeming provision. Therefore, there being no assessment under section 143(1)(a), the question of change of opinion, as contended, does not arise.

Central as well as the State Sales Tax and other income in the net profit would not qualify for deduction under section 80HHC and debit entry for warranty expenses out of which only an amount of Rs.1,05,48,633/- was incurred during the financial year under consideration - such reason would permit the AO to reopen the assessment - not find that the notice for reopening is invalid or lacks jurisdiction - against assessee.