TMI Blog2011 (5) TMI 699X X X X Extracts X X X X X X X X Extracts X X X X ..... itioner Mauna M. Bhatt for the Respondent JUDGMENT Harsha Devani, J 1. Rule. Mrs.Mauna Bhatt, learned Senior Standing Counsel waives notice of service of rule on behalf of the respondent. 2. Considering the controversy involved in the present case which lies in a narrow compass and with the consent of the learned advocates for the parties, the matter is taken up for hearing today. 3. By this petition under Article 226 of the Constitution of India, the petitioner has challenged the notice dated 24.3.2009 issued by the respondent under section 148 of the Income Tax Act, 1961 (the Act), the preliminary order dated 22.9.2009 and the further notice dated 22.9.2009. 4. The petitioner, a private limited company, is running a liquor shop and lodging hotel. The return of income filed by the petitioner for assessment year 2003-03 was processed by the department by issuance of notice under section 143(2) of the Act. After considering various submissions of the petitioner company and its representative Chartered Accountants, details of business activity, bank accounts, creditors, sales and purchases, closing stock, details of expenses etc. were furnished and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petition challenging the impugned notice as well as the order passed by the Assessing Officer rejecting the objections filed by the petitioner as well as the subsequent notice issued under section 143(2) of the Act. 9. Mr. R. K. Patel, learned advocate appearing on behalf of the petitioner has submitted that in the present case, the assessment for assessment year 2002-03 is sought to be reopened by issuance of a notice dated 24.3.2009 under section 148 of the Act, which is clearly beyond a period of four years from the end of the relevant assessment year. It is submitted that in the circumstances, the proviso to section 147 of the Act would be attracted and as such, unless there is any omission or failure on the part of the petitioner to disclose fully and truly all material facts necessary for its assessment, the assumption of jurisdiction on the part of the Assessing Officer is invalid. 10. Referring to the reasons recorded, it was submitted that the first reason for reopening the assessment is in respect of the advertisement expenses incurred by the petitioner which was subject matter of revision under section 263 of the Act by the Commissioner and was set aside by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r is not justified in reopening the assessment after the expiry of a period of four years from the end of the relevant assessment year. 12. The petition is opposed by Mr. M. R. Bhatt, learned Senior Advocate appearing on behalf of the respondent who has supported the impugned notice by reiterating the grounds stated in the order rejecting the objections of the petitioner. 13. In the present case, the assessment is sought to be reopened in respect of the assessment year 2002-03 by issuing notice dated 24.3.2009 which is clearly after the expiry of a period of four years from the end of the relevant assessment year. In the circumstances, for the purpose of assuming valid jurisdiction under section 147 of the Act, the Assessing Officer is required to establish, firstly that income chargeable to tax has escaped assessment, and secondly, that such escapement is by reason of failure on part of the petitioner to furnish return of income under section 139 or in response to notice issued under sub-section (1) of section 142 or section 148 of the Act or that there is failure on the part of the petitioner to disclose fully and truly all material facts. In the present case, it is not t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter due investigation. 16. Insofar as the first ground for reopening the assessment is concerned, as pointed out by the learned advocate for the petitioner in respect of the said issue, the Commissioner of Income Tax had taken the assessment order in revision under section 263 of the Act and had held that the assessment order was prejudicial to the interest of the revenue and had set aside the assessment and directed the Assessing Officer to frame the assessment de novo after making proper inquiry. A perusal of the order under section 263 of the Act shows that the assessment order was taken in revision mainly on the ground of expenditure incurred towards advertisement expense. The aforesaid order passed by the Commissioner was taken in appeal by the petitioner before the Income Tax Appellate Tribunal, who by an order dated 14.9.2007, allowed the appeal and set aside the order passed by the Commissioner. The revenue failed in its appeal against the said order of the Tribunal filed before the High Court. Thus, insofar as the expenditure incurred towards advertisement expenses of Rs.26,10,975/- is concerned, the same was already subject matter of revision as well as further appeal b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Income Tax Officer to reopen the assessment, though wide, are not plenary. The words used by the statute are "reason to believe" and not "reason to suspect". 21. On a plain reading of the reasons recorded, it is apparent that insofar as the second ground is concerned, the Assessing Officer has reopened the assessment merely to make inquiries. Nothing is stated in the reasons recorded to indicate that any income chargeable to tax has actually escaped assessment in relation to the said ground. 22. In the aforesaid premises, it is apparent that neither of the grounds for reopening the assessment are valid grounds and as such, the basic requirement for invoking the provisions of section 147 of the Act, viz., that income chargeable to tax should have escaped assessment, is itself not satisfied. In the circumstances, the impugned notice issued under section 148 of the Act seeking to reopen the assessment under section 147 of the Act, is without jurisdiction and as such, cannot be sustained. 23. Another aspect to be noted is that the petitioner has submitted objections against the detailed reasons recorded by the Assessing Officer, raising all contentions raised in the pre ..... X X X X Extracts X X X X X X X X Extracts X X X X
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