2014 (9) TMI 46 - HC - Income Tax

Bombay High Court validates Income Tax Act Section 148 notices for A.Y. 2006-07 & 2007-08

The High Court of Bombay upheld the validity of notices issued by the Assessing Officer under Section 148 of the Income Tax Act for reopening assessments ... Exercise of jurisdiction under Article 226 - Reopening of assessment u/s 148 – Rejection of assessee’s objection – Held that:- The assessment sought to be reopened was for a period of more than 4 years from the end of the relevant assessment year - Therefore a higher degree of satisfaction is required in cases where the assessment sought to be reopened is beyond four years - during the original assessment proceedings the AO had proceeded on the basis that the purchase details furnished by the petitioners including the bills of purchase are genuine - The information obtained subsequent to the assessment indicate that certain purchase details may not be genuine - the occasion to consider the genuineness of the purchase bill was never a subject matter of scrutiny in the proceedings u/s 143(3) of the Act for A.Y. 2006-07 and 2007-08 – the notice issued for reassessment u/s 148 cannot be interfered – Decided against Assessee. Issues:Challenge to reopening of assessment for A.Y. 2006-07 and A.Y. 2007-08 under Section 148 of the Income Tax Act; Objection to reasons in support of notices dated 7 December 2012; Change of opinion by Assessing Officer; Lack of jurisdiction in issuing impugned notices; Disclosure of particulars in reasons for reopening assessment.Analysis:The judgment by the High Court of Bombay dealt with petitions challenging two notices issued by the Assessing Officer under Section 148 of the Income Tax Act for reopening assessments for A.Y. 2006-07 and A.Y. 2007-08. The reasons for reopening both assessments were found to be identical, involving suspicions of bogus transactions by the assessee company with certain suppliers. The Assessing Officer sought to reopen the assessments based on new findings from survey proceedings and assessment proceedings for A.Y. 2008-09 regarding alleged bogus purchases. The petitioners objected to the lack of jurisdiction and change of opinion by the Assessing Officer in issuing the impugned notices, arguing that the reasons lacked necessary particulars to support the belief that income had escaped assessment.The court considered the arguments put forth by both parties. The petitioners contended that the notices were issued within four years from the end of the relevant assessment years, unlike a previous notice challenged in a separate case. They highlighted that complete details of purchases were provided during assessment proceedings for A.Y. 2006-07 and A.Y. 2007-08, indicating a change of opinion by the Assessing Officer in issuing the notices. On the other hand, the revenue argued that the notices were issued based on information received during subsequent scrutiny and survey proceedings, asserting that there was no change of opinion as the alleged bogus bills were not considered during the original assessments.The court independently analyzed the facts of the case and distinguished it from a previous judgment related to a notice issued beyond four years. It noted that the revenue obtained new information post-assessment, indicating potential bogus purchases, which were not scrutinized during the original assessments. The court found that the reasons provided in the notices did contain particulars such as seller names, purchase years, and amounts alleged to be bogus. Consequently, the court declined to interfere with the notices for reassessment under Section 148 of the Act, emphasizing that its observations were preliminary and the Assessing Officer should make decisions in the reassessment proceedings on merits, disregarding the court's observations.In conclusion, the court dismissed both petitions at the admission stage, leaving all contentions of the parties open and not awarding any costs.