9911796707
Advanced Search 
TMI Blog2022 (10) TMI 128X X X X Extracts X X X X X X X X Extracts X X X X ..... for the Assessment Year 2018-19 has escaped assessment within the meaning of Section 147 of the IT Act, notice dated 15.03.2022 under Section 148A was issued calling upon the petitioner-assessee, bearing PAN AAJCA0870E, to furnish response on or before 22.03.2022. Enclosed to said notice was the following material particulars facilitating filing of show-cause by the petitioner: "As per information gathered, you have inflated your expenses by showing bogus purchase from M/s. Mideast Integrated Steel Pvt. Ltd. and suppressed income amounting to Rs.31,64,58,088/-, which needed to be added back to your income during the Financial Year 2017-18." 3.1. There was no response from the assesse nor was any step taken for extension of time on or before 22.03.2022 as stipulated in the aforesaid notice dated 15.03.2022. Vide Order dated 26.03.2022 passed under Section 148A(d) of the Income Tax Act a detailed discussion has been made based on available material which is to the following effect: "The case was flagged for the Assessment Year 2018-19 by DIT (Systems) in Insight Portal in accordance with the risk management strategy formulated by the Board with certain underlying information. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e dated 15.03.2022 issued under Section 148A as inadequate time of seven days only was given. Furthermore, there was absence of reason with material particulars for proposed reassessment under Section 148 of the IT Act. 4. Mr. Tushar Kanti Satapathy, learned Senior Standing Counsel for Income-tax Department submitted that had the petitioner being sanguine about its rights and prejudice, it could have sought for further time on or before 22.03.2022 in response to notice dated 15.03.2022 under Section 148A enclosed as Annexure-2 to the writ petition. It is too late in the day to raise contention that the time granted to furnish response to notice dated 15.03.2022 under Section 148A was inadequate, more so when Order dated 26.03.2022 had already been passed under Section 148A(d) based on material available on record and in absence of any step being taken by the assessee on or before 22.03.2022. Still there is scope for the petitioner-assessee to place its own material to rebut the evidence collected by the Assessing Officer during the course of assessment under Section 148. 4.1. If the grounds are relevant and have a nexus with the formation of opinion regarding escaped assessment, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to tax has escaped assessment; (b) provide an opportunity of being heard to the assessee, with the prior approval of specified authority, by serving upon him a notice to show cause within such time, as may be specified in the notice, being not less than seven days and but not exceeding thirty days from the date on which such notice is issued, or such time, as may be extended by him on the basis of an application in this behalf, as to why a notice under Section 148 should not be issued on the basis of information which suggests that income chargeable to tax has escaped assessment in his case for the relevant assessment year and results of enquiry conducted, if any, as per clause (a); (c) consider the reply of assessee furnished, if any, in response to the show-cause notice referred to in clause (b); (d) decide, on the basis of material available on record including reply of the assessee, whether or not it is a fit case to issue a notice under section 148, by passing an order, with the prior approval of specified authority, within one month from the end of the month in which the reply referred to in clause (c) is received by him, or where no such reply is furnished, w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eans facts told, heard or discovered about somebody/something. The Law Lexicon describes the term 'information' as the act or process of informing, communication or reception of knowledge. The expression 'information' means instruction or knowledge derived from an external source concerning facts or parties or as to law relating to and/or having a bearing on the assessment. We agree that a mere change of opinion or having second thought about it by the competent authority on the same set of facts and materials on the record does not constitute 'information' for the purposes of the State Act. But the word "information" used in the aforesaid Section is of the widest amplitude and should not be construed narrowly. It comprehends not only variety of factors including information from external sources of any kind but also the discovery of new facts or information available in the record of assessment not previously noticed or investigated. Suppose a mistake in the original order of assessment is not discovered by the Assessing Officer, on further scrutiny, if it came to the notice of another assessor or even by a subordinate or a superior officer, it would be considered as information d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to limitation contained in Section 149 of the IT Act and there is no scope for set the clock ante-clock-wise. 5.5. The action based on the subjective opinion or satisfaction can judicially be reviewed first to find out the existence of the facts or circumstances on the basis of which the authority is alleged to have formed the opinion. It is true that ordinarily the court should not inquire into the correctness or otherwise of the facts found except in a case where it is alleged that the facts which have been found existing were not supported by any evidence at all or that the finding in regard to circumstances or material is so perverse that no reasonable man would say that the facts and circumstances exist. The courts will not readily defer to the conclusiveness of the authority's opinion as to the existence of matter of law or fact upon which the validity of the exercise of the power is predicated. The doctrine of reasonableness thus may be invoked. Where there are no reasonable grounds for the formation of the authority's opinion, judicial review in such a case is permissible. When we say that where the circumstances or material or state of affairs does not at all exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id embarrassment or wreck personal vengeance, then the power will be deemed to have been exercised improperly. The grounds which are relevant for the purpose for which the power can be exercised have not been considered or grounds which are not relevant and yet are considered and an order is based on such grounds, then the order can be attacked as invalid and illegal. On the same principle, the administrative action will be invalidated if it can be established that the authority was satisfied on the wrong question. The aforesaid principles of exercise of power vis-à-vis validity of exercising power has been discussed elaborately by the Hon'ble Supreme Court of India in Amarendra Kumar Pandey Vrs. Union of India, 2022 SCC OnLine SC 881. 5.6. "Proceeding" is frequently used to denote a step in an action and obviously it has that meaning in such phrases as proceeding in any cause or matter. When used alone, however, it is in certain statutes to be construed as synonymous with or including action. Reference may be had to Halsbury's Laws of England, Vol. 1, 3rd Edition, page 6. 5.7. The term "proceeding" is a very comprehensive term and generally speaking means a prescribed cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only mean a legal process taken to enforce the rights. 5.9. The dictionary meaning of the word "proceeding" is "the institution of a legal action, any step taken in a legal action". In a general sense, the form and manner of conducting juridical business before a Court or judicial officer. Regular and orderly progress in form of law, including all possible steps in an action from its commencement to the execution of judgment. Term also refers to administrative proceedings before agencies, tribunals, bureaus or the like. See: Most Rev. P.M.A. Metropolitan & Others Vrs. Moran Mar Marthoma & Another, 1995 Supp (4) SCC 286 = AIR 1995 SC 2001. 5.10. In P.L. Kantha Rao Vrs. State of AP, AIR 1995 SC 807 = (1995) 2 SCC 471, it is stated that the word 'proceeding' would depend upon the scope of the enactment wherein the expression is used with reference to a particular context where it occurs. It may mean a course of action for enforcing legal right. In the journey of litigation, there are several stages, one of which is the realisation of the judicial adjudication which attained finality. 5.11. The expression "proceeding" is not a term of art, which has acquired a definite meaning. What ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eedings for contempt, either on its own motion or otherwise, after the expiry of a period of one year from the date on which the contempt is alleged to have been committed. In the Pallav Sheth Vrs. Custodian, (2001) 107 Comp Cas 76 (SC) = (2001) 7 SCC 549 it has been held that in the case of suo motu proceedings contempt proceeding must be initiated by the Court by issuing a notice and in other cases initiation can only be by a party filing an application. Under Section 20 of the Contempt of Courts Act, 1971 action can be initiated, either by filing an application or by the Court issuing notice suo motu, within a period of one year from the date on which the contempt is alleged to have been committed. 5.16. In Kishan Lal & Co. Vrs. Additional Commissioner of Commercial Tax, (2017) 102 VST 343 (Chhatisgarh) = 2017 SCC OnLine Chh 584 the initiation of proceeding has been described. The word 'initiate' or 'initiation' has not been defined in the Act. Since it has not been defined in the Act, it would be appropriate to refer to the dictionary meaning of the word 'initiate'. In Webster's Third New International Dictionary, the word 'initiate' has been defined as to begin or set going; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proceeding under Section 148. Therefore, it is unbecoming on the part of the petitioner to turn around to contend to the contrary. Acceding to the contention of the petitioner would be rendering violence to provisions of Section 148 and will provide a handle to persons trying to avoid proceedings initiated with justification. It can be said to be taking advantage of one's own wrong inasmuch as there is no explanation whatsoever to explain the circumstance which prevented the petitioner from filing reply or making application for extension of time as required under Section 148A at the relevant point of time. 5.18. Looking the present case in the above perspective, it can be candidly said that in absence of rebuttal to the contents and material particulars supplied to the assessee by specifically mentioning that expenses have been inflated by making bogus purchases from M/s. Mideast Integrated Steel Pvt. Ltd., thereby suppressing income to the tune of Rs.31,64,58,088/- pertaining to Financial Year 2017-18 in the notice dated 15.03.2022, neither the Order dated 26th March, 2022 passed under clause (d) of Section 148A can be faulted with nor does the issue of notice under Section 148 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der Article 226/227 of the Constitution of India at this intermediate stage when the proceedings initiated are yet to be concluded by a statutory authority. Hence the writ petition stands dismissed." 5.20. The said Judgment of the Hon'ble Punjab & Haryana High Court was carried to the Hon'ble Supreme Court of India in SLP(C) No. 14823 of 2022 [Anshul Jain Vrs. Principal Commissioner of Income Tax], which came to be disposed of on 02.09.2022 with the following order: "What is challenged before the High Court was the re-opening notice under Section 148A(d) of the Income Tax Act, 1961. The notices have been issued, after considering the objections raised by the petitioner. If the petitioner has any grievance on merits thereafter, the same has to be agitated before the Assessing Officer in the re-assessment proceedings. Under the circumstances, the High Court has rightly dismissed the writ petition. No interference of this Court is called for. The present Special Leave Petition stands dismissed. Pending applications stand disposed of." 5.21. It is seen that in the case of Anshul (supra) the grievance of the petitioner was that his objection raised against notice under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The main question for consideration is whether the Petitioner should be given opportunity to take copy of the seized account book. The answer to such a question would depend upon whether principle of natural justice would be violates unless such opportunity is given. It is well settled that principles of natural justice cannot be confined within close jackets. What would be the principle in a particular case would depend on the facts and circumstances of that case. One thing, however, is certain that in an assessment proceeding if any particular material is used against an assessee then the assessee must be given full opportunity to rebut any adverse inference that could be drawn from user of that particular material. This was fully discussed by us in 26 (1970) S.T.C. 22 (Muralimohan Prabhudaval v. State of Orissa) wherein a question arose as to whether the assessee could be given opportunity for cross- examination with reference to account books of third parties used against the assessee. In paragraph 5 of our Judgment we referred to the fourth proposition as follows: 'In case he proposes to use against the assessee the result of any private enquiries made by him, he must commun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f any such account comes to their possession, they cross-verify the same with regular books of account maintained by the dealer and submit their verification report to the assessing officer alleging suppression of purchase and/or sale, if any, found on such verification. In such event, the assessing officer is not bound to accept the view of the inspecting officer in respect of the allegations raised against the dealer in the report in entirety. He may not accept the report at all. He may accept the report in part. Therefore, the part of the report containing allegation against the dealer and the materials on the basis of which such allegation has been made must have to be disclosed to the dealer for his rebuttal, if the assessing officer wants to utilize the same against the dealer. *** 21. The Hon'ble Apex Court in GKN Driveshafts (India) Ltd. Vrs. Income-tax Officer, (2003) 259 ITR 19 held that when a notice under Section 148 of the Income Tax Act is issued, the proper course of action for the notice is to file a return and, if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish the reasons within a reasonable time. 22. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
