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2016 (11) TMI 120 - BOMBAY HIGH COURT

2016 (11) TMI 120 - BOMBAY HIGH COURT - TMI - Reopening of assessment - validity of notice - Held that:- We find that the reasons indicate that the basis for issuing a notice was not any material outside the record but proceedings available with the Assessing Officer on the basis of which the assessment under Section 143(3) of the Act was completed. No doubt, the reasons recorded in support do use the words 'that income has escaped assessment on account of non-submission of any information / non .....

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knowledge subsequent to the finalising of assessment which led to the Assessing Officer to have reason to believe that the income chargeable to tax escaped assessment. No material in support of the above is indicated in the reasons in support of the impugned notice. This clearly makes the impugned notice without jurisdiction. - Writ Petition No. 2513 of 2001 - Dated:- 14-10-2016 - M. S. Sanklecha And S. C. Gupte, JJ. Ms.A. Vissanji with Mr.S.J. Mehta for Petitioner Mr.Suresh Kumar with Ms.Samiks .....

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3. On 30 November 1994, the Petitioner filed its return of income for the Assessment Year 199394 declaring a loss of ₹ 33.07 crores. On 24 February 1997, the Assessing Officer passed an order under Section 143(3) of the Act determining the Petitioner's total income at ₹ 71.11 lakhs. 4. Thereafter, on 28 May 2001, the impugned notice seeking to reopen assessment for Assessment Year 1994-95 was issued to the Petitioner. The Petitioner challenged the impugned notice dated 28 May 20 .....

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income of ₹ 71,11,040/. 2. In the assessment completed it was noticed that on following issues income has escaped assessment : ( i) Export credit interest amounting to ₹ 1,12,49,121/remained to be taxed. (ii) Unrealised gain from investment of ₹ 1,49,89,619/being accrued income but remained to be taxed. (iii) DRDA subsidy recoverable at ₹ 54,11,984/remained to be taxed. Apart from the above, provision for contingency frauds ₹ 8,16,43,000/were allowed without obtaini .....

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n view of this, the income has escaped assessment on account of nonsubmission of information / nondisclosure of material fact by the assessee. I have reason to believe that substantial income has escaped assessment. As per section 147 of I.T. Act for reopening the assessment, assessing officer should have reason to believe that any income chargeable to tax has escaped assessment. In view of the details mentioned in earlier paras, I have reasons to believe that substantial income chargeable to ta .....

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nt for reopening of assessment after 4 years is that the escapement of income should be by reason of the failure on the part of assessee to disclose fully and truly all material facts necessary for his assessment for that assessment year. Assessee has not disclosed the correct income taxable under I.T. Act. In view of the above discussion, the statutory requirements for reopening of assessment have been fully met and the reopening for assessment is essential and legally permissible. 4. Consideri .....

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ated 24 February 1997. 6. This amended challenge was admitted by the court on 24 January 2002 and impugned notice was stayed by this court. 7. When this petition reached hearing, Mr.Suresh Kumar, learned Counsel appearing for the Respondent-Revenue raised a preliminary objection, to the court considering the petition on merits. It is submitted that in view of the decision of the Apex Court in GKN Driveshafts (India) Ltd. vs. Incometax Officer (2003) 259 ITR 19 (SC), the Petitioner could now file .....

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the Petitioner points out that this petition challenges a notice of the year 2001 seeking to reopen an assessment for the Assessment Year 1994-95. Therefore, in the present facts, it would be most unfair to relegate the Petitioner to the procedure of filing an objection to the reasons recorded in support of the impugned notice and the Assessing Officer thereafter passing an order thereon. This more particularly in view of the fact the impugned notice is ex facie without jurisdiction as is eviden .....

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it court has plenary jurisdiction to issue prerogative writs to do justice between parties. The courts, as a matter of a self imposed limitation, do not entertain a writ petition where an alternative remedy is available. However in an appropriate case where the impugned notice is itself without jurisdiction and does not require investigation into facts, a writ would issue. In such a case, the party would not be relegated to taking recourse to the alternative remedy available. 10. In fact, as cor .....

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n. The court, in particular, observed as under : The decision in GKN's case [2003] 259 ITR 19 (SC) certainly reminds the assessee that when a notice under section 148 is issued, the proper course of action is to file a reply with his objections including those in relation to the absence of jurisdiction. However, it does not lay down the law to the effect that when such an objection is in relation to absence of jurisdiction and the same is revealed ex facie or apparent on the face of a notice .....

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extraordinary jurisdiction cannot be allowed to be availed of as a matter of course. In order to decide an issue of jurisdiction, findings of the authority on the factual aspect may be necessary. In that case, certainly primarily the assessee will have to approach the Assessing Officer. That does not mean that the assessee is invariably bound to approach the Assessing Officer in each and every case. There can be the cases, like the one in hand, where he may be entitled to approach the Court dire .....

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o filing its objections. 12. It is an undisputed position that the impugned notice is issued beyond the period of four years from the end of the relevant Assessment Year i.e. 1994-95. The impugned notice seeks to reopen an assessment with regard to which an order under Section 143(3) had been passed. Therefore, the first proviso to Section 147 of the Act would apply. The above proviso bars the Revenue from issuing a notice for reopening an assessment where the assessee has truly and fully disclo .....

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