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TMI Blog2018 (10) TMI 1731X X X X Extracts X X X X X X X X Extracts X X X X ..... for the assessment year 2009-10 under section 143(3) of the Act has been completed. After a lapse of four years, to reopen the assessment, is unwarranted. (ii) For invoking power under section 147 of "the Act", the Assessing Officer must have a reason to believe that any income chargeable to tax has escaped assessment. Then on such basis, a notice under section 148 of the Act has to be issued, notice dated July 10, 2014 has been issued but reasons to believe have not been specified therein. (iii) Income chargeable to tax must have escaped assessment for the assessment year by reason of failure on the part of the assessee. There was no failure on the part of the petitioners (assessee). (iv) After expiry of four years from the end of the relevant assessment year, if assessment has to be reopened, then in terms of section 151 of the Act, notice under section 148 of the Act is not to be issued by the Assessing Officer unless the Chief Commissioner or Commissioner of Income-tax is satisfied on the reasons recorded by the Assessing Officer that the case is fit for issue of the said notice. There is no such effective approval. Therefore, the mandate of section 151 of the Act has not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. The said return was processed under section 143(1) of the Act on March 24, 2011. Subsequently, the said return for the assessment year 2009-10 was selected for regular assessment, i.e., "Scrutiny Assessment" as a result whereof notice under sub-section (2) of section 143 of the Act has been served upon the petitioner-Corporation. For completion of regular assessment as required, the petitioner-Corporation submitted books of account and other documents including annual reports, 3CA and 3CD reports. It was brought to the notice of the Assessing Officer that gross expenditure of Rs. 5600.48 lakhs was incurred on Tripura Gas Based Power Project up to March 31, 2009. The Ministry of Power under their letter No.7/31/2000-H.I. dated November 24, 2005 communicated the decision of the Government of India to abandon the Tripura Gas Based Power Project. 7. The petitioner-Corporation made it clear that a total amount of Rs. 2581.63 lakhs for the assessment year 2009-10 were spent and as per mercantile practice and Accounting Standard 16, the said expenditure was debited to the revenue. The Deputy Commissioner of Income-tax, Shillong Circle (AO) after carefully going through the same, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be determined is as to whether the impugned notice dated July 10, 2014 under section 148 of the Act issued by the Assessing Officer is without jurisdiction because the same is linked with the maintainability or otherwise of the petition under article 226 of the Constitution. The power of reopening of assessment under section 147 of the Act on the ground that income chargeable to tax has escaped assessment for the assessment year is controlled by two exceptions : (i) reason to believe that income chargeable to tax has escaped assessment for the assessment year ; (ii) assessment cannot be reopened after a period of four years from the end of the relevant assessment year unless by reason of omission or failure on the part of the assessee to disclose fully and truly all material facts necessary for his assessment. The Assessing Officer is required to record reasons for reopening the assessment. Thereafter, notice under section 148 of the Act after expiry of four years from the end of the relevant assessment year cannot be issued by the Assessing Officer unless in terms of the proviso to sub-section (1) of section 151 of the Act, the Chief Commissioner or Commissioner is satisfied on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nance charges is devoid of merit. 14. The Assessing Officer in his note sheet has made it clear that as per section 36(1)(iii) of the Act "deduction is allowed" in respect of the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession. Provided that any amount of interest paid in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalized in the books of account or not) for any period beginning from the date on which the capital is borrowed for acquisition of the asset till the date on which such asset was first put to use shall not be allowed as deduction. Then the Assessing Officer has recorded that while considering the expenditure in the nature of Innovation and Entrepreneurship Development Centre, interest and finance charges during the construction period are exclusively capital in nature and was required to be disallowed. Further, it was found from the records that proposals have been cleared by the authorities for revival of the work projects. But in the assessment the capital expenditure was not disallowed and added back to the total income of the assessee. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has to be a proper application of mind which is missing. In this connection, the respondents have produced the record which reveals that the Assessing Officer has submitted the proposal for reopening of assessment of the petitioner-Corporation for the assessment year 2009-10, to the Commissioner of Income-tax, Shillong, vide F.No. : A-14/Review/JCIT(R)/SHG/2013-14/ 583 dated June 26, 2014 wherein, the Assessing Officer has clearly indicated as to how the expenditure towards interest and finance charges for Tripura Gas Based Power Project is of capital nature to be capitalised and not allowable as expenditure. Therefore, the income chargeable to tax has escaped assessment for the year 2009-10. The said proposal as per the official noting has finally been approved by the Commissioner for issue of notice under section 148 of the Act for the assessment year 2009-10. The Commissioner quite apparently as per the record has applied his mind. It is not a case of non-application of mind. The Commissioner appears to have consciously, after perusing the proposal and record, granted sanction for issue of notice under section 148 of the Act. 19. The contention of the learned counsel for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 61 (SC) ; [2010] 2 SCC 723. 24. The High Court exercising jurisdiction under article 226 of the Constitution has power to set aside a notice issued under section 147 of the Act if the conditions precedent for proceeding under section 147 of the Act do not exist. The court may, in exercise of its powers, ascertain whether the Assessing Officer had reason to believe that income chargeable to tax had escaped assessment. Reason to believe as stated above exists. 25. The conditions to be satisfied for reopening assessment of the relevant assessment year are, firstly that the Income-tax Officer must have reason to believe that the income chargeable to tax has escaped assessment, secondly that the Assessing Officer must have reason to believe that escaping of assessment is by reason of omission or failure of the assessee, and omission or failure to disclose fully and truly all material facts, necessary for his assessment for the year. If the Assessing Officer had no material at all for believing that there had been non-disclosure, only then existence of alternative remedy shall not be sufficient to refuse quick relief under article 226 of the Constitution of India. Reliance placed on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nnot be declined. In this connection, it shall be quite advantageous to quote paras 11, 12 and 13 of the judgment rendered by the hon'ble apex court in the case of CIT v. Chhabil Dass Agarwal [2013] 357 ITR 357 (SC) ; [2014] 1 SCC 603 (page 374 of 357 ITR) : "Before discussing the fact proposition, we would notice the principle of law as laid down by this court. It is settled law that nonentertainment of petitions under writ jurisdiction by the High Court when an efficacious alternative remedy is available is a rule of selfimposed limitation. It is essentially a rule of policy, convenience and discretion rather than a rule of law. Undoubtedly, it is within the discretion of the High Court to grant relief under article 226 despite the existence of an alternative remedy. However, the High Court must not interfere if there is an adequate efficacious alternative remedy available to the petitioner and he has approached the High Court without availing of the same unless he has made out an exceptional case warranting such interference or there exist sufficient grounds to invoke the extraordinary jurisdiction under article 226. (See State of U. P. v. Mohammad Nooh, AIR 1958 SC 86 ; T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be entertained if an effective remedy is available to the aggrieved person and observed (AIR page 1423, paragraph 7) : "7... The High Court does not, therefore, act as a court of appeal against the decision of a court or tribunal, to correct errors of fact, and does not by assuming jurisdiction under article 226 trench upon an alternative remedy provided by statute for obtaining relief. Where it is open to the aggrieved petitioner to move another Tribunal, or even itself in another jurisdiction for obtaining redress in the manner provided by a statute, the High Court normally will not permit by entertaining a petition under article 226 of the Constitution the machinery created under the statute to be by passed, and will leave the party applying to it to seek resort to the machinery so set up." 13. In Titaghur Paper Mills Co. Ltd. v. State of Orissa [1983] 53 STC 315 (SC) ; [1983] 2 SCC 433 this court observed (SCC pages 440-41, paragraph 11) : "11.... It is now well recognised that where a right or liability is created by a statute which gives a special remedy for enforcing it, the remedy provided by that statute only must be availed of. This rule was stated with great clar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -cum-Assessing Authority v. Gopi Nath and Sons [1990] 77 STC 1 (SC) ; [1992] Supp (2) SCC 312 ; Whirlpool Corporation v. Registrar of Trade Marks [1998] 8 SCC 1 ; Tin Plate Co. of India Ltd. v. State of Bihar [1998] 8 SCC 272 ; Sheela Devi v. Jaspal Singh [1999] 1 SCC 209 and Punjab National Bank v. O. C. Krishnan [2001] 107 Comp Cas 20 (SC) ; [2001] 6 SCC 569)." Applying the law as laid down by the hon'ble apex court, this petition in its peculiar facts and circumstances as stated above is not maintainable. The petitioners are free to avail of the efficacious remedies as available to them. The observations made hereinabove shall remain confined to the disposal of this petition and shall be without prejudice to the rights of the parties while the matter before the Assessing Officer or before the Appel late Authority is considered. 28. As stated hereinabove, the conditions to be satisfied for reopening assessment for the assessment year 2009-10, in terms of section 147 of the Act, i.e., reason to believe that the income chargeable to tax has escaped assessment, non-disclosure of material facts fully and truly by the assessee is apparent. Assertion and denial by the parties in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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