TMI Blog2018 (12) TMI 1873X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment years based on the materials available with the Assessment Officer. The notice issued under Section 148 of the Act itself stipulates that the Department has received information that the writ petitioner has made an investment of ₹ 45,71,26,016/- from U.K. Companies and also incurred expenses during the year ended 31.3.1995. But the writ petitioner has not admitted any income accrued or received based on the investment during the previous year ended 31.3.1996 relating to the assessment year 1996-1997. The learned Senior Standing Counsel for the Department also clarifies that these informations or materials are independent and unconnected with the block assessment made with reference to Section 158-BC for ten years. Thus, when the Assessing Officer has got reason to believe under Section 147 of the Act, then they are empowered to issue notice under Section 148 of the Act and deal with the case under Sections 147 to 153 of the Act and by following the procedures contemplated under the provisions of the Act. When the Income Tax Department come out with a plea that the reopening of the assessment is made based on the independent informations and the documents availabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the writ petitioner to inspect all those documents. However, opportunities proposed to be provided was informed by the Assistant Commissioner of Income Tax. However, now the learned Senior Standing Counsel for the Income Tax Department made a submission that an opportunity will be provided to the writ petitioner by following the procedures. This being the submission made, this Court is of an opinion that complete opportunity as contemplated under the Act must be provided to the assessee, enabling him to submit his explanations/objections and the documents if any along with the statements for the purpose of concluding the proceedings in all respects and to ensure that the proceedings reaches its logical conclusion. - W.P. Nos.7623 of 2002 and 1143 and 1144 of 2003 - - - Dated:- 14-12-2018 - The Hon'ble Mr. Justice S.M. Subramaniam For the Petitioner : Mr. S. Sridhar. For the Respondents : Mr. A.P. Srinivas and Mr. A.N.R. Jaya Prathap. COMMON ORDER The writ petition WP No.1143 of 2003 is filed challenging the notice issued by the Authorities Competent under Section 148 of the Income Tax Act, for reopening of the assessment year 1996-1997 and WP No.1144 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the assessee. In the event of allowing the authorities to proceed parallelly, the assessee would be deprived of his opportunity in submitting his depositions or defence statements, in both the cases where block assessment is taken as well as the reopening of the closed assessment. 7. With reference to the abovesaid submission, the learned counsel for the writ petitioner cited the provisions of the Income Tax Act. The learned counsel for the writ petitioner states that under Section 158-BA as amended through the Finance (No.2) Act, 1998 with effect from 1.7.1995, provides Explanations to the original provision made under Section 158-BA of the Act. The Explanations are provided for the removal of doubts and it reads as follows:- Explanation. - For the removal of doubts, it is hereby declared that - (a) the assessment made under this Chapter shall be in addition to the regular assessment in respect of each previous year included in the block period; (b) the total undisclosed income relating to the block period shall not include the income assessed in any regular assessment as income of such block period; (c) the income assessed in this Chapter shall not be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the writ petitioner with reference to Chapter XIV-B of Section 158-B of the Act, states that undisclosed income is one aspect of the matter and the block assessment made is another aspect of the matter. Therefore, the Authorities Competent are empowered to invoke Clause (b) of Section 158-B in respect of undisclosed income and not in respect of the disclosed income. 13. The assessment already made denotes the disclosed income . Therefore, they have to make reassessment only with reference to the undisclosed income and the over all reopening is impermissible in view of Section 158-B of the Act. 14. The learned Senior Standing Counsel, appearing on behalf of the Income Tax Department, disputed all the contentions raised on behalf of the writ petitioner in entirety. The learned Senior Standing Counsel for the Income Tax Department is of an opinion that the present writ petitions are premature and not maintainable. The facts and circumstances in all respects are under investigation and under the consideration of the Competent Authorities and in this stage, the High Court cannot consider the facts and circumstances now placed by the writ petitioner in the present writ petit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion (1) of Section 37 of the Indian Income-tax Act, 1922 (11 of 1922), or under sub-section (1) of Section 131 of this Act, or a notice under sub-section (4) of Section 22 of the Indian Income-tax Act, 1922, or under sub-section (1) of Section 142 of this Act was issued to produce, or cause to be produced, any books of account or other documents has omitted or failed to produce, or cause to be produced, such books of account or other documents, as required by such summons or notice and the said books of account or other documents have been taken into custody by any officer or authority under any other law for the time being in force, or (b) any books of account or other documents will be useful for, or relevant to, any proceeding under the Indian Income-tax Act, 1922 (11 of 1922), or under this Act and any person to whom a summons or notice as aforesaid has been or might be issued will not, or would not, produce or cause to be produced, such books of account or other documents on the return of such books of account or other documents by any officer or authority by whom or which such books of account or other documents have been taken into custody under any other law for the t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ground that the Department had not provided the opportunities contemplated under the Act and therefore, the principles of natural justice had been violated. In this regard, the learned Senior Standing Counsel for the Income Tax Department states that the Department is ready to provide all such opportunities in accordance with law and by following the procedures contemplated. The order dated 15.11.1996 issued by the Assistant Commissioner of Income Tax, Central Circle II (5), Chennai-34 also denotes that books and documents seized by the Enforcement Directorate in the cases of the writ petitioner are available with the Assistant Commissioner of Income Tax. In case, the writ petitioner require any inspection of those documents, the writ petitioner is at liberty to do so during any working day by giving a requisition letter one day in advance and by specifying the documents required for inspection. Citing the abovesaid letter dated 15.11.1996, the learned Senior Standing Counsel for the Income Tax Department, states that such an opportunity to be provided has already been informed to the writ petitioner and it is left open to the writ petitioner to avail such opportunity by submit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... comprise block period. The Revenue, therefore, cannot contend successfully that wherever the term assessment year is used in the group of sections from section 147 to 153 of the Act the said term has to be replaced by the term block period . Furthermore, the amendment which is retrospectively made in the definition of the block period by the Finance (No. 2) Act, 1996, itself indicates that originally the term block period meant as consisting of 10 previous years prior to the previous year in which the search was conducted and also the period of current previous year up to the date of search, but, before adoption of uniform previous year, in case of different assessees, block period would be different depending on the accounting period adopted in terms of section 3 of the Act. To obviate this situation the definition of block period was amended. This becomes clear from Circular No. 762, dated February 18, 1998 ([1998] 230 ITR (St.) 12), issued by the Central Board of Direct Taxes extracted hereinbefore. 32. As already noticed hereinbefore, the entire scheme under Chapter XIV of the Act, more particularly from Sections 147 to 153 of the Act pertaining to reassessment, an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned notices dated 31st May 2001 under Section 148 of the Act during the pendency of the block assessment proceeding was impermissible in law. Having initiated the proceeding under Section 158BC for the block assessment, there was no justification to issue the aforementioned notice under Section 147 of the Act as that would undoubtedly result in parallel proceedings. They are based on the same materials which form subject matter of the block assessment. The impugned notices dated 31st May 2001 are hereby quashed. 25. The learned counsel for the writ petitioner emphasized that the High Court of Delhi reiterated the principle that during the pendency of the block assessment proceeding, the reopening of the assessment under Section 148 of the Income Tax Act is impermissible and therefore, the very notice issued and impugned in the present writ petitions are to be quashed. 26. To counter, the learned Senior Standing Counsel for the Income Tax Department said that the facts and circumstances of those cases may be different and this Court has to consider the facts and circumstances of the present writ petitions. With reference to Section 158-BC and Section 148 of the Act, the Suprem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions under the provisions of the Act. Thus, search operating officials are trained for that purpose and this Court cannot invade into the powers of such authorities under the Act in respect of conducting search operations. 30. The sources found by these authorities cannot be questioned by the assessee under the provisions of the Income Tax Act. Thus, the only mandatory provision is to ensure that adequate opportunities are provided to the assessee to put forth his defence before the Competent Authorities under the Act. This Court in a writ jurisdiction also must ensure that such opportunities contemplated under the Act are provided to the authorities, while undertaking the process of actions under the Act. Thus, under these circumstances, this Court cannot appreciate or accept the factual contentions raised by the writ petitioner on merits. The writ petitions are filed challenging the notices and therefore, all the facts on merits to be placed before the Competent Authorities by the writ petitioner by producing evidences, documents or by way of statements. 31. Contrarily, this Court cannot appreciate the contention raised on behalf of the writ petitioner that the parallel pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 and 1996-1997 alone. Thus, the reopening of the assessment is initiated based on other reasons. 35. The learned Senior Standing Counsel also clarified that reopening of the assessment is taken with reference to two assessment years based on the materials available with the Assessment Officer. The notice issued under Section 148 of the Act itself stipulates that the Department has received information that the writ petitioner has made an investment of ₹ 45,71,26,016/- from U.K. Companies and also incurred expenses during the year ended 31.3.1995. But the writ petitioner has not admitted any income accrued or received based on the investment during the previous year ended 31.3.1996 relating to the assessment year 1996-1997. 36. The learned Senior Standing Counsel for the Department also clarifies that these informations or materials are independent and unconnected with the block assessment made with reference to Section 158-BC for ten years. Thus, when the Assessing Officer has got reason to believe under Section 147 of the Act, then they are empowered to issue notice under Section 148 of the Act and deal with the case under Sections 147 to 153 of the Act and by followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the abovesaid judgment, this Court made the following observations, which is extracted hereunder:- 100. 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 to be furnished. Responding to the letter sent by the writ petitioner, the Assessing Officer communicated the reasons to the Assessee/writ petitioner and the objections were rejected. Thus, the writ petitioner has not been prejudiced in respect of the proceedings communicated by the Assessing Officer. Thus, this Court, has to consider the very fact that, whether any prejudice has been caused to the Assessee resulting any injustice or otherwise in the present writ petitions on hand. The writ petitioner very well can respond to the Assessing Officer and establish his genuinity or otherwise by producing the materials available with him and by providing informations known to him. Without doing so, the writ petitioner filed the present writ petitions, challenging the notice. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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