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TMI Blog2018 (10) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessment year 2011-2012 and the consequential order dated 9.12.2016. 3. In all these writ petitions the writ petitioner is M/s.South Asia FM Ltd., represented by its Authorised Signatory Mr.K.S.Rajesh. Thus, all the three writ petitions are filed challenging the notices issued under Section 148 of the Act in respect of the three different assessment years. Thus, the facts in respect of all the three writ petitions are common. PLEADINGS OF THE PETITIONER AS WELL AS THE ARGUMENTS: 4. The impugned notices for reopening of the assessments are issued with reference to the assessment years 2008-2009, 2010-2011 and 2011-2012. The writ petitioner-Company states that they have filed the return of income on 24.9.2008, admitting an income of Rs. 33,24,51,590/-. The return was processed under Section 143(1) of the Income Tax Act, accepting the return of income. After a lapse of six and half years and after filing and accepting the return by the first respondent on 27.3.2015, the impugned notice has been issued for reopening of the assessment on the ground that the Assessing Officer had reason to believe that the income had escaped assessment within the meaning of Section 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, for coming to the belief that any income had escaped assessment; (c) There is no concept of income involved as the transactions were capital in nature and when there is no income involved, there cannot be any escapement of such alleged income; (d) The assessment cannot be reopened to verify the transactions; and (e) No application of mind in the reasonings recorded and its mechanical approval by the immediate Higher Authority. 8. The writ petitioner in WP Nos.44312 and 44313 of 2016 have filed their return of income within the time limit stipulated. The assessments were taken up for compulsory scrutiny and the assessments were completed under Section 143(3) of the Act by making disallowances of Rs. 4,10,17,643/- and Rs. 91,03,884/- by invoking the provisions of Section 14-A read with Rule 8-D. 9. The contentions of the writ petitioners are that as against the legally completed assessments, the writ petitioners have received a notice under Section 148 of the Act dated 30.3.2016, after four years from the end of the relevant assessment year. The writ petitioners by their letter dated 19.4.2016 sought for the reasons for reopening the reopening of the assessment for the ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount to change of reasons or coming to a belief that any income has escaped assessment and the proceedings under Section 147 cannot be continued as fresh reason cannot be brought after the issue of a notice and furnishing of reasons. The respondent cannot state that it is typographical error. It ought to have issued a fresh notice under Section 148 of the Act and assessment proceedings cannot be continued in the old notice issued under Section 148 of the Act; (b) Completion of all the assessment from AY 2006-2007 to AY 2010-2011 under Section 143(3) of the Act without disturbing the claim of depreciation does not bar for reopening the assessments. 11. The writ petitioner states that the issuance of notice under Section 148 of the Act, is prima facie illegal for the fact that the reasons recorded for reopening of the assessment were communicated only on 23.2.2016 after the end of six years i.e., 31.3.2015. The writ petitioner brought to the notice of the respondents about the judgments given in the point of limitation and the same had not been considered at all. 12. The writ petitioner's case is governed by statutory audit under Section 44-AB of the Act, where all investment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved is revenue in nature, there cannot be any income or for that matter information within the meaning of Section 148 for reopening the assessment. 14. The learned Senior Counsel for the writ petitioner, forcibly contended that the nature of the transaction occurred and revealed in the returns filed by the writ petitioner is a capital income and certainly not a revenue receipt. Thus, an inference is to be drawn in respect of the capital income received in the form of a share by the writ petitioner-Company. It is not a capital receipt. Thus, the same cannot be designated as a revenue receipt, so as to impose tax under the provisions of the Income Tax Act, 1961. The capital income received by the writ petitioner-Company is a one time investment and in respect of the returns filed by the writ petitioner, the scrutiny was completed. Thus, there is no question of escaped assessment and the very action of the respondents are nothing but a "change of opinion". The writ petition is maintainable in view of the fact that the ingredients of Section 147of the Act, have not been satisfied in view of the fact that the impugned notice for reopening of the assessment has been issued based on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the Assessee to make a return under Section 139 or in response to a notice issued under subsection (1) of Section 142 or Section 148 or to disclose fully and truly all material facts necessary for his assessment, for that assessment year." 18. The learned Senior Counsel, while elaborating the amended phrase by the Direct Tax laws (Amendment) Act, 1989 with effect from 1.4.1989 that "has reason to believe" emphasises that the right to get reason for reopening the assessment is the vested right of an Assessee. It is contended that such a vested right provided by way of a Statute, more specifically, by amendment, cannot be taken away by the Assessing Officer. Thus, the vested right contemplated in respect of the reasons to be provided at the time of reopening of the assessment is mandatory and the same cannot be tinkered with by the respondents in order to harass the Assessees, who had already filed their returns long back and the same was assessed during the relevant point of time under the provisions of the Income Tax Act, 1961. 19. Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the escaped assessment must be stated and communicated to the Assessee. The learned Senior Counsel is of a firm opinion that providing reasons subsequently after issuance of notice is not sufficient. The learned Senior Counsel further contended that it is a precondition that in the event of any reason to believe and a decision is taken by the Competent Authorities, then, the reasons must be recorded in the notice and the same should be communicated to the Assessee. Thus, the twin requirements as per the Act is that the Assessing Officer must have a reason to believe and such reasons which forms the basis for the reopening of the escaped assessment must be reduced in writing and communicated to the Assessee at the time of issuance of the notice. Thus, subsequent communication of the reasons will not save the defective notice issued by the Assessing Officer under Section 148 of the Act. 22. Section 148 defines issue of notice where the income has escaped assessment. Thus, even the decision is taken under Section 147 of the Act by the Assessing Officer. Such reasons must be communicated to the Assessee along with the notice issued under Section 148 of the Act. 23. Section 149 deals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r, in the present cases on hand, the notice under Section 148 of the Act, was issued before the expiry of the period of six years. However, the reasons for reopening of the assessments were provided after the expiry of the six years. Thus, the learned Senior Counsel for the writ petitioner is of an opinion that the date of communication of the reasons for reopening of the assessment must be taken into consideration for the purpose of reckoning the period of limitation. In other words, the reasons communicated to the writ petitioner after the expiry of the period of limitation of six years will vitiate the entire proceedings. Since law requires that along with the notice, the reasons must be communicated. If the reasons are communicated belatedly, then also the actions become null and void. Thus, the impugned notice under Section 148 of the Act, is hit by the law of limitation prescribed under Section 149(1)(b) of the Act. 28. The learned Senior Counsel for the writ petitioner is of an opinion that the writ petitioner is not implicated in the criminal case by the CBI. Therefore, there is no reason to reopen the assessment already concluded in respect of the writ petitioner-Company ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and Haryana High Court in the case of Duli Chand Singhania that, in the absence of an allegation in the reasons recorded that the escapement of income had occurred by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment, any action taken by the Assessing Officer under section 147 beyond the four year period would be wholly without jurisdiction. Reiterating our viewpoint, we hold that the notice dated 29-3-2004 under section 148 based on the recorded reasons as supplied to the petitioner as well as the consequent order dated 2-3-2005 are without jurisdiction as no action under section 147 could be taken beyond the four year period in the circumstances narrated above. 24. .. .. .. .. .. .. This means that a notice under section 148, in the present case, could not, in any event, have been issued after six years from the end of the assessment year 1998-99, i.e., after 31-3-2005. In whichever way we look at it, a notice under section 148 without the communication of the reasons therefor is meaningless inasmuch as the Assessing Officer is bound to furnish the reasons within a reasonable time. In a case, where the no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot be invoked casually or mechanically. The heart of the provision is the formation of belief by the AO that income has escaped assessment. The reasons so recorded have to be based on some tangible material and that should be evident from reading the reasons. It cannot be supplied subsequently either during the proceedings when objections to the reopening are considered or even during the assessment proceedings that follow. This is the bare minimum mandatory requirement of the first part of Section 147 (1) of the Act. 26. The first part of Section 147 (1) of the Act requires the AO to have "reasons to believe" that any income chargeable to tax has escaped assessment. It is thus formation of reason to believe that is subject matter of examination. The AO being a quasi judicial authority is expected to arrive at a subjective satisfaction independently on an objective criteria. While the report of the Investigation Wing might constitute the material on the basis of which he forms the reasons to believe the process of arriving at such satisfaction cannot be a mere repetition of the report of investigation. The recording of reasons to believe and not reasons to suspect is the precondi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his power is conditional upon the fact that the assessing officer has some reason to believe that the income has escaped assessment. The use of the words "reason to believe" in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such reassessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT Act so as to empower the assessing authorities to reassess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order." 35. In the case of State of Uttar Pradesh and Others vs. Aryaverth Chawal Udyog and Others [(2015) 17 SCC 324], wherein the Hon'ble Supreme Court, in paragraphs 28 and 29, held as under:- "28. This Court has consistently held that such material o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment exists requiring assessment proceedings to be reopened. The conscious application of mind is made to the relevant facts and material available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to "change of opinion". 37. Referring the said judgment, the learned Senior Counsel for the writ petitioner is of an opinion that the principles laid down by the Supreme Court in the above judgment squarely follows in respect of the facts and circumstances of the present writ petitions. 38. The writ petitioner-Company had submitted their returns within the time stipulated and the same was assessed by the Assessing Officer and it was concluded. Thus, the CBI charge shee,t in which the writ petitioner has not even implicated, cannot provide a ground for issuance of notice under Section 148 of the Act for reopening of the assessment which was closed. 39. In the case of Income Tax Officer, I Ward, District VI, Calcutta and others vs. Lakhmani Mewal Das [(1976) 3 SCC 757], wherein the Hon'ble Supreme Court, in paragraphs 11 and 12, held as follows:- "11.As stated earlier, the reasons for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld be there between the material before the Income Tax Officer in the present case and the belief which he was to form regarding the escapement of the income of the assessee from assessment because of the latter's failure or omission to disclose fully and truly all material facts was missing in the case. In any event, the link was too tenuous to provide a legally sound basis for reopening the assessment. The majority of the learned Judges in the High Court, in our opinion, were not in error in holding that the said material could not have led to the formation of the belief that the income of the assessee respondent had escaped assessment because of his failure or omission to disclose fully and truly all material facts. We would, therefore, uphold the view of the majority and dismiss the appeal with costs." 40. In the case of Madhya Pradesh Industries Ltd., Kingsway, Nagpur vs. Income Tax Officer, Special Investigation Circle 'B', Nagar [(1965) 57 ITR 637], wherein the Hon'ble Supreme Court, in paragraph 10, held as under:- "10. We may hasten to observe that we are not seeking to lay down any rigid Rule about the nature or quantum of enquiry which the High Court i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be. The word 'assess' refers to a situation where the assessment was not made in the normal manner while the word 'reassess' refers to a situation where an assessment is already made, but it is sought to be reassessed on the basis of this provision. In cases where the Assessing Officer has not made an assessment of any item of income chargeable to tax while passing the assessment order in the relevant assessment year, it cannot be said that such income was subjected to an assessment. In the assessment proceedings, the Assessing Officer would ascertain on consideration of all relevant circumstances the amount of tax chargeable to a given taxpayer. The word 'assessment' would mean the ascertainment of the amount of taxable income and of the tax payable thereon. In other words, where there is no ascertaining of the amount of taxable income and the tax payable thereon, it can never be said that such income was assessed. Merely because during the assessment proceedings the relevant material was on record or could have been with due diligence discerned by the Assessing Officer for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mation based on which the Assessing Officer has reason to believe and formed his opinion. It is pertinent to state that in case of Mrs.Rama Sinha vs. CIT [(2003) 130 Taxman 139 (P&H)] has held that the reassessment proceedeings cannot be questioned since the Assessing Officer initiated the reassessment proceedings on the basis of the definite information received from the CBI about the Assessee. Further, in the case of Balram Jagar vs. CIT [(2002) 120 Taxman 464 (P&H)], it was held that the question whether the petitioner could held liable for an offence under the Prevention of Corruption Act or any other contemporaneous Statute could not have any bearing on his liability to be taxed under the Act and the Competent Authority constituted under the Act would not be denuded of his jurisdiction to determine the petitioner's liability to pay tax in relation to the particular assessment year simply because in a criminal case, charge had not been framed. 45. The settled position of law is that there is no mandatory requirement as per the Income Tax Act, 1961, furnishing the reasons to the Assessee at the time of the issuance of the notice. As per the decision of the Apex Court, in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd had obtained illegal gratification during the said process. Further, during the relevant time, when the writ petitioner was holding a key position in the Government of India and therefore, the transaction cannot be simply brushed aside sighting that it was approved in various stages by the Government. The writ petitioner can prove the same by availing this opportunity for due hearing during the scrutiny proceedings. The writ petitioner is entering into the shoes of the Assessing Officer and was citing method of investigations which should be carried out for forming a reason which is an entirely subjective position provided under the Statute. 49. The proceedings under the Income Tax Act and the proceedings conducted by CBI are different and distinct from each other. The Income Tax Act provides for limitation of time, for reopening of the assessment upto six years from the relevant assessment year whereas the proceedings under the CBI would take more time for Courts to decide and if the Department has to wait till the outcome of the proceedings of the CBI then the proceedings under the Income Tax Act would get time barred leading to a potential leakage of revenue for the Nation. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 of the Act and after passing of the assessment order, the writ petitioner is having appellate remedy under the provisions of the Act. 54. Pursuant to the amendment made on 1.4.1989, there is a change in the provisions of the Income Tax Act and the original term "reasons to be recorded in writing" has been amended as "has reason to believe". Thus, it is the subjective satisfaction of the Assessing Officer whether there is any reason to believe for the purpose of reopening the escaped assessment. The Assessing Officer, undoubtedly, has to record the reasons for reopening of the escaped assessment. However, the sufficiency of the materials available with the Assessing Officer cannot be questioned nor provide a cause of action for the writ petitioner to challenge the very notice by way of a writ petition under Article 226 of the Constitution of India. There is an application of mind on the part of the Competent Authorities while recording the reasons as the provision warrants such an exercise. However, the same need not be communicated at the notice stage and the reasons were already communicated in respect of the writ petitioner at his request. Thus, the procedures contemplated un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is further contended that an Explanation 2(c)(1) to Section 147 of the Act, reads as under:- "(c) where an assessment has been made, but-(i) income chargeable to tax has been underassessed ; or (ii) such income has been assessed at too low a rate ; or (iii) such income has been made the subject of excessive relief under this Act ; or (iv) excessive loss or depreciation allowance or any other allowance under this Act has been computed." The above Explanation 2 also provides power to the Assessing Officer that income chargeable to tax has been underassessed or such income has been assessed at too low a rate or such income has been made the subject of excessive relief under the Act or excessive loss or depreciation allowance or any other allowance under this Act has been computed. 59. It is stated by the respondent that various circumstances are provided under the provisions of Section 147 for the reopening of the assessment. Thus, the provision does not restrict a particular circumstance or event, number of circumstances and the reasons are provided for reopening of the assessment in order to protect the revenue and to ensure that the Assessees are brought under the Taxnet in r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fit case for reopening of the assessment. The sufficiency of the materials can never be questioned by the Assessee. Contrarily, it is the duty of the Assessee to establish his case before the Assessing Officer, so as to come to a conclusion and pass an order on merits and in accordance with law. Thus, the present writ petitions are premature and are liable to be rejected. 63. In support of the arguments, the learned Additional Solicitor General of India, cited the following judgments:- In the case of Biswanath Bhattacharya vs. Union of India and Others [(2014) 4 SCC 392], the Hon'ble Supreme Court, in paragraphs 13, 14 and 16, held as follows:- "13. Though Section 127 expressly provided for recording of reasons it did not expressly provide communicating the same to the assessee. Still, this Court held that such a communication is mandatory: (Ajantha Industries case [Ajantha Industries v. CBDT, (1976) 1 SCC 1001 : 1976 SCC (Tax) 127] , SCC p. 1005, paras 10-11) "10. The reason for recording of reasons in the order and making these reasons known to the assessee is to enable an opportunity to the assessee to approach the High Court under its writ jurisdiction under Article 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... respondents by producing the appropriate material that further steps in furtherance to the notice under Section 6 need not be taken. Apart from that, an order of forfeiture is an appealable order where the correctness of the decision under Section 7 to forfeit the properties could be examined. We do not see anything in the ratio of Ajantha Industries case [Ajantha Industries v. CBDT, (1976) 1 SCC 1001 : 1976 SCC (Tax) 127] which lays down a universal principle that whenever a statute requires some reasons to be recorded before initiating action, the reasons must necessarily be communicated." The Apex Court in paragraph 16 of the abovesaid judgment said that there is no express statutory requirement to communicate the reasons which led to the issuance of notice under Section 6 of the Act. Secondly, the reasons, though not initially supplied along with the notice dated 4-3-1977, were subsequently supplied thereby enabling the appellant to effectively meet the case of the respondents. This apart, the appellant could have effectively convinced the respondents by producing the appropriate material that further steps in furtherance to the notice under Section 6 need not be taken. At t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have sufficient evidence to corroborate the allegations. The question as to whether the petitioner could be held liable for an offence under the Prevention of Corruption Act or any other contemporaneous statute does not, in our opinion, have any bearing on his liability to be taxed under the 1961 Act and the competent authority constituted under that Act cannot be denuded of its jurisdiction to determine the petitioner's liability to pay tax in relation to the particular assessment year simply because in the criminal case charge has not been framed." The Hon'ble High Court of Punjab and Haryana, in the abovesaid judgment, dismissed the writ petition as premature on the ground that the question as to whether the petitioner could be held liable for an offence under the Prevention of Corruption Act or any other contemporaneous statute does not, in our opinion, have any bearing on his liability to be taxed under the 1961 Act and the competent authority constituted under that Act, cannot be denuded of its jurisdiction to determine the petitioner's liability to pay tax in relation to the particular assessment year simply because in the criminal case charge has not been f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .. ... .. However, we clarify that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order." In the abovesaid judgment, the Hon'ble Supreme Court has clarified that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. 68. The Hon'ble Supreme Court reiterated the principles in GKN Driveshafts (India) Ltd's case that reasons need not be communicated along with the notice issued under Section 148 (1) of the Act. If the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment is proposed to be reopened, then the Assessee is entitled to know the reasons already said to have been recorded by the authorities concerned. DISCUSSIONS: 72. Considering the contentions raised by the respective parties to the cases on hand, this Court is of an opinion that issuance of the notice under Section 148 of the Act is nothing but initiation of the proceedings for reopening of the assessment already finalised. Undoubtedly, such reopenings are to be done cautiously and the reasons for reopening is also mandatory. In the absence of any substantial reason, the Assessing Officer cannot reopen the assessment which was closed long back. 73. The very object of the provision under the Income Tax Act is to ensure that the suppressed materials or facts and the new availability of materials to the Department are also to be dealt with for the purpose of taxation. In order to cover the loopholes in the Tax Regime, and to control and evasion of tax by the individuals, the provision of reopening of assessments are made and such provisions are to be certainly invoked by following the procedures contemplated under the Act. 74. Let us now look into the manner in which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment and after such information is provided, the procedures must be followed for the purpose of concluding the reassessment. 78. In the present cases on hand, the proceedings have not reached its finality. It is only an initiation of proceedings under Sections 147 and 148 of the Act. The very initiation cannot be interfered with by the Courts in a routine manner. Judicial review against such initiations under the provisions of the Act, is certainly limited. The Court cannot intervene on such initiations in a routine manner in the absence of any valid and acceptable legal grounds. Thus, the exercise of judicial review in such matters regarding the initiation of the proceedings are to be exercised cautiously. 79. Let us now meet the grounds raised on behalf of the writ petitioner that Section 147 requires that the reasons must be recorded in the notice and in the absence of any reasons communicated along with the notice under Section 148 of the Act, the entire proceedings become null and void. If such an interpretation is accepted by this Court, then one can presume that the authorities are bound to pass a final order at the notice stage itself. That is not the intention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Department and the Department is bound to provide reasons, enabling the Assessee to submit his explanations/objections in order to defend his case. Thus, mere issuance of notice will not preclude the writ petitioner from seeking the reasons and other documents. 86. In the present cases, admittedly, on receipt of the notice, the writ petitioner submitted a letter to the respondents, seeking reasons for reopening of the assessment for the assessment years 2008-2009, 2010-2011 and 2011-2012. The respondents also furnished the reasons for reopening of the assessment. Thereafter, the Assessee must co-operate for the scrutiny and for completion of the reassessment process. 87. The writ petitioner, being a Company, is duty bound to respond to the notice to prove its innocence or otherwise. Contrarily, the writ petitions are filed at the notice stage itself, and the same will hamper all further proceedings of the Department and such an idea would if any developed can never be encouraged by the Courts. On receipt of the notice impugned in the present writ petitions, rightly the writ petitioner had approached the respondents for furnishing the reasons. The respondents have also furnished t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has to exhaust the remedy provided under the Act, this Court cannot entertain the writ petition, when there is a remedy available to the aggrieved person under the Statute. The High Court cannot usurp the power of the Appellate Authorities in respect of the adjudication of the merits and the demerits of the matter. The High Court cannot appreciate the mixed question of law and facts, at the initial stage, when a notice under Section 148 of the Income Tax Act, 1961 was issued to the Assessee for reopening the assessment. Such complex facts and circumstances are to be adjudicated by producing documents and by adducing evidences by the parties concerned. Such an exercise can never be done by the High Courts under Article 226 of the Constitution of India. Thus, entertaining a writ petition at the notice stage, must be sparingly and cautiously done. The High Courts must be restrained from entertaining such writ petitions when the very notice itself is under challenge. 91. Undoubtedly, the legal principles settled in this regard that the writ petition can be entertained if the notice has been issued by an incompetent authority having no jurisdiction or if the allegation of mala fides ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gating the issues. 95. The very concept of income tax assessment is that the Assessee is taxed by the Department based on the returns filed by the Assessee. Section 2 of the Act provides "definitions". Section 2(8) defines "assessment includes reassessment". Thus the very meaning of the assessment provided under the Act includes reassessment also. Thus, the reassessment is not a separate concept and it is included within the meaning of the assessment under Section 2(8) of the Act. Thus, an assessment and reassessment are part and parcel of the procedures and therefore, there cannot be any doubt in respect of the power of reassessment provided under the Act. 96. The Income Tax Department may not be aware of the income of the individual Assessees. They are assessing the tax based on the returns filed by the respective Assessees. Thus, the very concept of assessment is that the Officer who is scrutinising the returns did not aware of the income of an individual. For this reason only Act provides adequate power to deal with the cases, where there is evasion or suppression or otherwise by the Assessees. The very source of assessment is the returns filed by the Assessee concerned. O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsequently in the course of the proceedings under the Section". Thus even after initiation of reopening of assessment proceedings under Section 147 of the Act. If during the course of the proceedings if any materials or informations are received by the Assessing Officer that also can be taken into consideration for the purpose of reassessment. It is crystal clear that the reasons recorded before the initiation of the reopening of the assessment alone need not be a ground for reassessment. Even after reopening of the assessment if any materials or informations are received by the Assessing Officer that also shall be included part and parcel of the proceedings and sufficient explanations shall be called for from the Assessee and accordingly a reassessment order can be passed. Thus, two circumstances arise after the conclusion of the assessment. Firstly, if the assessment is finalised, the reopening in respect of the escaped assessments can be made if any new materials or suppression of materials are identified. On such reopening of the assessment and during the course of the proceedings, if the Assessing Officer noticed any other materials or informations in respect of escaped asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the Assessing Officer. 105. It is for the Assessee to convince the Assessing Officer in respect of all such escaped assessments, informations and materials available and submit the returns. This being the legal principles to be followed, the provisions are to be interpreted to achieve its purpose and the object and therefore the wider powers provided under Section 147 of the Act, for reopening of the escaped assessments can never be restricted by imposing certain conditions on the Assessing Officer. 106. Even in case of certain procedural lapses, this Court is of an opinion that such procedural lapses can be taken advantage of by the Assessee only if it causes prejudice to the proceedings, if any. Such procedural lapses not causing any prejudice to the rights of the Assessee during the course of the proceedings of the reassessment, then the Assessee cannot file a writ petition, seeking quashing of the entire proceedings. Such writ petitions also cannot be entertained in view of the fact that such procedural lapses or omissions or commissions have not caused any prejudice to the interest of the Assessee nor resulted in denial of fair procedure and opportunity to the Assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer to the Assessee. 110. In the present cases on hand, the request made by the writ petitioner had been complied with and the reasons for reopening of the escaped assessment had been communicated to the writ petitioner. The said propositions are very well recognised by the Supreme Court of India in the case of GKN Driveshafts (India) Ltd. Thus the very provision stating that the Assessing Officer should record the reasons does not mean that the same should be communicated along with the notice itself. The provision is incorporated in order to ensure that the Assessing Officers act with responsibility and make sure that they are reopening the assessment only based on some reasons and the materials available on record. Such provisions provided to avoid the arbitrariness on the part of the Assessing Officer cannot be taken advantage by the Assessee by contemplating the procedures that the reasons so recorded by the Assessing Officer should be communicated to the Assessee along with the notice issued under Section 148(1) of the Act. Such a proposition cannot be appreciated and that is not the intention of the Act itself. Thus, the very arguments advanced in this regard by the w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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