1999 (11) TMI 15 - HC - Income Tax

Dismissed petition challenging income tax notice validity for 1987-88 assessment year

SK. Gupta And Co. Versus Income-Tax Officer And Another

SK. Gupta And Co. Versus Income-Tax Officer And Another - [2000] 246 ITR 560, 165 CTR 565 Issues Involved:1. Validity of the notice issued u/s 148 of the Income-tax Act, 1961.2. Jurisdiction and limitation period for issuing the notice.3. Whether the Assessing Officer acted independently or under the dictates of the Commissioner.4. Revival of the earlier notice and return after the Tribunal quashed the assessment.Summary:1. Validity of the Notice Issued u/s 148:The petitioner challenged the notice dated March 26, 1998, issued u/s 148 for the assessment year 1987-88. The petitioner argued that the original notice u/s 148 had not been quashed, and a return had been filed in compliance with it. Therefore, the Department had no jurisdiction to issue a subsequent notice on the same facts for the same assessment year during the pendency of the earlier proceedings. The court held that the petitioner did not set up a case in the writ petition that the Income-tax Officer did not apply his own mind before issuing the impugned notice. The court emphasized that the Assessing Officer must record his reasons for issuing a notice u/s 147 and have his own reasons to believe that income has escaped assessment.2. Jurisdiction and Limitation Period:The petitioner contended that the notice was issued to circumvent the period of limitation, making it illegal and arbitrary. The court noted that due to the time taken in the earlier proceedings, the limitation for making an assessment based on the return filed in response to the notice dated October 5, 1990, had expired. However, the court referred to Explanation 2(b) to section 147, which allows the Assessing Officer to reassess income if it is noticed that the assessee has understated income or claimed excessive loss, deduction, allowance, or relief in the return. The court concluded that the conditions mentioned in clause (b) were satisfied, and the Assessing Officer could reassess the income after issuing a notice u/s 148.3. Assessing Officer's Independence:The petitioner argued that the assessment was reopened under the dictates of the Commissioner, which is against the provisions of section 147. The court found that the petitioner did not amend the petition to include requisite averments or annex the reasons recorded by the Assessing Officer. The court held that the petitioner could not legally raise such a contention without proper averments. The court further held that it was not established that the Assessing Officer did not examine the matter independently and acted solely on the Commissioner's command.4. Revival of Earlier Notice and Return:The petitioner argued that the earlier notice and return revived after the Tribunal quashed the assessment, and the Assessing Officer could have proceeded based on those documents. The court referred to the case law cited by the petitioner but concluded that due to the expiration of the limitation period, the earlier notice and return could not be treated as pending. The court emphasized that the statute allows the Assessing Officer an opportunity to bring to tax escaped income even after the original period had expired.Conclusion:The court dismissed the writ petition with costs to the respondents, holding that the petitioner was not entitled to raise the contentions presented and that the Assessing Officer acted within the law. The interim order, if any, was discharged.