TMI Blog2018 (10) TMI 871X X X X Extracts X X X X X X X X Extracts X X X X ..... tice to prove its innocence or otherwise. This Court is of an undoubted opinion that if the AO has reason to believe that income has escaped assessment, it confers jurisdiction to reopen the assessment. It is however, to be noted that the conditions stipulated in the Act must be fulfilled if the case falls within the ambit of Section 147. Considering the fact that there are some materials on record and the informations with the Department of Income Tax, the reopening of the assessment in the writ petitions with reference to Sections 147 to 153 is in accordance with law and there is no infirmity, as such. Thus, the writ petitioner is bound to respond to the Assessing Officer for the purpose of arriving a conclusion and for taking a decision. In the event of passing an order of assessment or reassessment, then the writ petitioner is entitled to prefer an appeal contemplated under the provisions of the Act. Contrarily, based on the preliminary informations gathered by the AO, the notice issued for the purpose of reopening of the assessment would not provide a cause of action for filing of the present writ petitions and this Court has no hesitation in holding that the writ petiti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Act and required the writ petitioner-Company to file one more return of income for the same assessment year i.e., 2008-2009. 5. In response to the notice impugned, the writ petitioner-Company by their letter dated 28.4.2015, requested the first respondent to treat the return already filed on 24.9.2008 as a return in response to the notice issued under Section 148 of the Act and also requested the first respondent to furnish the reasons for reopening the above assessment. The respondents on 23.2.2016, furnished the reasons for reopening the assessment. Immediately on 29.2.2016, the writ petitioner filed the objections on the alleged reasonings recorded for reopening the assessment. On 4.3.2016, just before 27 days for the completion of reassessment, the first respondent by an order allegedly to be a spea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 years 2010-2011 and 2011-2012 are:- (a) The claim of depreciation at 25% was not for the first time but was subjected to scrutiny assessments from the AY 2006-2007 and in all the earlier assessment years 2006-2007 to 2008-2009 the petitioner's claim of depreciation was allowed by the department in the scrutiny assessments; (b) In so assuming its jurisdiction to issue notice under Section 148 of the Act, the Assessing Officer failed to record a finding that the income chargeable to tax has escaped assessment by reason for the failure on the part of the taxpayer to disclose fully and truly all material facts necessary for the assessment which is a legal necessity as the original assessment was completed under Section 143(3) of the Act. On the contrary not only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al 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 investments are revealed in the returns filed. In fact, it is the first respondent in his reasons had categorically admitted that the writ petitioner had received the investments in the form of shares during the year 2007-2010. Thus, it is crystal clear that all the informations were readily available with the respondents in the return filed by the writ petitioner. The fact of investment was revealed in the return filed by the writ petitioner. While being so, the first respondent had not come forward in the reasons as to the basis for the issuance of Section 148 notice after lapse of six years. All the materials required are there before the first respondent. Therefore, it is not known what information the first respondent had, for coming to believe that any inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 change of opinion and not on the basis of the principle of reason to believe . Thus, change of opinion cannot constitute a ground to reopen the assessment which was already finalised. Therefore, the writ petition is also maintainable in view of the judgment of the Supreme Court in the case of Jeans Knit Private Ltd., Bangalore vs. Deputy Commissioner of Income Tax, Bangalore [2016 SCC Online SC 1536] , wherein the Apex Court set aside the impugned judgments and remit the cases to the respective High Courts to decide the writ petitions on merits on the ground that the case of Commissioner of Income Tax vs. Chhabil Dass Agarwal [(2013) ITR 357 (SC)] does not apply to those cases. 15. The learned Senior Counsel for the writ petitioner co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lly, 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. Section 147 of the Act, mandates the reasons to be recorded at the time of issuance of notice for reopening of the closed assessment. In the absence of recording the reasons for reopening the notice is to be construed as non est in law. The executive power conferred under the Act to the Executives, cannot be interpreted, so as to take away the vested right of an Assessee in respect of the closed assessments. Reopening of the assessment is not a routine affair or a normal event. Only in case of suppression of fact or the availability of new materials on record, then alone, the executive power can be exercised under Section 147 of the Act, for reopening the escaped assessment. The reasonsings are mandatory. In the absence of adequate reason ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 with time limit for notice, which reads as under:- (1) No notice under section 148 shall be issued for the relevant assessment year,- (a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under clause (b); (b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year. Explanation.-In determining income chargeable to tax which has escaped assessment for the purposes of this subsection, the provisions of Explanation 2 of section 147 shall apply as they apply for the purposes of that section. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 29. In the case of Shri Balwant Rai Wadhva vs. ITO , decided by the Income Tax Appellate Tribunal, Delhi Bench on 14.1.2011 in I.T.A.No.4806/Del/10, the period of limitation was considered and paragraph-4 of the judgment, is partly extracted:- 4. We have duly considered the rival contention and gone through the record carefully. Admittedly the reasons were not supplied to the assessee by 31st March, 2008 i.e. within a period of 6 years from the end of the asstt. year. The question before us is whether valid service of notice has been served upon the assessee within the limitation provided u/s 149 (1) (b) of the Act. According to this section the notice ought to be served within 6 years from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 notice has been issued within the said period of six years, but the reasons have not been furnished within that period, in our view, any proceedings pursuant thereto would be hit by the bar of limitation inasmuch as the issuance of the notice and the communication and furnishing of reasons go hand-in-hand. The expression within a reasonable period of time as used by the Supreme Court in GKN Driveshafts (India) Ltd. s case cannot be stretched to such an extent that it extends even beyond the six years stipulated in section 149. For this reason also, even assuming that we overlook all that has happened between 11-5-2004, when the petitioner sought the reasons, and 5-11-2007, when ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment. 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 precondition to the assumption of jurisdiction under Section 147 of the Act. The reasons to believe must demonstrate link between the tangible material and the formation of the belief or the reason to believe that income has escaped assessment. Relying on the abovesaid judgment, the learned Senior Counsel urged this Court by stating that in any angle, the impugned order cannot survive for want of legal support and accordingly, the same is liable to be quashed. 33. In the case of Commissioner of Income Tax and Others vs. Chhabil Dass Agarwal [(2014) 1 SCC 603] , wherein the Hon'ble Supreme Court in paragraphs 3 and 5, held as follows:- 3. It has come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 on which the assessing authority bases its opinion must not be arbitrary, irrational, vague, distant or irrelevant. It must bring home the appropriate rationale of action taken by the assessing authority in pursuance of such belief. In case of absence of such material, this Court in clear terms has held the action taken by the assessing authority on such reason to believe as arbitrary and bad in law. In case of the same material being present before the assessing authority during both, the assessment proceedings and the issuance of notice for reassessment proceedings, it cannot be said by the assessing authority that rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bmitted 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 the formation of the belief must have a rational connection with or relevant bearing on the formation of the belief. Rational connection postulates that there must be a direct nexus or live link between the material coming to the notice of the Income Tax Officer and the formation of his belief that there has been escapement of the income of the assessee from assessment in the particular year because of his failure to disclose fully and truly all material facts. It is no doubt true that the court cannot go into the sufficiency or adequacy of the material and substitute its own opinion for that of the Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee 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 in a petition which seeks to challenge the issue of a notice under Section 34(1)(a) of the Indian Income Tax Act may make. If the petition on the face of it does not disclose a right to relief, the High Court has undoubtedly power to dismiss it in limine. If there be other grounds which appear to the High Court to be adequate such as delay or acquiescence, existence of an adequate alternative remedy which is equally efficacious, or failure to disclose all material facts which have a bearing on the question or misrepresentation of facts, jurisdiction of the High Court to dismiss a petition in limine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt 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 Assessing Officer must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. If looking back it appears to the Assessing Officer (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on the record was not subjected to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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 the case of GKN Driveshaft [259 ITR 19] , it was held that the due procedure to be followed during reopening proceedings was that once the notice is served the Assessee would have to necessarily file its return and then on request, the Assessing Officer should furnish the reasons for reopening of the assessment. The time limit provided under the Act is therefore, only for proper issue and service of notice which had been duly followed in the present cases. 46. The writ petitioner questioned the sufficiency of the reasons and the modus operandi of the i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Thus, both are different and distinct proceedings and the level of evidence vary. A notice under Section 148 can be issued once the reason for belief is formed on the information in the possession of the Assessing Officer. Proceedings are initiated to verify the same and the writ petitioner would be given a fair opportunity for defending his case by submitting proof and arguments. In fact the Hon'ble Apex Court in a case reported in 103 ITR 437 has held that Court cannot go into adequacy of material if reason for informatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer, 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 under the Act, are followed scrupulously by the Competent Authorities and there is no infirmity or irregularity. 55. The learned Additional Solicitor General of India once again gone through the ingredients of Section 147. The language employed in Section 147 of the Act is that If the Assessing Officer 'has reason to believe' that any income may, subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing 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 respect of the entire income. Such circumstances are enumerated in Section 147 to ensure that the Act is implemented in its letter and spirit and the object is achieved. 60. The learned Additional Solicitor General of India contended that under Section 252 of the Act, after an order is passed, the writ petitioner shall approach the Appellate Tribunal by way of an appeal. Section 260-A provides an appeal to the High Court and Section 261 provides an appeal to the Supreme Court. Thus, the presen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 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 226 of the Constitution or even this Court under Article 136 of the Constitution in an appropriate case for challenging the order, inter alia, either on the ground that it is mala fide or arbitrary or that it is based on irrelevant and extraneous considerations. Whether such a writ or special leave application ultimately fails is not relevant for a decision of the question. 11. We are clearly of opinion that the requirement of recording reasons under Section 127(1) is a ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t 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 the outset, the Apex Court says that the reasons can be provided even after the issuance of the notice in a format. Thus, there is no infirmity in respect of providing reasons even in such circumstances, the Assessees can submit their returns effectively in respect of reassessment and defend their case by producing materials and by convincing the Assessing Officer in respect of the stand taken by them. Contrarily, the writ petitioner cannot challenge the very i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax 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 framed. 65. In the case of K.M.Bansal vs. Commissioner of Income Tax and Another [1991 SCC Online AII 1283] , the Hon'ble Allahabad High Court came to the conclusion that the function of the Assessing Officer at the stage of issuance of notice under Section 148(1) is administrative in nature. It becomes quasi-judicial once the notice is served upon the assessee. Since reasons are recorded at a stage anterior to issuance and serving of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se 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 there is a request made by the Assessee then the reasons shall be communicated, enabling the Assessee to respond to the reasons recorded by the authorities concerned. 69. In the case of Dr.K.Nedunchezhian vs. The Deputy Commissioner of Income Tax [(2005) 4 CTC 161 (SC)] , the Hon'ble Supreme Court, held that particularly in tax matters, there should be no short circuiting of the alternative statutory remedies as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the initiations are done by the respondents in respect of the present writ petitions. Undoubtedly, the writ petitioner filed the returns for the respective assessment years, within the time limit prescribed under Section 139 (1) of the Income Tax Act, 1961. It is an admitted fact that the impugned notices are issued within the period of six years as contemplated under Section 149(1)(b) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iew 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 the Statute. The intention of the Statute is that the authorities on receipt of new material facts or regarding any suppression of materials by the Assessee, is bound to initiate proceedings by invoking Sections 147 and 148 of the Act. 80. The amended phraseology of reason to believe must be interpreted that the Assessing Officer on receipt of any such new material or mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the reasons and the letters. Thus, it is left open to the writ petitioner to defend their case in the manner known to law and allow the officials to scrutinise the assessments based on the new materials available and thereafter, take a decision and pass assessment or reassessment orders by following the procedures contemplated under the Act. 88. In view of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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 are raised or if the same is in violation of any Statutory Rules in force. Even in the case of raising an allegation of mala fides, the authorities against whom such an allegation is raised to be impleaded as party respondent in his personal capacity. In the event of not establishing any such legal ground, no writ proceedings can be entertained against a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso. 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. Only after the filing of the returns, the Department of Income Tax came to understand that the income of the person concerned. Thus, the reassessment may arise on several occasions and on several grounds. The Income Tax Department may receive informations from many other sources. The Income Tax Department may get some external materials ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessment and the same also can be treated as part and parcel of the reassessment proceedings which is reopened. 100. On going through the said ingredients of the Section 147, this Court has no hesitation to conclude that the Assessing Officer has got wider power in respect of covering the escaped assessments for the purpose of r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 107. In the present writ petitions, this Court is of an opinion that undoubtedly notice was issued based on the reasons recorded by the Assessing Officer under Section 147 of the Act. However, the reasons arrived had not been communicated to the writ petitioner. But the writ petitioner requested the reasons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 writ petitioner deserves no merit consideration. 111. In case of M/S. Phool Chand Bajrang Lal vs Income-Tax Officer And Another [1993 203 ITR 456] , it has been held as follows:- One of the purposes of Section 147, appears to us to be, to ensure that a party cannot get away by wilful ..... X X X X Extracts X X X X X X X X Extracts X X X X
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