2008 (9) TMI 504 - HC - Income Tax

High Court upholds notice validity & ex-parte assessment, Tribunal deems reassessment justified

The High Court dismissed the appeals challenging the validity of the notice under section 148, the ex-parte assessment under section 144, and the ... Reassessment- The assessee had originally filed return for the assessment year 1994-95 , declaring an income of Rs. 34,800. In September, 1998, the Assessing Officer received information from the office of the Assistant Commissioner of Income-tax, Jalandhar in the form of a letter addressed to the assessee pointing out that though the assessee had filed a declaration under the VDIS 1997 disclosing income of Rs. 2 lakhs in the form of cash for the assessment year 1994-95 and Rs. 2 lakhs for the assessment year 1995-96, he had not paid the due tax and, therefore, the said declaration was deemed not to have been filed as per the provisions of section 67(2) of the VDIS, 1997. On the basis of this information, the Assessing Officer framed a fresh assessment. Tribunal reject the appeal o the assessee on the ground that service of notice u/s 148 is proper. Held that- the declaration had been declared to be no declaration only for the purpose of the 1997 Scheme. Further the documents did not form the sole basis for the Assessing Officer to initiate reassessment proceedings but he also look into consideration the letter written by the assistant commissioner as well as the fact that no return had been filed by the assessee for the assessment year 1995-96. Thus, the Assessing Officer had rightly invoked the jurisdiction to initiate the reassessment proceedings u/s 147. Dismissed the appeal. Issues:Validity of notice under section 148 of the Income-tax Act, 1961Validity of ex-parte assessment under section 144Jurisdiction to initiate reassessment proceedings under section 147 based on VDIS declarationValidity of reassessment proceedings based on VDIS declarationValidity of Notice under Section 148:The appellant challenged the validity of the notice served under section 148 of the Income-tax Act, 1961. The Tribunal held that the service of notice on an employee of the assessee was not disputed, and the father of the assessee had been receiving notices on behalf of his wife. Citing precedent, the Tribunal deemed the service of notice valid even if not served on the assessee personally. The appellant's reliance on a judgment regarding refusal of service by a security guard was distinguished, leading to the dismissal of the appeal on this issue.Validity of Ex-parte Assessment under Section 144:The appellant contended that the ex-parte assessment under section 144 should be set aside due to sufficient cause preventing their appearance before the Assessing Officer. However, the Tribunal found no error in the order of the appellate authority in not setting aside the ex-parte assessment. The appeal challenging the ex-parte assessment was dismissed accordingly.Jurisdiction to Initiate Reassessment Proceedings under Section 147 based on VDIS Declaration:The Assessing Officer initiated reassessment proceedings under section 147 based on a VDIS declaration filed under the 1997 Scheme. The appellant argued that the declaration was held to be no declaration due to non-payment of tax, thus rendering it invalid for any action. However, the Tribunal disagreed, stating that the declaration's nullity was only for the purposes of the VDIS, 1997. The Tribunal concluded that the reassessment proceedings were not solely based on the VDIS declaration but also considered other factors, such as the letter from the Assistant Commissioner of Income-tax and the non-filing of a return for a subsequent assessment year.Validity of Reassessment Proceedings based on VDIS Declaration:The appellant further contended that the reassessment proceedings based on the VDIS declaration were invalid. The Tribunal found that the reassessment was not solely reliant on the VDIS declaration and dismissed the appeal. The Tribunal emphasized that the document did not form the sole basis for initiating the reassessment proceedings, as other factors were also taken into account by the Assessing Officer.In conclusion, the High Court dismissed the appeals on various grounds, including the validity of the notice under section 148, the ex-parte assessment under section 144, and the jurisdiction to initiate reassessment proceedings based on the VDIS declaration. The judgment provided detailed analysis and reasoning for each issue raised by the appellant, ultimately upholding the decisions made in the lower courts and tribunals.