2022 (9) TMI 984 - HC - Income Tax

Court directs Assessing Officer to proceed with assessment, upholds validity of reassessment notices. Liberty granted for submissions.

The Court upheld the validity of the reassessment notices and directed the Assessing Officer to proceed with the assessment, emphasizing that the issue of ... Reopening of assessment u/s 147 - Validity of Order passed under Section 148A(d) and the Notice issued under Section 148 - HELD THAT:- This Court is of the view that the issue of alleged illegal mining done by the petitioner has not been conclusively settled in petitioner’s favour. The State of Rajasthan still has the option to conduct a further inquiry. In any event, the aforesaid facts disclose that there is a prima facie allegation of income having escaped assessment which will have to be examined by the Revenue Authorities and not the State of Rajasthan. Consequently, the notice under Section 148 of the Act calls for no interference at this stage. Validity of first proviso to Section 149 as decided in Touchstone Holdings Pvt. Ltd. [2022 (9) TMI 892 - DELHI HIGH COURT] reassessment notice be deemed as a notice issued under Section 148A of the Act and permitted Revenue to complete the said proceedings. In this case, the income alleged to have escaped assessment is more than 50 lakhs and therefore, the rigour of Section 149(1)(b) of the Act (as amended by the Finance Act, 2021) has been satisfied. Consequently with the aforesaid liberty, the present writ petition and applications stand disposed of. It is also clarified that the petitioner shall be at liberty to raise all its contentions and submissions before the Assessing Officer, except the issue of limitation. Issues:Challenge to Order under Section 148A(d) and Notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14; Constitutional validity of Instruction No. 1/2022 issued by CBDT; Alleged illegal mining and demands raised by Joint Secretary, Department of Mines, Government of Rajasthan; Reassessment proceedings initiated based on Committee Report dated 12th March, 2018; Allegation of income escaping assessment; Validity of first proviso to Section 149 of the Act.Analysis:1. Challenge to Order under Section 148A(d) and Notice under Section 148:The petitioner challenged the Order passed under Section 148A(d) and the Notice issued under Section 148 of the Income Tax Act for Assessment Year 2013-14. The petitioner also contested the constitutional validity of Instruction No. 1/2022 issued by the CBDT, claiming it was against the first proviso to Section 149 of the Act as amended by Finance Act 2021.2. Alleged Illegal Mining and Demands Raised by Rajasthan Government:The petitioner, a mining company, faced demands from the Department of Mines, Government of Rajasthan, for alleged extra mining in the year 2012-2013. A civil writ petition filed in the High Court of Rajasthan challenged these demands, leading to the order setting aside the demands and remitting the matter back to the State of Rajasthan for further action.3. Reassessment Proceedings and Committee Report:The reassessment proceedings were initiated based on the Committee Report dated 12th March, 2018, despite the High Court of Rajasthan setting aside the earlier demands. The petitioner raised objections, but the respondent proceeded with the reassessment without considering the petitioner's concerns.4. Allegation of Income Escaping Assessment:The respondent-revenue argued that the reassessment notices could extend back to their original dates based on a Supreme Court decision and the provisions of the Taxation and Other Laws Act. It was contended that the issue of alleged illegal mining was not conclusively settled, giving the State of Rajasthan the option to conduct further inquiries.5. Validity of First Proviso to Section 149 of the Act:The Court referred to a previous judgment in Touchstone Holdings Pvt. Ltd. vs. Income Tax Officer, Delhi & Ors., which clarified the validity of the first proviso to Section 149 of the Act. The Court dismissed the writ petition, stating that the Assessing Officer should decide the matter on its merits, except for the issue of limitation.In conclusion, the Court upheld the validity of the reassessment notices and directed the Assessing Officer to proceed with the assessment, emphasizing that the issue of limitation was the only aspect clarified in the judgment. The petitioner was granted liberty to present all contentions and submissions before the Assessing Officer, except for the limitation issue.