Tax reassessment reopening beyond four years for alleged unexplained money (s.69A) upheld; challenge rejected due to tangible material and alternate remedy.

Reopening of assessment under ss. 147/148 beyond four years was challenged on the ground that the AO lacked "reason to believe" and tangible material to support an addition under s. 69A. The HC held that the recorded reasons disclosed the tangible material forming the basis of belief of escapement, and at this stage the court should not stifle the AO's enquiry where statutory jurisdiction is being examined in reassessment proceedings. As the assessee had participated by furnishing details in response to notices under ss. 142(1) and 143(2) and had already raised objections before the AO, and an efficacious alternative statutory remedy existed, writ interference was declined and the impugned notice was allowed to proceed.

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Issues Involved:
1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961.
2. Whether the reasons provided for reopening the assessment were adequate.
3. Application of mind by the sanctioning authority.
4. Participation in assessment proceedings and subsequent challenge to the notice.

Detailed Analysis:

1. Validity of the Notice Issued Under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 31st March 2019, issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year (A.Y.) 2012-13, arguing that it was not validly issued and was without jurisdiction. The court noted that the petitioner had filed objections which were rejected, and the petitioner had participated in the assessment proceedings before filing this petition. The court highlighted that the notice was issued after more than four years but less than six years from the end of the relevant assessment year, and prior approval of the Pr. Commissioner of Income Tax, Range-20, Mumbai, was obtained as required under Section 151(1) of the Act.

2. Adequacy of Reasons Provided for Reopening the Assessment:
The petitioner argued that the reasons for reopening did not indicate the amount of income that had escaped assessment and questioned the timing and adequacy of the information received by the respondents. The court referenced the Supreme Court's judgment in Commissioner of Income Tax vs. Kelvinator of India Ltd. [2010] 320 ITR 561 (SC), which states that the power to reopen must be based on "tangible material" and not merely a "change of opinion." The court found that the reasons provided did disclose tangible material and a live link with the formation of the belief that income had escaped assessment.

3. Application of Mind by the Sanctioning Authority:
The petitioner contended that the sanctioning authority did not apply its mind to the proposal for reopening the assessment, citing the timing of the information received and the issuance of the notice. The court referred to the judgment in German Remedies Ltd. vs. Deputy Commissioner of Income-Tax [2006] 287 ITR 494 (Bom), emphasizing that the commissioner must apply his mind and not exercise power casually. However, the court concluded that there was no indication of non-application of mind in this case, as the approval was granted after due consideration.

4. Participation in Assessment Proceedings and Subsequent Challenge to the Notice:
The respondents argued that the petitioner, having participated in the assessment proceedings, could not challenge the notice at this stage. The court agreed, referencing Amaya Infrastructure (P.) Ltd. vs. Income Tax Officer Ward 12(1)(1) [2017] 79 taxmann.com 345 (Bombay), which held that a petitioner who has participated in assessment proceedings cannot later contend that the court should exercise its extraordinary jurisdiction to prohibit further proceedings. The court found that the petitioner had indeed participated in the proceedings and had only challenged the notice after receiving a show-cause notice regarding the addition of Rs. 3,13,00,000 to the income under Section 69A of the Act.

Conclusion:
The court dismissed the petition, stating that there was no reason to exercise its extraordinary jurisdiction under Article 226 of the Constitution of India to prohibit the authority from proceeding further in the matter. The petition was dismissed with no order as to costs.

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