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TMI Blog2021 (8) TMI 243X X X X Extracts X X X X X X X X Extracts X X X X ..... ent under Section 147 of the Act. Thus, it may not be required to record the other facts narrated in the affidavit filed in support of the writ petitions and this Court would confine the facts with reference to the dispute raised. 3.The learned senior counsel appearing on behalf of the writ petitioner has raised certain important grounds relatable to the provision of reopening of the assessment under Section 147 of the Act. It is contended that absolutely there is no reason for the purpose of reopening nor the reasons furnished are in compliance with the requirements contemplated under Section 147 of the Act. Even the reasons for reopening was furnished to the petitioner after a lapse of more than one year and the learned senior counsel by drawing an inference with reference to the conduct of the respondent made a submission that no reason was available, thus there was a delay. It is contended that it is a classic case of change of opinion. Once all the materials, books of accounts, details, informations, clarifications provided by the petitioner were considered by the Assessing Officer and after passing of the assessment order, reopening must be done strictly in accordance with t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is in violation of the provisions of the Income Tax Act and amounts to change of opinion. The objections submitted by the writ petitioner regarding the reasons furnished were also not considered in a right perspective with reference to the provisions of the Act, disposal of reasoning was undertaken in a routine manner and therefore, the impugned order disposing of the objections is also not in consonance with the facts as well as the provisions of the Income Tax Act. In this regard, the learned senior counsel read out the reasoning furnished as well as the order passed disposing of the objections. Comparatively submissions are made to establish that there was no proper application of mind on the part of the respondent in dealing with the objections and the grounds placed before the respondent were not even looked into. 5.The learned senior counsel relied on catena of judgments mainly to establish the legal proposition what amounts to change of opinion and what is reason to believe as contemplated under the Act. The judgments relied upon would show that the processes through which a decision is to be arrived in respect the reopening of proceedings under Section 147 of the Act. Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd settled cannot be applied directly so as to allow the petition or to dismiss the petition. The facts plays the major role in view of the fact that it is only a reopening of proceedings and not an appeal questioning the validity of the final order of assessment passed. 8.Whenever the very initiation of proceedings under the provisions of the statute is questioned, the Courts are expected to be slow and cautious. The power of initiation may be curbed if there is specific violation of the provisions of the Act. In the event of unnecessary intervention by the Courts, the same would derail the procedures to be followed which is to be of importance for the purpose of achieving the objectives of the statute. In normal circumstances, one would not prefer to pluck the flower at the budding stage unless it is infected. Thus, the intervention during the initial stage is to be exercised sparingly and if there is a blatant violation of the Act. 9.The learned senior counsel relied on various judgments of the High Court of Delhi and High Court of Madras to establish that the Courts have interfered in reopening of proceedings, more specifically, when there is a formation of opinion that it i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... certification as claimed by the petitioner cannot be relied upon in view of the fact that the auditor's report would reveal that the Company has certified that there is no expenditure debited to the Profit and Loss Account which is admissible under Section 40(a) of the Act. Therefore, the auditors have not independently scrutinized those expenditures debited, however, the auditors have stated that the Company has certified and therefore, they recorded the same. Thus, the reliance placed by the petitioner are untenable and the Assessing Officer has to consider all these aspects for the purpose of forming an opinion. The learned senior standing counsel referred Section 40(a) of the Act and the petitioner has not produced any details regarding the consulting fees and other expenditures stated. Regarding these particulars, reopening of assessment is imminent and therefore, there is no irregularity or otherwise in respect of the notice issued under Section 148 of the Act. Thus the writ petitions are to be dismissed. 13.The learned senior standing counsel relied on the judgments in the case of Kalyanji Mavji & Co. vs. Commissioner of Income Tax [(1976) 102 ITR 287 (SC)] and said th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impact of change in the accounting policy resulting in charging of Rs. 2005.15 Million out of carry value of these expenses in the current year profit and loss account. To substantiate the said explanation, the petitioner has referred to the Notes to the Financial Statement for the year and further cited the judgments of the Hon'ble Supreme Court. 15.In reply, the learned senior standing counsel made a submission that all these details and particulars required an adjudication and the said details cannot be adjudicated in a writ proceedings by this Court. Thus the respondent must be allowed to proceed with the reopening proceedings for the purpose of culling out the truth or otherwise in respect of the informations provided by the petitioner. 16.Let us now consider the scope of Section 147 of the Act though this Court has considered on several occasions. The very scheme of the Act under Chapter XIV of the Income Tax Act pertains to the procedures for assessment. Section 139 deals with return of income. Thus the entire assessment proceedings are undertaken under Chapter XIV of the Income Tax Act based on the return of income filed by the respective assessment. In other wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... portance with reference to the procedures which are all contemplated. The authorities competent thus bound to follow the procedures contemplated mandatorily and any deviation would vitiate the very proceedings itself. The importance of the procedures contemplated under Chapter XIV are repeatedly emphasized by the Constitutional Courts across the Country. Thus the High Court should ensure that the procedures contemplated are scrupulously followed and in the event of any violation reliefs are to be granted based on the facts and circumstances of each case. For instance, in some cases, remand may be required and in some other cases orders itself could be liable to be set aside. 18.With reference to Section 147 of the Act, if the Assessing Officer has reason to believe that any income chargeable to tax escaped assessment for any assessment year, he 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 which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e reopening of assessment is made within four years those special circumstances became unnecessary. As far as the reopening of assessment within four years are concerned, explanation (1) to section 147 of the Act provides that production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the foregoing proviso. Thus mere production of materials or evidences are insufficient. Even with reference to the same materials, books of accounts, etc. scrutinized by the Assessing Officer may be a ground for reopening of assessment if the Assessing Officer has reason to believe that some materials which were not adjudicated are newly emerged or identified after passing of the assessment order. Therefore, even in respect of materials considered or scrutinized the Assessing Officer may cull out certain materials or informations for the purpose of reopening of assessment under section 147 of the Act. Explanation (2) to Section 147 of the Act stipulates for the purposes of section 147, the following shall also be deemed to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in consonance with the purpose and object of Chapter XIV as well as the Act as a whole. Therefore the purpose and object of the procedures contemplated under Chapter XIV of the Act is of paramount importance to understand the widerness of the provisions contemplated to determine the tax with reference to the income chargeable to tax escaped assessment. 25.Referring to Section 148(2), the learned senior counsel for the petitioner made a submission that the respondent had failed to record reasons before issuance of notice under Section 148 of the Act and therfore the impugned orders are liable to be side. 26.The learned senior standing counsel pointed out that the reasons communicated to the petitioner would reveal that the reasons to believe that income chargeable to tax has escaped assessment in the case of the petitioner was recorded by the predecessor of the order passed in letter dated 05.10.2007. Such reasons are furnished by one Shri.C.Vatchala, Assistant Director of Income Tax [International Taxation], Chennai. The said Officer has clearly stated that the reasons to believe were recorded by her predecessor and such reasons were communicated to the petitioner. Under these ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2002-03." 28.The petitioner filed their objections for the reasons. The learned senior counsel refer the objections and contended that all the objections are relatable to the informations furnished by the petitioner at the time of original assessment and the learned senior counsel compared the objections as well as the informations produced by the assessee at the first instance before passing the assessment order. 29.The order impugned dated 24.10.2000 disposing of the objections and its rejection were attacked by the learned senior counsel by stating that none of the objections raised are met with by the Assessing Officer with reference to the documents relied on by the petitioner. 30.This Court is of the considered opinion that what is under challenge is the initiation of reopening proceedings under section 147 of the Act. The High Court is not expected to conduct a rowing enquiry in respect of facts and circumstances as narrated by the respective parties to the lis on hand. It is improper on the part of the Courts to form an opinion with reference to the disputed facts at this point of time as several alternate and efficacious remedies are available to the assessee under t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ircumstances, this Court is of the considered opinion that the assessee is bound to furnish further details or the documents or materials so as to establish the expenditure, which are all now considered as the reason for the purpose of reopening of assessment. This Court cannot go into the factual details now furnished by the petitioner at the time of original assessment nor made a comparison with reference to the original explanations or submissions along with inferences drawn by the Assessing Officer for reopening of assessment. However, the reasoning furnished for reopening of assessment would reveal that there is no indication either in the return of income or the accompanying statement or the details filed that the assessee had deducted tax on the above payments. If at all the Assessing Officer's finding in this regard is not in consonance with the facts and circumstances, it is for the assessee to place all materials and at any stage, there is a possibility of dropping of further proceedings by the Assessing Officer if he is satisfied. Therefore, the petitioner need not shy away from participation and to explain before the Assessing Officer that the reasons to believe is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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