2013 (7) TMI 446 - HC - Income Tax

Validity of Income Tax Reassessment Upheld, Speaking Order Justified

The court upheld the validity of the reassessment proceedings under section 147 of the Income-tax Act, finding compliance with statutory requirements. The ... Reopening of assessment - whether the proceedings u/s 147 can be justified beyond a period of four years with reference to any act or omission on the part of the assessee in effecting the true and full disclosure - Held that:- the course and proceedings pursued by the third respondent are in conformity with the statutory prescription and there is no violation of any legal provisions or binding judicial precedents - no opinion was expressed by the respondent thus it cannot be said that section 147 proceedings have been initiated by change of opinion/by way of review - In any view of the matter, it is more a question of fact and the true state of affairs can be brought to light only on furnishing the export turnover details sought for from the part of the third respondent and the actual fact has to be established by the assesse – petition decided against the assesse. Issues:1. Challenge to speaking order passed under section 147 of the Income-tax Act.2. Reopening of assessment under section 147 after finalization under section 143(3).3. Compliance with statutory requirements for invoking section 147.4. Justification of proceedings beyond four years with reference to disclosure.Analysis:Issue 1: Challenge to speaking order passed under section 147 of the Income-tax ActThe petitioner challenged the speaking order passed by the third respondent under section 147 of the Income-tax Act in a writ petition. The petitioner contended that there was no valid reason for reopening the assessment under section 147, emphasizing that the reassessment was proposed after a significant lapse of four years without any fault on the part of the assessee. The petitioner argued that the proposed exercise by the third respondent was akin to a review or change in opinion, which was impermissible under established legal principles. The petitioner sought to contest the matter based on detailed reasons furnished under section 147 to enable a fair opportunity for defense without the need for extensive assessment proceedings.Issue 2: Reopening of assessment under section 147 after finalization under section 143(3)The sequence of events revealed that the assessment for the year 2005-06 was initially finalized by the third respondent under section 143(3) of the Income-tax Act. Subsequently, rectification orders were passed under section 154, and appeals were filed by the petitioner against the assessment orders. The third respondent then issued a notice under section 148 proposing reassessment under section 147. The petitioner raised objections, leading to the passing of the challenged order, exhibit P-12, by the third respondent. The respondents argued that the reassessment was justified due to alleged non-disclosure of actual facts leading to income escapement, falling within the purview of section 147.Issue 3: Compliance with statutory requirements for invoking section 147The respondents contended that the reasons for reopening the assessment were furnished in compliance with the directions of the apex court and that the objection raised by the petitioner was duly considered before passing the impugned order, exhibit P-12. The court found that the respondents had adhered to the legal requirements for invoking section 147, as evidenced by the reasons provided to the petitioner and the subsequent consideration of objections leading to the challenged order.Issue 4: Justification of proceedings beyond four years with reference to disclosureThe court examined whether the proceedings could be justified beyond four years concerning any act or omission by the assessee affecting disclosure. The third respondent analyzed the contentions raised by the assessee in objections and observed discrepancies in the income particulars filed for the relevant years. The court noted that the pendency of an appeal did not bar reassessment for income escapement not part of the appeal subject matter. The third respondent relied on legal provisions and precedents to justify the decision to proceed with the reassessment on the merits, finding no procedural lapse or violation of legal requirements.In conclusion, the court held that the writ petition lacked merit, as the proceedings undertaken by the third respondent were in accordance with statutory provisions and did not contravene established legal principles. The court dismissed the petition, declining interference in the matter.