2013 (4) TMI 489 - HC - Income Tax

High Court upholds validity of Income Tax notice under Section 148

ESTER INDUSTRIES LTD Versus UNION OF INDIA AND ORS

The High Court upheld the validity of the notice issued under Section 148 of the Income Tax Act, 1961, ruling that no sanction was required as it was ... Notice U/s 148 - Amendment made to Section 115JB of the Act by the Finance Act, 2008 with retrospective effect -Held that:- The Court merely noticed that it was held by the Supreme Court in M.K. Venkatachalam Vs. Bombay Dyeing & Manufacturing Co. Ltd.(1958 (4) TMI 4 - SUPREME Court ) that a retrospective amendment of law can even permit action for rectification of the assessment on the ground of mistake apparent from record. This Court held that just because action for rectification is permissible, it does not mean that no action can be taken for re-opening the assessment because the powers under Section 147 and Section 154 are not mutually exclusive and there could be some overlapping and so long as the conditions for the applicability of either of these sections are satisfied. The petitioner does not appear to have properly understood and appreciated the purport of our observation. We have only pointed out that “there could be overlapping of jurisdiction and so long as the jurisdictional pre conditions are satisfied, action can be taken by the assessing officer under the appropriate section even though action could be taken under another Section.” The argument of the petitioner that action can only be taken under Section 154 did not appeal to this Court, and was rejected - The petitioner has also prayed for recalling the direction imposing cost. We do not find any merit in the same - The prayer is rejected - we find no merit in the review petition which is dismissed with no order as to costs. Issues:1. Validity of notice issued under Section 148 of the Income Tax Act, 1961.2. Rejection of objections by the Assessing Officer regarding reasons for reopening assessment.3. Challenge to the vires of the retrospective amendment to Section 115JB of the Act.4. Compliance with procedural requirements under Sections 151 and 129 of the Act.5. Consideration of arguments raised during the hearing on 8th November, 2012.Issue 1: Validity of Notice under Section 148:The petitioner, M/s. Ester Industries Ltd., challenged a notice issued under Section 148 of the Income Tax Act, 1961. The High Court had previously quashed a re-assessment order and directed the Assessing Officer to reconsider the objections raised by the petitioner. The respondent subsequently rejected the objections in an order dated 23rd September, 2011. The petitioner contested the validity of the notice, arguing that the sanction of the Joint Commissioner of Income Tax was not obtained as required by Section 151(1) of the Act. However, the Court ruled that since the notice was issued by the Deputy Commissioner of Income Tax, no sanction was necessary.Issue 2: Rejection of Objections by Assessing Officer:The petitioner raised objections to the re-assessment, arguing non-compliance with Section 129 of the Act, which requires objections to be heard by the same officer who passes the order. The Court held that the petitioner did not request a de novo hearing before the successor-officer, thus rejecting this contention. The Assessing Officer's order rejecting the objections was challenged in WP(C) No. 7482/2011, marking the third challenge to the re-assessment proceedings.Issue 3: Challenge to Vires of Retrospective Amendment:A significant issue revolved around the vires of the retrospective amendment to Section 115JB of the Act by the Finance Act, 2008. The petitioner contested the amendment's constitutionality, but the Court noted that the petitioner had abandoned this challenge in a previous order. The Court examined the challenge and concluded that the retrospective legislative amendment provided tangible material for re-opening the assessment.Issue 4: Compliance with Procedural Requirements:The Court addressed the procedural compliance under Sections 151 and 129 of the Act. It clarified that the sanction requirement under Section 151(1) did not apply in this case due to the rank of the issuing officer. Additionally, it emphasized that under Section 129, the petitioner should have requested a de novo hearing before the successor-officer, which was not done.Issue 5: Consideration of Arguments Raised During Hearing:During the hearing on 8th November, 2012, the Court considered various arguments raised by the petitioner's counsel. The Court found no merit in the review petition filed by the petitioner, which alleged that certain arguments were not considered in the judgment. The Court dismissed the review petition, emphasizing that all arguments raised by the petitioner had been duly addressed during the hearing.In conclusion, the High Court thoroughly analyzed each issue raised by the petitioner, addressing concerns regarding the validity of the notice, rejection of objections, challenges to the retrospective amendment, procedural compliance, and consideration of arguments during the hearing. The Court dismissed the review petition, finding no merit in the petitioner's contentions and upholding the previous judgments.