Petition to challenge Income Tax Act notice dismissed for lack of explanation. Assessing Officer had valid grounds.

The petition challenging the notice under Section 148 of the Income Tax Act for reopening the assessment for the year 2007-08 was dismissed. The Court held that the Assessing Officer had tangible material to believe that income had escaped assessment, and the petitioner's objections did not provide a sufficient explanation. The Court found no grounds to interfere with the notice, emphasizing the importance of maintaining objections raised before the Assessing Officer unless the notice is without jurisdiction.

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Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for assessment year 2007-08.

Analysis:
1. The petition challenges a notice dated 28 September 2012 issued under Section 148 of the Income Tax Act, seeking to reopen the assessment for assessment year 2007-08. The petitioner, engaged in the business of shares and stock brokers, had filed its return of income for the said assessment year, which was completed by the Assessing Officer on 30 November 2009. The notice for reopening was based on the belief that income chargeable to tax had escaped assessment.

2. The petitioner contended that the reopening of assessment was beyond the 4-year period and required satisfaction of two jurisdictional requirements: a reason to believe that income had escaped assessment and a failure to disclose all material facts. The petitioner argued that there was no failure to disclose necessary facts, particularly regarding loans and repayments, as they were correctly disclosed. The Assessing Officer rejected these objections, emphasizing the undisclosed amount received from directors and family members.

3. The petitioner's counsel argued that the undisclosed amount was actually margin money reflected in the financial statement. The revenue's stance was that the failure to report this amount constituted a lack of full disclosure. The Court noted that the petitioner's objection did not categorically state the nature of the amount in question as margin money in the financial statement.

4. The Court found that the petitioner's submission regarding the nature of the amount as margin money was raised for the first time during the Court proceedings, not in the objections to the reopening. It was emphasized that objections raised before the Assessing Officer must be maintained unless the notice to reopen is without jurisdiction. The Court concluded that the Assessing Officer had tangible material to believe that income had escaped assessment.

5. The Court acknowledged that the petitioner might clarify the nature of the amount during reassessment. However, at the current stage, the Court's focus was on the Assessing Officer's reasonable belief that income had escaped assessment. As the petitioner failed to provide a sufficient explanation in their objections, the Court found no reason to interfere with the notice under Section 148.

Conclusion:
The petition was dismissed, with no order as to costs, as the Court found no grounds to interfere with the notice issued under Section 148 of the Income Tax Act for reopening the assessment for assessment year 2007-08.

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