TaxTMI 
TaxTMI 
2006 (6) TMI 142
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....ally worded grounds of appeal. Grounds of appeal Nos. 1 and 2 are directed against initiation of proceedings under section 147. The case of the assessee in this respect is that the view taken by the learned Assessing Officer was contrary to the Judgment of Hon'ble Delhi High Court in DIT v. All India Oriental Bank of Commerce Welfare Society [2003] 184 CTR (Delhi) 274 and certain decisions of the Tribunal. Facts of the case leading to these grounds of appeal are that the assessee filed return of income for assessment year 1997-98 on 8-1-1998 and for assessment year 1998-99 on 25-1-1999 declaring nil income. The Assessing Officer issued intimation under section 143(1)(a) and granted refund as asked for by the assessee. No notice under se....
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....e Assessment Year 1997-98. Sd/-28-11-2003 ITO, Ward 33(4), New Delhi." For assessment year 1998-99 the Assessing Officer recorded similar reasons to believe that assessee's income chargeable to tax had escaped assessment. 3. During the course of hearing before me the learned counsel for the assessee argued that reasons as recorded by the Assessing Officer were not tenable. The assessee was a society constituted for mutual benefit of its members. It had been held in certain Tribunal orders as well as court pronouncements that where surplus funds of a mutual society were kept in a bank, interest accruing on such deposits did not fall outside the ambit of principle of mutuality. On consideration I am unable to accept these contentions ....
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....question is not of correctness or otherwise of the reasons because that can be decided only after conduct of assessment proceedings and after further examination of the facts of the case and consideration of the contentions of the assessee. As long as the learned Assessing Officer had bona fide reasons to believe that income chargeable to tax had escaped assessment and such belief is based on relevant material, validity of initiation of proceedings under section 147 cannot be challenged. In the instant case on the g reasons recorded it is apparent that the learned Assessing Officer entertained an honest belief that assessee's income chargeable to tax had escaped assessment. The belief was based on application of mind on relevant facts. ....
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.... was bad in law and liable to be quashed for this reason alone. 5. It is seen that in the case of GKN Drives hafts (India) Ltd. the assessee filed writ petition against issue of notice under section 148 for various assessment years. The Hon'ble High Court dismissed the writ petition and thereupon the assessee filed an appeal against the judgment of Hon'ble Delhi High Court. After hearing the parties the Hon'ble Supreme Court pronounced judgment in the following words:- "We see no justifiable reason to interfere with the order under challenge. However we clarify that when a notice under section 148 of the Income-tax is issued, the proper course of action for the noticee is to file a return and if he so desires, seek reasons fo....
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....'s preliminary objections, the respondent shall pass a speaking order and it will be open to the petitioner to challenge such order." 7. On consideration of both the judgments relied upon by the learned A.R. of the assessee, I am unable to persuade myself that proceedings initiated by the Assessing Officer under section 147 should be rendered void or invalid for the reasons only that the Assessing Officer had proceeded to complete the assessment without earlier having passed a speaking order dealing with the preliminary objections of the assessee against issue of notice under section 148. As far as the provisions of Income-tax Act are concerned, there is no express provision for an interim order on assessee's objections to initiati....