2013 (7) TMI 652 - HC - Income Tax

Court upholds initiation of assessment proceedings under section 143 of Income-tax Act; emphasizes necessity of genuine belief.

Sysarris Software Pvt. Ltd. Versus Deputy Commissioner of Income-tax

The court upheld the initiation of proceedings under section 143 of the Income-tax Act, 1961, dismissing the petitioner's challenge regarding the ... Reassessment - assesse contended that the very reopening of the assessment for the year 2006-07 is one without jurisdiction - Held that:- The proceedings would squarely fall under section 147 - having regard to the fact that it is not forthcoming in the reasons stated that he had a reason to believe that the income chargeable in A.Y. 2006-07 had escaped his attention within the meaning of section 147 – assessee had reflected the present transactions in the returns filed by them - but that had escaped the notice of the assessing authority – the term 'reason to believe' has been described by the SC in the judgement of Johri Lal v. CIT (1973 (2) TMI 2 - SUPREME Court) – petition decided against assesse. As observed the petitioner is already before the Dispute Resolution Panel. Undoubtedly, if the proceedings go against him before the Dispute Resolution Panel, it is always open for him to file an appeal before the Income-tax Appellate Tribunal wherein all contentions available to him can be raised. - the reasons given by respondent No. 1 making him to believe to initiate or reopen the assessment for the year 2006-07 cannot be substituted by this court by giving its own reasons as to why the reasons given by him are incorrect. Issues:Challenging initiation of proceedings under section 143 of the Income-tax Act, 1961.Detailed Analysis:The petitioner, a private limited company, filed its income tax return for the assessment year 2006-07, declaring a loss. Respondent No. 1 passed an assessment order raising nil demand. Subsequently, a notice under section 148 of the Act was issued, leading to objections by the petitioner. The petitioner contended that the reopening of assessment lacked jurisdiction as there was no reason to believe that income had escaped assessment. The petitioner's counsel argued that the reasons provided did not demonstrate proper application of mind by respondent No. 1. On the other hand, the Revenue's counsel emphasized that the concept of 'reason to believe' had been interpreted by the apex court to focus on the reasons given for such belief rather than the order itself.The court reviewed the proceedings, noting that the matter was referred to the Transfer Pricing Officer based on an earlier order. The petitioner raised concerns about the lack of independent assessment for the year in question. The court highlighted that section 147 of the Act pertains to income escaping assessment, even if previously disclosed by the taxpayer. The court referred to previous apex court judgments emphasizing the necessity of a genuine and reasonable belief supported by relevant grounds for reopening assessments.Respondent No. 1 justified the reopening based on transactions with specific companies in previous years, suggesting a similar adjustment for the year in question. The court reiterated that as long as reasons are provided, the sufficiency of those reasons is not within its purview. The petitioner was advised to address concerns before the Dispute Resolution Panel and, if necessary, the Income-tax Appellate Tribunal. Ultimately, the court found no grounds for interference, concluding that the reasons provided by respondent No. 1 were valid for initiating the assessment proceedings for the year in question.In conclusion, the court upheld the initiation of proceedings under section 143 of the Income-tax Act, 1961, dismissing the petitioner's challenge regarding the reopening of assessment for the assessment year 2006-07.