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TMI Blog2019 (5) TMI 1061X X X X Extracts X X X X X X X X Extracts X X X X ..... t orders relevant for the purpose of considering the present writ petitions for 1995-1996, 1996-1997 and 1997-1998. The writ petitioners had submitted their returns in time, which were properly assessed by the Assessing Officer under Section 143(3) of the Income Tax Act, 1961 and therefore, the same were scrutinized and finalized by the Income Tax Department. The block assessment made in this regard were also quashed by the ITAT and therefore there is no "reason to believe", which is contemplated under the Act for initiation of proceedings for reassessment by invoking the powers conferred under Sections 147 to 153 of the Income Tax Act. The learned Senior Counsel is of the strong opinion that the authorities competent have issued the notice only on the premise that the block assessment made by the authorities were quashed by the ITAT and out of frustration they have initiated the proceedings for reassessment under Sections 147 and 148. The said contentions are well narrated in the affidavit filed by the writ petitioners in support of the writ petition and by citing the allegations set out against the officials, the learned Senior Counsel is of an opinion that all the materials, inf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had filed full set of accounts before the Assessing Officer comprising of profit & loss account, balance sheet and schedules thereto. The assessee-company had furnished the details regarding the acquisition of various machineries and assets and the details regarding the leasing out of those machineries and items to other parties. The assessee had also furnished the details of lease rent received out of those lease agreements. The assessee had also furnished the detailed computation of depreciation mentioning therein the written down value of machineries and assets before and after claiming the depreciation allowance for the impugned assessment years. It is a factual finding by the Tribunal that the assessee-company had fully and truly disclosed all material facts necessary for working out the quantum of depreciation allowance and completed the assessment accordingly. The Tribunal is right in following the judgment of the learned Single Judge of this Court reported in Fenner (India) Limited Vs. Deputy CIT, [2000] 241 ITR 672. In the said judgment, the learned Single Judge considered the scope of the proviso to Section 147 of the Income Tax Act in detail and held as follows: "The p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red to in the main paragraph of section 147 would, in cases where the proviso is attracted, include reasons referred to in the proviso and it is necessary for the Assessing Officer to record that any one or all the circumstances referred to in the proviso existed before the issue of notice under section 147. After an assessment has been made, in the normal circumstances, there would be no reason for anyone to doubt that the assessment has been made on the basis of all relevant facts. If the Assessing Officer chooses to entertain the belief that the assessment has been made in the background of the assessee's failure to disclose truly and fully all material facts, it is necessary for him to record that fact, and in the absence of a record to that effect, it cannot be held that a notice issued without recording such a fact is capable of being regarded as a valid notice. As to whether the material facts disclosed by the assessee are full and true is always a question of fact and unless the facts disclosed had been examined in relation to the extent of failure if any on the part of the assessee, it is not possible to form the opinion that there had been a failure on the assessee& ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t has given a clear finding that the assessee had created and recorded bogus entries of loan and, therefore, the Court held that the assessee could not say that it had truly and fully disclosed all material facts necessary for the assessment for the year concerned." 6. Relying on the above findings of the Apex Court, the learned Senior Counsel states that the present case on hand, is also akin to that of the case decided by this Court. In the present writ petitions, the returns submitted by the assessee were approved and concluded. Thus, the block assessment made by the authorities were quashed. Thus, the notice under Section 148 is issued only on the basis of change of opinion and there is no reason to believe for initiation of reassessment proceedings. In view of the fact that it is a change of opinion, the present writ petitions are to be allowed by following the principles settled by the Apex Court in the case cited supra. 7. In the case of Foramer Versus Commissioner of Income Tax and others reported in [2001] 247 ITR 436 (All), the High Court of Allahabad dealt with the point of limitation stipulated under the Income Tax Act, while dealing with the case, his lordship Markan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and material details had been exhibited before the Assessing Officer, it is for the Assessing Officer to reach such conclusions as he considered was warranted from such data and any failure on his part to do so cannot be regarded as the assessee's failure to furnish the material facts truly and fully. Any lack of comprehension on the part of the Assessing Officer in understanding the details placed before him cannot confer a justification for reopening the assessment, long after the period of four years had expired. On the facts of this case, it is clear that the escapement of income, if any, on this account is not on account of any failure on the assessee's part to disclose the material facts fully and truly. The notice issued by the Assessing Officer in exercise of his power under section 147, therefore, cannot be sustained. As the error here is one of jurisdiction it is not necessary for the assessee to have recourse to the remedies by way of appeal, revision, etc. It is well settled that when a jurisdictional error is brought to the notice of this court such errors are capable of being corrected by this court in exercise of the court's powers under article 226 of the Consti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble and liable to be dismissed in limine. What is under challenge in these writ petitions are notices issued under Section 148 of the Income Tax Act. The contentions of the notice impugned, reveals that the returns filed for the assessment years had escaped assessment within the meaning of Section 147 of the Income Tax Act, 1961. In view of the fact that the escaped assessment is noticed by the authorities or any information received in this regard then the competent authorities are empowered to invoke the pweres conferred under Sections 147 to 153 of the Act and initiate proceedings for reopening of the assessments which were completed. Thus, there is no irregularity or illegality in respect of initiation of reopening proceedings under the relevant provision of the Income Tax Act. The very purpose and object of the Act is to ensure that the assessments are properly made with reference to the actual income of the assessee and to impose tax if there is any escapement in respect of the information or the returns filed. The very purpose and object of the Act cannot be defeated, as in the present writ petitions, the very notice itself are under challenge. The writ petitioners are entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t in W.P.No.27598 of 2008 dated 29.01.2018, the said judgment is submitted to repudiate the judgment submitted by the learned Senior Counsel dated 11.10.2007 in W.P.No.18411 of 2004. The learned Senior Counsel for the petitioner relying on the judgment dated 11.10.2017 said that the notice impugned in the present writ petitions are liable to be scrapped on the ground that it is a change of opinion and not the reason to believe. It is pertinent to note that both the judgments were delivered by the Honorable Mr.Justice T.S.Sivagnanam. The learned judge has taken a view that the petitioner appears to have acquired some knowledge, though not officially, as to what could have been the reasons for reopening, which prompted the petitioner to send the letter dated 06.06.2008 objecting to the reopening proceedings. In response to the said letter, the first respondent sent a reply dated 12.08.2008 calling upon the petitioner to file their return of income. Once again, another letter of the even date was sent by the first respondent to the petitioner calling upon the petitioners for the proposal under Section 144 of the said Act for the assessment year 2002-2003. 16. The learned Judge, furth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by passing a speaking order, before proceeding with the assessment in respect of the abovesaid five assessment years." The procedures prescribed by the Supreme Court of India in G.K.N.Driveshafts (India) Limited case, are to be followed by the Competent Authorities scrupulously. 27. The learned counsel for the respondents also has not disputed the proposition and reiterated that the Authorities Competent are following the principles laid down by the Apex Court and with reference to the present writ petition on hand, the same procedure has been followed. 28. This Court has elaborately considered the Legal principles in the case of South Asia FM Ltd., reported in [2018] 98 taxmann.com 200 (Madras). The relevant paragraphs are extracted hereunder: "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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ials from any other sources can be a ground for reopening of the assessment and the period of limitation is four years and six years respectively and in respect of the present writ petitions, it is six years. 98. The procedure of reopening of the assessment is contemplated under Sections 148 to 153 of the Act. Once again looking into the spirit of Section 147, it is unambiguously enumerated that "assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this Section, or recompute the loss or the depreciation allowance". 99. The language employed in Section 147(1) of the Act is that "which comes to his notice subsequently 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... escaped assessments. 103. On a perusal of various circumstances incorporated under Section 147 of the Act, for reopening of the escaped assessment, this Court is of an opinion that it is certainly flexible and wider power has been provided, enabling the Assessing Officer to reopen the assessment in the interest of revenue and to ensure that the Assessees pay the correct tax with reference to the provisions of the Act. 104. This Court is of a firm opinion that where certain doubts in respect of the reasons or otherwise have been raised by the Assessee, such benefit of doubt should be held in favour of the revenue and not in favour of the taxpayer. Contrariness is to be established by the Assessee, while scrutinising the materials available with 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act, 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 Assessing Officer, the notices 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 petitions are not only premature, even on merits the writ petitioner has failed to establish any acceptable reason to grant the relief, as such, sought for". 29. The learned counsel for the respondents further contented that the writ petitioner has raised several grounds, including the point of jurisdiction and with reference to the returns filed by him during the assessment year 1996- 1997 and also for the assessment year 1997- 1998. All the legal grounds and the factual circumstances submitted by the writ petitioner are t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income Tax Act is nothing but initiation of the proceedings for reopening of the assessment already concluded. 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 is not empowered to re-open the assessment, which were closed already. 19. 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 invoked by following procedures contemplated under the Act. 20. Undoubtedly, the writ petitioners in the present writ petitions, on hand had filed the returns for the respective assessment years within the time limit prescribed under Section 139 of the Income Tax Act, 1961. It is an admitted fact that the impugned notices were issued beyond the period of four years and within a period of six years as contemplated under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceedings have not reached finality. It is only an initiation of the proceedings under Sections 147 and 148 of the Act. The very initiation cannot be interfered with by the Court 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 and in order to ensure that the taxations are done properly and the assessees are made to pay the income tax in accordance with the provisions of the Income Tax Act. The amended phraseology of "reason to believe" must be interpreted that the Assessing Officer on receipt of any such new material or materials in relation to the non furnishing of fact by the assessee has made out a prima facie opinion that it is the case for reopening of the assessment, then he can issue notice under Section 148 and thereafter, the procedure of furnishing the reasons, receiving objections and conducting scrutiny and all other procedures contemplated under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eir case in the manner prescribed. 30. In respect of the grounds raised by the learned Senior Counsel, on behalf of the writ petitioners that the notice is beyond the period of limitation of four years, the same cannot be accepted in view of the fact that the notice was issued within a period of six years. As the present case falls under Section 149(1)(b) of the Income Tax Act, the period of limitation prescribed is six years. In view of the fact that the notice has been issued within a period of six years, the ground of limitation raised on behalf of the writ petitioners, fails. As far as the ground in relation to the change of opinion, it is premature on the part of the writ petitioners to come to such a conclusion whether it is a change of opinion or the reopening is made based on the new or additional material available with the Income Tax Department, the same can be ascertained only after furnishing objections to the Income Tax Department by the assessee. In the absence of having knowledge about the reasons, the writ petitioners cannot come to the conclusion that there is no new material or reason to reopen the assessment already closed. Such a ground raised is not only pres ..... X X X X Extracts X X X X X X X X Extracts X X X X
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