TMI Blog2023 (3) TMI 924X X X X Extracts X X X X X X X X Extracts X X X X ..... the notice u/s.148 as being independent and stand alone and unhindered/unfettered by the restrictions contained in Sec.147 is based on a misconception and may well distort the scheme of reassessment under the Income Tax Act. b) While the subtantive power of making a reassessment is traceable to Sec.147. The procedure for exercising the power of reassessment is set out under Sec.148 and Sec.149 prescribes the time limit within which the powers of reassessment ought to be exercised. c) Sections 147 to 153 of the Income Tax Act, 1961 must be understood as an integrated code which deals with various facets/aspects of reassessment and must be read harmoniously and in conjunction and not disjunctively as being independent of each other as interpreted and understood by the learned Judge. d) Judgment of the Supreme Court GKN Driveshafts (India) Ltd. [ 2002 (11) TMI 7 - SUPREME COURT ] which mandates furnishing of reasons for reassessment when sought for, with an opportunity to the assessee to question the assumption of jurisdiction and casting an obligation on the assessing authority to dispose of such objection was not meant to be an empty formality or ritual without a purpose, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... MMED SHAFFIQ, J. ) The present writ appeal is filed against the order in W.P.No.31722 of 2017 rejecting / dismissing the challenge to the proceedings under Sections 147 r/w.148 of the Income Tax Act, 1961 as bad for want of jurisdiction. 2. Brief Facts : The appellant is a public limited company and engaged in the business of Information Technology and Software Development. The appellant had engaged the services of a large number of software engineers for carrying out coding of software. The appellant filed its return for the Assessment Year 2012-13 wherein, it had claimed deduction under Section 80 JJAA under Chapter VI A of the Income Tax Act, 1961, in respect of Rs.17,93,76,639/-, which represented additional wages paid to the software engineers who were understood and treated as ''workmen'' by the appellant for the purpose of claiming the benefits under Section 80 JJAA of the Income Tax Act, 1961. 3. The appellant's return was taken up for scrutiny and notice under Section 142 of the Income Tax Act, 1961 was issued on 01.01.2016. The 2nd respondent raised a query as to why a large deduction has been claimed under Chapter VI-A of the Income T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... riginal return of income be treated as compliance to the notice issued under Section 148 of the Income Tax Act, 1961, while proceeding to draw the attention of the 2nd respondent to the decision of the Hon'ble Supreme Court in G.K.N Driveshafts and requested for providing the reasons for invoking the power of reassessment. The 2nd respondent vide communication dated 13.10.2017, set out the reasons for reopening the assessment under Section 147 of the Income Tax Act, 1961 for the Assessment Year 2012-13, wherein, it was stated as under: ''The assessee has claimed deduction u/s.80JJAA amounting to Rs.17,93,76,639/-. It was noticed that the assessee had treated many persons as a workmen, who were working in managerial or administrative capacity such as Senior Project Lead, Senior consultant, etc. As these employees are not regular ''workmen'', as contemplated in the Industrial Dispute Act (hereinafter read as I.D.Act), 1947, the payment made do not qualify for the deduction u/s.80JJAA of the I.T.Act. Further, the assessee failed to substantiate whether the said employees were actually receiving wages from the company less than Rs.6500 per month. As the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... furnished. e) The appellant also proceeded to submit on the merits as to the correctness of their claim of deduction under Section 80JJAA while placing reference to the object behind Section 80JJAA, while also setting out the reasons / submissions in support of their claim of deduction under Section 80JJAA. f) The appellant relied upon judgments of the various Courts including the Tribunal to show that the appellant would constitute ''industrial undertaking'' within the meaning of Section 80JJAA and also its employee would qualify as ''workmen'', and submitted that the Income Tax Appellate Tribunal had held that the applicability of wage limit of Rs.6500/- per month as per Industrial Disputes Act was applicable only to those employees employed in Supervisory capacity, while the deductions are claimed by the appellant in respect of employees who were not performing any supervisory, managerial or administrative functions. It was submitted that the above view had been upheld by the Bangalore and Chennai Income Tax Appellate Tribunal and thus judicial discipline requires the respondent to follow the same. 7. The 2nd respondent proceeded to reje ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 80JJAA is mere change of opinion and thus proceeding for reassessment is unsustainable. 10. The learned Single Judge has proceeded to dismiss the order of reassessment by relegating the appellant to participate in the reassessment proceedings while leaving it open to the assessing authority to drop the proceedings for reassessment, if the circumstances do not justify invocation of reassessment proceeding on the strength of the following reasons: a) Issuance of notice under Section 148 of the Income Tax Act is for passing an order of assessment under Section 147, however, the restrictions contained in Sec.147 of the Income Tax Act, would not govern or control the issuance of notice under Section 148. b) The only requirement for issuance of notice under Section 148 is that it ought to be within the time limit prescribed under Section 149 of the Income Tax Act, 1961. c) The decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd., v. Income Tax Officer and others reported in (2003) 1 SCC 72 only enables the assessee to seek reasons for reopening after filing the returns and the communication of reasons is merely to allow an assessee to participate in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 48 prescribes the procedure for initiation of reassessment and assumption of jurisdiction to reassess income escaping assessment. In other words, it appears to us that while the subtantive power of making a reassessment is traceable to Sec.147. The procedure for exercising the power of reassessment is set out under Sec.148 and Sec.149 prescribes the time limit within which the powers of reassessment ought to be exercised. c) Sections 147 to 153 of the Income Tax Act, 1961 must be understood as an integrated code which deals with various facets/aspects of reassessment and must be read harmoniously and in conjunction and not disjunctively as being independent of each other as interpreted and understood by the learned Judge. d) It also appears to us that the judgment of the Supreme Court which mandates furnishing of reasons for reassessment when sought for, with an opportunity to the assessee to question the assumption of jurisdiction and casting an obligation on the assessing authority to dispose of such objection was not meant to be an empty formality or ritual without a purpose, but, was directed to ensure that the assessees do not have to go through the rigmarole of the enti ..... 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