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Suresh Versus Additional Commissioner of Income-Tax and others

2016 (7) TMI 704 - BOMBAY HIGH COURT

Reopening of assessment - notices issued without jurisdiction - Held that:- In the instant case, the fact is not in dispute that on the request of the petitioner the respondent has provided copy of the reasons recorded by respondent No. 3 as well as the copy of the order passed under section 151 of the said Act. So no case of prejudice caused to the petitioner has been made out. - In the light of the discussion made in the foregoing paras, we are of the view that there is no merit in the pet .....

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ioner : B. R. Waramaa, Advocate For the Respondent : Alok S. Sharma, Advocate JUDGMENT V. L. Achliya, J. 1. The petitioner herein has preferred this writ petition under articles 226 and 227 of the Constitution of India, seeking reliefs as under : (A) By issuing writ of certiorari or appropriate writ or directions or orders in like nature, impugned notice dated March 25, 2015 (Exhibit "D") issued by respondent No. 3 and sanction dated March 25, 2015 granted by the learned Additional Com .....

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Commissioner thereon, notice dated August 14, 2015 (exhibit "I") issued by respondent No. 2 and impugned order dated September 16, 2015 (exhibit "J") passed by respond ent no. 2 recording reasons to believe under sections 147 and 148 of the Income-tax Act are without jurisdiction, competence and barred by limitation. 2. We have heard learned counsel for respective parties at length and further perused the copies of the impugned notices and orders as well as other documents r .....

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s assigned to the Deputy Commissioner of Income-tax, i.e., respondent No. 2. Notice under section 143(2) of the Income-tax Act, 1961 (hereinafter shall be referred to as "the said Act") was issued by respondent No. 2. Subsequently, by order dated February 9, 2012, passed by the Commissioner of Income-tax-2, Nashik, in exercise of powers under section 127 of the said Act, the file of the petitioner was transferred to the Joint Commissioner of Income-tax, Jalgaon. The said order was give .....

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ly, the petitioner had paid the tax. For the subsequent assessment year, the income of the petitioner was assessed and finalised by the Income-tax Officer, Ward No. I(I), Jalgaon. (b) Thereafter, on March 23, 2015, respondent No. 3 decided to reopen the assessment for the year 2010-11 pursuant to the information received from the Director of Income-tax (Intell & Cr.Inv), Mumbai, wherein it is mentioned that, on analysis of the client code modification (CCM) data obtained from National Stock .....

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s (F and O segments) shown to be debited to profit and loss account and same appears to be loss of ₹ 36,60,755 claimed by the petitioner in the said assessment. In view of this, respondent No. 2 arrived at the conclusion that, there is reason to believe that income to the extent of ₹ 62,82,394 has escaped in the assessment as per third proviso to Explanation 2(c)(i) to section 147 of the said Act. After recording satisfaction that there is reason to believe that the said income has e .....

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on, pleased to grant sanction to reopen the assessment of the petitioner for the assessment year 2010-11 and issuance of notice under section 148 of the Income-tax Act, 1961, after recording the reasons. After receiving the sanction from the Additional Commissioner of Income-tax, the respondent No. 3 issued notice under section 148 of the Income-tax Act, 1961 to the petitioner on March 25, 2015 and called upon the petitioner to submit a return in the prescribed proforma of his income for the ass .....

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shed to the petitioner and later on, at the request of the petitioner, the copy of the reasons together with the order passed by the sanctioning authority was furnished to the petitioner. On August 14, 2015, respondent No. 2 issued notice under section 142(1) of the Income- tax Act. The petitioner thereafter filed response on September 7, 2015 raising preliminary objection to reopening of assessment of the assessment year 2010-11. On September 16, 2015, the Deputy Commissioner of Income-tax, Cir .....

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lid and without jurisdiction. It is contended that, as the assessment for the year 2010-11 was finalised at the level of the Joint Commissioner of Income-tax, respondent No. 3 had no authority to reopen the assessment and issue notice under section 148 of said Act. In this context, the learned counsel has invited our attention to sections 147 and 148 of the Income-tax Act, 1961 and by placing emphasis on the word Assessing Officer used in the said provision and defined under section 2(7A) of the .....

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learned counsel appearing for respondents Nos. 1 to 3 has countered the submissions advanced with contention that, in the matter of the petitioner respondent No. 3 is an "Assessing Officer for all purposes under the provisions of Income-tax Act as the case in question falls under his jurisdiction. It is submitted that, the assessment of the subsequent period, i.e., 2011-12 and onwards wherein the petitioner had disclosed the income below ₹ 10.00 lakhs, finalised by respondent No. 3 &a .....

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itioner to the file of the Joint Commissioner of Income-tax, Range-I, Jalgaon, vide order dated February 9, 2012 for administrative convenience. The Commissioner of Income-tax has specifically mentioned in the order dated February 9, 2012 that transfer order shall remain in force with effect from February 9, 2012 to March 31, 2013 for the assessment year 2010-11. In this background, it is submitted that there is no substance in the submissions of the learned counsel for the petitioner that the j .....

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said definition. Since respondent No. 3 is the Assessing Officer in the matter of the petitioner, no illegality is committed on his part in issuing the impugned notices. He has further submitted that, as respondent No. 3 being "Assessing Officer" for the assessment year 2014-15 for the petitioner, and the information from the Director of Income-tax (Intell and Cr.Inv), Mumbai received to the effect that he has escaped income during the assessment year 2010-11, he acted upon that inform .....

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1. The Additional Commissioner of Income-tax has considered the same and on due satisfaction that the case is fit for reassessment, was pleased to accord sanction for reopening of case under section 147 of the Income-tax Act as well as issuance of notice under section 148 of the Income-tax Act. It is therefore submitted that, the entire action on the part of respondent No. 3 was within the bounds of law and in accordance with the procedure prescribed under the said Act. It is further submitted t .....

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ection 127 of the Income-tax Act, 1961 and now the same is dealt with by the Deputy Commissioner of Income-tax, Circle-I, Jalgaon. The preliminary objection raised by the petitioner was also dealt with and decided by the Deputy Commissioner of Income-tax. It is, therefore, submitted that there is no illegality in issuing the notice under section 148 of the Income-tax Act, by respondent No. 3 as well as impugned order passed by respondent No. 2. 6. We have carefully considered the submissions adv .....

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ase of the petitioner vests with respondent No. 3 as an "Assessing Officer" of concerned ward. 7. The challenge to the impugned notices and the order passed is based upon the contention that as the assessment for the year 2010-11 was made at the level of the Joint Commissioner of Income-tax, respondent No. 3 was not competent to act under section 147 and issue notice under section 148 of the said Act. In this context, it is useful to refer clause (7A) of section 2 of the said Act which .....

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he jurisdiction of the Income-tax authorities. Sub-section (1) of section 120 provides that, Income-tax authorities shall exercise all or any of the powers and perform all or any of the functions conferred on, or, as the case may be, assigned to such authorities by or under the Act in accordance with such directions as the Board may issue for the exercise of the powers and performance of the functions by all or any of those authorities. Sub-section (3) of section 120 of the said Act provides tha .....

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income up to 10.00 lakhs to entertain the case of the petitioner for assessment lies with respondent No. 3 and the assessment of the period 2011-12 onwards. As the information was received from the Director of Income-tax (Intell and Cr.Inv), Mumbai and it was found that the petitioner had escaped certain income during the assessment year 2010-11, respondent No. 3 proceeded with the matter. After recording satisfaction that there is reason to believe that the income has been during assessment ye .....

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10-11 as well as to issue notice under section 148 of the Income-tax Act, 1961. Pursuant to notice dated March 25, 2015, issued under section 148 of the said Act, the petitioner appeared on April 22, 2015 and filed the copy of return of income for the assessment year 2010-11. In response to the notice dated March 25, 2015, the petitioner has not raised any objection as to the jurisdiction of respondent No. 3 to issue such notice. The petitioner requested for providing the copy of reasons recorde .....

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ax vide order dated September 16, 2015 passed in the matter. 9. In our view the order passed by the Deputy Commissioner of Income- tax is a speaking and well reasoned order. As soon as respondent No. 3 noted from the copy of Income-tax return, the return for income filed for the year 2010-11 are more than one crore and the assessment was made by the Joint Commissioner, he transferred the file to the Deputy Commissioner of Income-tax as per the procedure laid down in section 127 of the said Act a .....

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February 9, 2012 to March 31, 2013, there is no force in the submission of learned counsel for the petitioner that officer not below the rank of the Joint Commissioner of Income-tax can only make reassessment. The Deputy Commissioner of Income-tax, who is now dealing with the case is duly competent and possess the pecuniary and territorial jurisdiction to deal with the case of the petitioner for reassessment. For this reason alone, we are not inclined to accept the contention of learned counsel .....

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chargeable for the assessment year 2010-11, the petitioner has escaped certain amount from assessment within the meaning of third proviso to Explanation 2(c)(i) to section 147 of the said Act. In the notice it is also mentioned that necessary approval has been granted by the Additional Commissioner of Income-tax for issuing such notice. The petitioner has responded to the said notice dated March 25, 2015 on April 22, 2014. However, no objection as to jurisdiction is raised. The objection as to .....

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September 7, 2015. As provided under sub-section (3) of section 124 of the said Act, no person is entitled to call in question the jurisdiction of an Assessing Officer after the expiry of the time allowed by the notice issued under section 148. Section 124 of the Income-tax Act reads as under : "124. (1) Where by virtue of any direction or order issued under sub-section (1) or sub-section (2) of section 120, the Assessing Officer has been vested with jurisdiction over any area, within the l .....

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n of an Assessing Officer- (a) where he has made a return under sub-section (1) of section 115WD or under sub-section (1) of section 139, after the expiry of one month from the date on which he was served with a notice under sub-section (1) of section 142 or sub-section (2) of section 115WE or sub-section (2) of section 143 or after the completion of the assess ment, whichever is earlier ; (b) where he has made no such return, after the expiry of the time allowed by the notice under sub-section .....

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t Kumar Jain v. Deputy CIT reported in [2016] 381 ITR 428 (Delhi). In our view the decision in the case of Dushyant Kumar has no bearing upon the facts of the present case. The facts of the case cited are altogether different from the present case. In the case cited the notice was issued and reasons for reopening assessment were recorded by the Income-tax Officer, who was not the Assessing Officer for the assessee for the concerned assessment year. So also the notice was found to be issued beyon .....

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cer, Ward No. 1, Jalgaon. 12. As discussed in the foregoing paras, respondent No. 3 had issued the notice under section 148 of the said Act after seeking necessary approval under section 151 of the said Act. The proceeding is already transferred by respondent No. 3 to the Deputy Commissioner of Income-tax, who is vested with the jurisdiction to deal with the matters having valuation more than 10.00 lakhs. The objections raised by the petitioner also decided by the Deputy Commissioner of Income-t .....

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of this, we find no merit in the submissions advanced that the impugned notice issued by respondent No. 3 is illegal, bad in law and without jurisdiction. So also, we find no infirmity in the order dated September 16, 2015 passed by the Deputy Commissioner of Income-tax. 13. The learned counsel for the petitioner further submitted that reasons recorded by respondent No. 3 and the copy of the order of sanction were not furnished along with notice dated March 25, 2015 and same was furnished and th .....

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