TMI Blog2012 (3) TMI 329X X X X Extracts X X X X X X X X Extracts X X X X ..... chargeable to tax for the assessment year 1997-98 had escaped assessment the petitioner was entitled to the deduction under Section 80-O of the Act in respect of its consultancy income of Rs.71,11,695/- which has been declared in its profit and loss account for the year ended 31.03.1997 - the assessee deducted 50% of Rs.71,11,695/- which comes to Rs.35,55,848/- as deduction under Section 80-O. If this figure is reduced from the profit figure of Rs.42,79,340/-, the balance comes to Rs.7,23,492/-. It was on this basis that the petitioner declared income of Rs.7,23,490/- for the assessment year 1997-98 under the VDIS - aDecided in favor of the assessee - W.P.(C) No.8631/2007 - - - Dated:- 7-3-2012 - MR. JUSTICE SANJIV KHANNA, MR. JUSTICE R.V. EASWAR, JJ. For Appellant: Mr. N. K. Kaul, Sr. Adv. with Mr. Akshay Ringe, Adv. For Respondents : Ms. Rashmi Chopra, Sr. Standing Counsel. R.V. EASWAR, J.: The short question raised in this writ petition filed by M/s. Northern Exim (P) Ltd. is whether the assessment for the assessment year 1997-98 has been validly reopened under Section 148 of the Income Tax Act, 1961 ( Act‟, for short) despite the fact that the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that since it had availed of the VDIS it was not required to file its income tax return again. 4. It would appear that the petitioner thereafter filed a writ petition in W. P. (C) No.240/2001 (Tax) before the Allahabad High Court seeking issue of a writ of certiorari to quash the notice dated 14.12.2000 issued by the respondent No.1 under Section 148 of the Act and also prayed for a direction to the respondent No.2 (respondent No.1 in the Writ Petition before us) not to proceed with the re-assessment proceedings. On 16.02.2001 a Division Bench of the Allahabad High Court passed an order staying all further proceedings pursuant to the notices dated 14.12.2000 and 16.01.2001. It appears that in the year 2005 the respondents filed their counter affidavit before the Allahabad High Court to the writ petition on the ground of lack of territorial jurisdiction and accepting the plea the Allahabad High Court dismissed the petitioner‟s writ petition by order dated 19.10.2007. Thereafter the petitioner filed the present writ petition before this Court. The prayer in the present writ petition is that the notice issued under Section 148 of the Act and the show-cause notice issued on 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily disclosed income shall not be included in the total income of the declarent for any assessment year under the Act subject to fulfillment of the conditions and there is no violation of any of these conditions stated in the Section. Therefore, the notice issued under Section 148 of the Act is without jurisdiction. 6. The contention of the learned Standing Counsel on behalf of the Income Tax Department is that in the rejoinder affidavit the petitioner itself has accepted that no details were filed in the declaration made under the VDIS and therefore the notice under Section 148 of the Act was well within jurisdiction. It was next contended that the reasons recorded for re-opening the assessment show that on a perusal of the return filed by the petitioner for the assessment year 1998-99 it was observed that in the previous year the petitioner had shown a taxable profit of Rs.42,79,340/-, but no return was found to have been filed by the petitioner for the assessment year 1997-98 and it was for this reason that notice under Section 148 of the Act was issued on the ground that income chargeable to tax for the assessment year 1997-98 had escaped assessment. It was contended that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome was not to be included in the total income of the declarant for the purpose of assessment for any year under the Income Tax Act if the intimation of the crediting in the books of accounts is made to the Assessing Officer and the tax on the declaration is also paid in time. Section 72 protected the declarant by ensuring secrecy of the declaration except in very limited circumstances. It was further provided by Section 71 that the particulars contained in the declaration shall not be admissible in evidence against the declarant for the purpose of any proceedings relating to imposition of penalty or for the purposes of prosecution under various Acts, including Income Tax Act, 1961; Wealth Tax, 1957; FERA, 1973 and Companies Act, 1956. However, immunity shall not extend to offences under laws such as Indian Penal Code, Prevention of Corruption Act, Narcotic Drugs and Psychotropic Substances Act, etc. The scheme also provided that a person in whose case search action has been taken under Section 132 of the Income Tax Act, 1961 or where his books of accounts or other assets have been requisitioned under Section 132A of the said Act will not be entitled to take advantage of the VDIS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... profit and loss account also contained the corresponding figures of income and expenses for the year ended 31.03.1997. The Assessing Officer, therefore, noticed the figure of profit shown in the profit and loss account for the year ended 31.03.1997 and on seeing that the same was Rs.42,79,340/- and finding that the return of income for the assessment year 1997-98 had not been filed by the petitioner, proceeded to record reasons and issued notice under Section 148 of the Act on the ground that the income chargeable to tax had escaped assessment. The petitioner, having filed a declaration under VDIS for the assessment year 1997-98, was under no obligation to file the return of income in the normal course for that assessment year under Section 139(1) of the Act. It has been clarified by the circular No.753 dated 10.06.1997 issued by the CBDT as follows: - In accordance with the provisions of section 64 of the Finance Act, 1997, a person may make a disclosure in respect of any income chargeable to tax under the Act, for any assessment year (a) for which he has failed to furnish a return under section 139 of the 1961, Act; (b) which he has failed to disclose in a return of incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Co. Ltd. v. ITO, (1981) 128 ITR 326 (Cal.); (vi) Equitable Investment Co. (P.) Ltd. v. Income-Tax Officer, G. Ward, and Ors., (1988) 174 ITR 714 (Cal.); (vii) S. Sreeramachandra Murthy and Anr. V. Deputy Commissioner of Income-Tax and Anr., (2000) 243 ITR 427 (A.P.). The ratio laid down in all these cases is that, having regard to the entire scheme and purpose of the Act, the validity of the assumption of jurisdiction under Section 147 can be tested only by reference to the reasons recorded under Section 148(2) of the Act and the Assessing Officer is not authorised to refer to any other reason even if it can be otherwise inferred and/ or gathered from the records. He is confined to the recorded reasons to support the assumption of jurisdiction. He cannot record only some of the reasons and keep the others up his sleeves to be disclosed before the Court if his action is ever challenged in a Court of law. 15. In the affidavit the petitioner has averred in paragraph 5 that for the assessment year 1997-98 the entire taxable income shown and declared under the VDIS was Rs.7,23,490/- after permissible deductions under the Income Tax Act . In the schedule 10 to the financial account ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
