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2016 (5) TMI 113 - DELHI HIGH COURT

2016 (5) TMI 113 - DELHI HIGH COURT - [2016] 381 ITR 428 - Reopening of assessment - officer who issued the notice and recorded the reasons for re-opening the assessment, i.e. the ITO Ward 39(2) was not the AO of the Assessee - Held that:- The reasons given by the Department in its counter affidavit do not in any way explain the patent illegality in invoking the powers under Section 148 of the Act for reopening the assessment of the Assessee for AY 2007-08. The mere fact that the definition of a .....

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rs under Section 147/148 to re-open the assessment. This is because he alone would be in a position to form reasons to believe that some income of that particular AY has escaped assessment. This again cannot be based on a mere change of opinion. Further, in terms of Section 151 of the Act such a move will have to have the prior approval of the CIT. Under the scheme of the Act, if a superior officer forms an opinion that the original assessment order is prejudicial to the interests of the Revenue .....

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DER Dr. S. Muralidhar, J. 1. This is a writ petition under Article 226/227 of the Constitution of India praying for issuance of a writ of certiorari and quashing of the notices dated 14th March, 2014 and 23rd June, 2014 issued by the Income Tax Officer ( ITO ), Ward 39(2), New Delhi and the Assistant Commissioner of Income Tax ( ACIT ), Circle 39(1), New Delhi respectively under Section 148 of the Income Tax Act, 1961 ( Act ) seeking to reopen the assessment for Assessment Year ( AY ) 2007-08. 2 .....

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2007 declaring an income of ₹ 38,76,580. The Deputy Commissioner of Income Tax ( DCIT ), Circle 39(1), who is the Assessing Officer ( AO ) of the Assessee, issued a notice to the Assessee under Section 142(1) of the Act on 10th October, 2008 raising certain queries and calling for records. These were furnished by the Assessee on 3rd November, 2008. On 13th April 2009, an assessment order was passed by the AO under Section 143(3) of the Act. 4. In terms of the provisions to Section 147 of t .....

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f the Chief Commissioner of Income Tax, Delhi-1 (CCIT) forwarding a letter dated 19th March, 2013 received from the Commissioner of Income Tax ( CIT ), Central-II, New Delhi along with a CD containing the details of certain accommodation entries provided by Shri Rakesh Gupta, Shri Vishesh Gupta, Shri Navneet Jain and Shri Vaibhav Jain directing this office to take necessary action as per Section 148 in respect of entries pertaining to AY 2007-08, which is time barring on 31st March, 2014 . The r .....

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Petitioner addressed a letter dated 9th April, 2014 to the ITO, Ward 39(2) inter alia, pointing out that he does not have any jurisdiction over a case which was completed by the AO who was the DCIT, Circle 39(1). A copy of the return filed for AY 2007-08 was enclosed. Accordingly, the ITO Ward 39 (2) was requested to drop the proceedings under Section 148 of the Act. 7. This was followed by another notice dated 23rd June 2014, again under Section 148 of the Act, issued this time by the ACIT, Ci .....

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ed beyond four years (in terms of Section 147) and six years (in terms of Section 149 of the Act). 9. On 7th November, 2014 a notice was received under Section 143(2) of the Act from the DCIT, Circle 39(1) requiring the petitioner to attend his office on 11th November, 2014 at 4:30 pm. 10. On 12th November 2014, the Petitioner replied to the above notice pointing out that objections had already been filed in response to the notice under Section 148 of the Act. Another copy of the income tax retu .....

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how Cause Notice issued by the DCIT, Circle 63(1) on 28th January, 2015, this time for AY 2007-08, but referring inter alia to the notice dated 1st December, 2014. 11. On 28th January, 2015 an order was passed by the DCIT, Circle 63(1) rejecting the objections filed by the Assessee to the reopening of the Assessment. It was stated that the Assessee has neither complied with the notice under Section 148 dated 14th March, 2014 nor filed any return in response." It was further stated: "In .....

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reasons for re-opening had been recorded by the ITO Ward 39(2), who was not the AO as far as the Petitioner was concerned for the AY in question. As far as the second impugned notice dated 23rd June, 2014 is concerned it was issued by the AO of the Petitioner but well beyond the period of limitation in terms of Section 149(1)(b) of the Act which expired on 31st March, 2014. 13. In the counter affidavit filed on behalf of the Respondent, the above objections are sought to be met by stating in pa .....

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of Income Tax or Deputy Director of Income Tax or the Income Tax Officer who is vested with the relevant jurisdiction by virtue of direction or orders issued under sub-section (1) or sub-section (2) of Section 120 or any other provision of the Income Tax Act, and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of Sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, o .....

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148. 14. It is further averred in the counter affidavit that the grounds urged by the Assessee are frivolous untenable and unsustainable . 15. What is evident from the counter affidavit filed by the Respondent is a clear admission that the officer who issued the notice dated 14th March, 2014, and recorded the reasons for re-opening the assessment, i.e. the ITO Ward 39(2) was not the AO of the Assessee. That single fact in itself vitiates the reopening of the assessment. What is also evident is t .....

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