TMI Blog2004 (11) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... Sunil Kumar Jain whereas Civil Miscellaneous Writ Petition No. 852 of 1995 has been filed by Suresh Chandra Jain, Hindu undivided family seeking a writ, order or direction in the nature of certiorari quashing separate notice dated March 31,1995, issued under section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the Act") by the Income-tax Officer, Ward 3(4), Kanpur-respondent No. 1 for the assessment year 1986-87 and other consequential reliefs. Briefly stated the facts giving rise to the present petition are as follows: According to the petitioner in Civil Miscellaneous Writ Petition No. 851 of 1995 he is carrying on business of electronic goods on small scale basis under the name and style of Anu Electronics and is being assessed to tax by the Income-tax Officer, Ward 3(4), Kanpur-respondent No. 1 since the assessment year 1981-82. The grandfather of the petitioner, the late Darbari Lal was the karta of the Hindu undivided family which owned certain movable and immovable properties in Jasrana town, district Mainpuri (now in the district of Firozabad). After the death of Sri Darbari Lal, Suresh Chandra Jain, the father of the present petitioner, became the karta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s valued at Rs. 10,506 have been assessed as belonging to Prem Chandra Jain. However, in the appeal preferred by Prem Chandra Jain, the Commissioner of Income-tax (Appeals) vide order dated December 5,1994, had set aside the assessment on the ground that it was barred by limitation against which the Department preferred an appeal before the Tribunal. The Tribunal vide order dated February 27, 2004, had allowed the appeal filed by the Department and remanded the matter to the Commissioner of Income-tax (Appeals) for deciding the appeal afresh in accordance with law. Thereafter the Income-tax Officer, Ward 3(4), Kanpur, respondent No. 1 had issued notice under section 148 of the Act for the assessment year 1986-87 to both the petitioners. In compliance with the notice the petitioners filed their return under protest and had requested that the reason for issuing notice under section 148 of the Act be communicated to them in writing. The Income-tax Officer Ward 3(4), Kanpur, respondent No. 1 had communicated the common reasons which are as follows: "However, keeping in view the contents made in the alleged 'will' dated June 2, 1985, wherein Smt. Shyama Devi had bequeathed the above a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8] 234 ITR 249 (All); (8) Comunidado of Chicalim v. ITO [2001] 247 ITR 271 (SC); (9) Foramer v. CIT [2001] 247 ITR 436 (All); (10) GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 (SC); (11) Smt. Kavita Agarwal v. Director of Income-tax (Investigation) [2003] 264 ITR 472 (All); (12) CIT v. Foramer France [2003] 264 ITR 566 (SC); (13) V.K. Packaging Industries v. TRO [2004] 266 ITR 283 (All); (14) Naresh Kumar Kohli v. CIT [2004] 266 ITR 553 (P H); (15) Ajanta Pharma Ltd. v. Asst. CIT [2004] 267 ITR 200 (Bom); (16) Banyan and Berry v. CIT [1996] 222 ITR 831 (Guj); (17) ONGC Ltd. v. Deputy CIT [2003] 262 ITR 648 (Uttaranchal); (18) AMS Jewellers v. CIT [2004] 187 CTR 557 (Delhi); and (19) Dr. Mrs. Anita Sahai v. Director of Income-tax (Investigation) [2004] 266 ITR 597 (All). Learned standing counsel, however, submitted that even though the Department has taken a stand that the amount of Rs. 2,19,000 and the pawned articles worth Rs. 10,506 belong to Prem Chandra Jain but as the petitioners have claimed that the said amount belongs to them, respondent No. 1 was well within his jurisdiction to form a belief that the income has escaped assessment and in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. It must be reasonable or, in other words, it must be based on reasons which are relevant and material as held by the apex court in Ganga Saran and Sons P. Ltd. v. ITO [1981] 130 ITR 1 (SC). The expression "reason to believe" in section 147 does not mean purely subjective satisfaction on the part of the Assessing Officer. The belief must be held in good faith; it cannot be merely a pretence. It is open to the court to examine whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Assessing Officer in starting proceedings under section 147 is open to challenge in a court of law as held in S. Narayanappa v. CIT [1967] 63 ITR 219 (SC); Kantamani Venkata Narayana and Sons v. First Addl. ITO [1967] 63 ITR 638 (SC); Madhya Pradesh Industries Ltd. v. ITO [1970] 77 ITR 268 (SC); Sowdagar Ahmed Khan v. ITO [1968] 70 ITR 79 (SC); ITO v. Lakhmani Mewal Das [1976] 103 ITR 437 (SC); ITO v. Nawab Mir Barkat Ali Khan Bahadur [1974] 97 ITR 239 (SC); CST v. Bhagwan Industries P. Ltd. [1973] 31 STC 293 (SC) and State of Punjab v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... further information on certain points in connection with the returns. Thereupon the appellant filed writ petitions challenging the notices. The High Court dismissed the writ petitions holding that the petitions were premature and the appellant could raise its objections to the notices by filing reply to the notices before the Assessing Officer. The appellant preferred appeals and the Supreme Court dismissed the appeals, observing that since the reasons for reopening of assessments under section 148 had been disclosed in respect of five assessment years, the Assessing Officer had to dispose of the objections, if filed, by passing a speaking order before proceeding with the assessments for those years." The Constitution Benches of the hon'ble Supreme Court, in K.S. Rashid and Son v. Income-tax Investigation Commission [1954] 25 ITR 167 (SC); AIR 1954 SC 207; Sangram Singh v. Election Tribunal, AIR 1955 SC 425; Union of India v. T.R. Varma [1957-58] 13 FJR 237 (SC); AIR 1957 SC 882 State of U.P. v. Mohammad Nooh, AIR 1958 SC 86; K.S. Venkataraman and Co. P. Ltd. v. State of Madras [1966] 60 ITR 112 (SC); AIR 1966 SC 1089, have held that article 226 of the Constitution confers on al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nowhere lays down that the party is totally debarred from approaching the High Court under article 226 of the Constitution of India when the exercise of power by the authority under section 148 of the Act, ex facie appears to be without jurisdiction. Undoubtedly, whether such an exercise is with or without jurisdiction will have to be revealed from the notice and reasons on the face thereof. At the same time, it is also well-settled, and Calcutta Discount Co. Ltd. [1961] 41 ITR 191 (SC) is very clear on the point, that mere availability of alternative relief can be no bar for exercise of writ jurisdiction when the authorities seek to assume jurisdiction which they do not possess or act in a totally arbitrary manner. The decision in GKN Drive-shafts (India) Ltd. [2003] 259 ITR 19 (SC) reminds the assessee that when a notice under section 148 of the Act 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 that when such an objection is in relation to the absence of jurisdiction and the same is revealed ex facie or apparent on the fact of a notice or reasons in support the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... specified portions and the proceeding was, therefore, valid. In the case of Tarsem Kumar [1986] 161 ITR 505 the apex court has held that on a construction of section 132 of the Act and the context in which the words "search", "possession" and "seizure" had been used in the section and the rules, there could not be any order in respect of goods or money or papers which were in the custody of another Government Department under legal authority. In the case of Nenmal Shankarlal Farmer [1992] 195 ITR 582 the Karnataka High Court has held that where there was no reference at all in the warrant of authorisation that any valuable article or thing was in the possession of the petitioner in his individual capacity as a necessary consequence, the mere mention of residential premises did not enable the Department to effect seizure either of gold, jewellery or other articles or documents belonging to the partner from such premises and, therefore, the order of assessment passed under section 132(5) of the Act was not valid and liable to be quashed. In the case of Southern Herbals Ltd. [1994] 207 ITR 55 the Karnataka High Court has held that it is not for the court to examine the sufficie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orisation. In the case of Smt. Kavita Agarwal [2003] 264 ITR 472 this court has taken the similar view. Even though in the writ petition a prayer for releasing the seized articles has been made, it may be mentioned that the seizure was effected on June 6,1985, and as the matter stands today it has been held to be the belonging of Prem Chandra Jain so long as it is not held that the seized articles belonged to the petitioners, it cannot be returned to them. It is another thing that after assessment of the individual case of Prem Chandra Jain is taken as satisfied, seized money and pawned articles, after its return to Prem Chandra Jain, can be claimed by the petitioners from the said Prem Chandra Jain. All the aforesaid decisions cited by learned counsel for the petitioner relate to search, validity of search and seizure, which is not in issue in the present writ petitions. In the case of Lalji Haridas [1961] 43 ITR 387 the apex court has held that in cases where it appears to the income-tax authorities that certain income has been received during the relevant year but it is not clear who has received that income; and, prima facie, it appears that the income may have been receive ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oth and alternative assessments may also be framed. It is also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order. The law does not permit assessment of the same income successively in different hands. The tax can only be levied and collected in the hands of the person who has really earned the income and is liable to pay tax thereon. In the case of Banyan and Berry [1996] 222 ITR 831 the Gujarat High Court has held that where there is doubt or ambiguity about the real entity in whose hands a particular income is to be assessed, the assessing authority is entitled to have recourse to making a protective assessment in the case of one and a regular assessment does not affect the validity of the other assessment inasmuch as if ultimately one of the entities is really found to be liable to assessment, then the assessment in the hands of the entity alone remains the effective assessment and the other becomes infructuous. The levy is enforceable only under one assessment and not under both. In the case of Oil and Natural Gas Corporation Ltd. [2003] 262 ITR 648 the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
