Court dismisses writ challenging Income Tax Act notice & objections order. Disputed facts not for writ. Disallowances upheld.

The Court dismissed the writ petition challenging the notice under Section 148 of the Income Tax Act and the order disposing of objections. It held that disputed facts and circumstances cannot be adjudicated in a writ proceeding under Article 226 of the Constitution of India. The Court emphasized that deeming fictions under the IT Act cannot be applied to beneficial provisions. The reasons for disallowances were upheld, and the Court ruled that such disallowances needed to be added back to taxable income. The writ petition was dismissed without costs, and the connected miscellaneous petition was closed.

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Issues: Challenge to notice under Section 148 of the Income Tax Act and the order disposing of objections.

Analysis:
1. The petitioner, a Private Limited Company, filed its return of income for the Assessment Year 2009-10 claiming deduction under Section 10 A of the Income Tax Act. The Assessing Officer issued notices under Sections 143 (2) and 142 (1) followed by the original assessment order under Section 143 (3). However, a notice under Section 148 was issued in 2016, leading to objections by the petitioner.

2. The petitioner contended that the reopening of assessment lacked a valid reason as it relied on a Tribunal's judgment, which was already decided by the Bombay High Court. The petitioner argued that there was no basis to invoke Section 147 of the Income Tax Act based on the Tribunal's judgment, especially when the Bombay High Court had already addressed similar issues regarding disallowances.

3. The petitioner further argued that the objections raised during the original assessment were not considered in the impugned order disposing of objections. The petitioner claimed that the very basis for reopening the assessment was unsustainable and should be set aside.

4. The respondents, represented by the Senior Standing Counsel, countered the petitioner's contentions by stating that the Assessing Officer must consider applicable principles and facts during reassessment. The Court cannot adjudicate disputed facts regarding materials scrutinized for reopening the assessment, as this process is part of reassessment.

5. The Court held that disputed facts and circumstances based on documents and evidence cannot be adjudicated in a writ proceeding under Article 226 of the Constitution of India. The Court emphasized that deeming fictions created under the IT Act cannot be imported to beneficial provisions of the Act. The reasons for disallowances were communicated, and the Court ruled that such disallowances needed to be added back to the taxable income.

6. The Court dismissed the writ petition, stating that the mere production of account books or evidence does not necessarily amount to disclosure within the meaning of Section 147. The Court highlighted that the Assessing Officer could have ascertained facts during the original assessment, and the petitioner could not seek shelter under exceptions provided by the proviso to Section 147 after the completion of assessment under Section 143 (3).

7. In conclusion, the Court upheld the reasons for disallowances and emphasized that the intricacies in documents should be scrutinized by the Competent Authority during reassessment, which cannot be done by the High Court. The writ petition was dismissed without costs, and the connected miscellaneous petition was closed.

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