TaxTMI 
TaxTMI 
TaxTMI 
2008 (8) TMI 800
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....d before us that from 16-10-1996 to 20-10-1996, a search was conducted at the residence of late Anant N. Naik and his family in exercise of the powers conferred by section 132 of the Income-tax Act, 1961. The assets were seized. His statement was recorded during the course of the said investigation on 20-10-1996. 4. Between 16-1-1997 to 30-12-1997, assessment proceedings before the Assessing Officer, Dy. CIT (Asst.) Special Range, Panaji, were held and pursuant thereto, he passed a block assessment order on 31-12-1997 under section 158BC of the Income-tax Act, 1961 (hereinafter referred to as 'the Act'). 5. The petitioners' case is that the search and seizure proceedings were as a result of bias on the part of one of the officers and that is how despite the Department not being able to sustain the block assessment orders, it finally resorted to the provisions of section 147 of the Income-tax Act. Be that as it may, further undisputed fact is that by orders dated 7-6-1999 [Ananta N. Naik v. Dy. CIT of the Tribunal, Pune Bench, the block assessment proceedings were quashed. A copy of the said order is at Annex 'C', p. 78 of the petitioner's paper book. 6. After the block assessmen....
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....le to tax for the assessment year 1989-90 has escaped assessment within the meaning of section 147 of the Income-tax Act. I, therefore, propose to reassess the income for the said assessment year and hereby require allowance under section..... You deliver to me before the expiry of 31 days from the date of service of this notice, a return in the prescribed form of your income for the said assessment year. This notice is being issued after obtaining the necessary satisfaction of the Addl. CIT/CIT/Chief CIT, G. R., Panaji." Identical notices have been issued to all the petitioners/assessees. After the request to furnish reasons was made, each of the petitioners received a letter from the Dy. CIT (Inv.), Panaji, dated 19-1-2000 enclosing with the communication copies of the order-sheets for the relevant assessment years which, according to the Department, constitute reasons for reopening of the assessment. Once again, more or less, identical reasons are on record in respect of the other notices. The reasons read thus :- "Shri Anand Naracinha Naik Asst. yr. 1997-98 In this group of cases, a search and sei....
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.... He submits that if the impugned notices are tested on the touchstone of the subject provision, it would be apparent that the notices have been issued by the Department to get over the adjudication by the Tribunal and finally by this Court. Mr. Nadkarni pointed out that the Department has lost throughout and even its appeal to this Court under section 260A of the Income-tax Act has been dismissed. In such circumstances and when block assessment orders gained finality, the impugned notices are nothing but an attempt to reopen them. Such attempts are impermissible in law much less by recourse to section 147 of the Income-tax Act. He submits that each of these notices are after the block assessment proceedings were quashed by the Tribunal. Same contentions were urged during the proceedings before the appellate authority. Once the appellate authority is finding no merit in the case of the Department, then, recourse to section 147 was impermissible in the peculiar facts of this case. This is not a case of income escaping assessment. Moreso, when the Department admits that there were proceedings initiated by it, in such circumstances, the prerequisite which is necessary to be satisfied f....
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..... CIT [2003] 183 CTR (Bom.) 248, Ganga Saran & Sons (P.) Ltd. v. ITO [1981] 130 ITR 1 1 (SC) German Remedies Ltd. v. Dy. CIT, Ajanta Pharma Ltd. v. Asstt. CIT [2004] 267 ITR 2002 (Bom.) and CIT v. Rao Thakur Narayan Singh [1965] 56 ITR 234 (SC). 15. On the other hand, Mr. Rivonkar, appearing for the revenue contended before us that the writ petition may have been entertained but no relief can be granted in favour of the petitioners. He submits that undisputed factual position is that the petitioners had filed returns and raised objections. The objections would be scrutinized by the Department. If the petitioners can very well satisfy the concerned officer and support their objections by producing relevant materials, then, there is no reason to interfere at this stage. The entire attempt is to scuttle the proceedings, which should not be permitted even at the present stage. The Department has not concluded the matter. The satisfaction is only prima facie and it would be open for the assessees to place before the Department such material to support their objections and due consideration would be given to the same whereafter final orders would be passed. Therefore, there is no reason....
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....cisions in support of the above contentions : Raymond Woollen Mills Ltd. v. ITO [1999] 236 ITR 34 (SC), GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19 1 (SC), A.L.A. Firm v. CIT [1991] 189 ITR 2852 (SC) and ITO v. Selected Dalurband Coal Co. (P.) Ltd. [1996] 217 ITR 597 (SC). 19. For properly appreciating the rival contentions, reference to section 147 of the Act would be necessary. The same reads thus :- "147. Income escaping assessment.-If the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment for any assessment year, he may, subject to the provisions of sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of the proceedings under this section, or recompute the loss or the depreciation allowance or any other allowance, as the case may be, for the assessment year concerned (hereafter in this section and in sections 148 to 153 referred to as the relevant assessment year) : Provided that where an assessment under sub-section (3) of section 143 or this ....
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....or assessment year, then, subject to provisions of sections 148 to 153, the Assessing Officer can reassess or assess such income and also any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings under this section. 20. The proviso of the same has been relied upon by Shri Rivonkar to support some of the notices and he has contended that there is no question of the proviso becoming applicable to some of the notices which are issued within a period of four years. In other words, the failure on the part of the assessees to make the return under section 139 or in response to a notice issued under Explanation [sic-sub-section (1)] of section 142 or 148 or to disclose fully and truly all material facts is something which is germane to these notices which have been issued after four years have lapsed and such requirement cannot be read into the substantive provision namely section 147. 21. Mr. Rivonkar has also relied upon the Explanation 1 to the said proviso. 22. For the present petition, it is not necessary to consider and determine or decide any larger issues or controversy. The factual situation in the p....
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....o the notice of the Assessing Officer. Merely because the block assessment was not upheld by the authorities under the Income-tax Act, it cannot be reason enough in this case to invoke section 147 of the same. The income has not escaped assessment in the admitted factual position. We are of the view that even the order sheet does not meet the requirement in law. The same merely sets out that the seized material and inquiries with the assessee at the time of search, reveal that the income as per particulars is unaccounted in the books of the seizure. Therefore, there is reason to believe that the income has escaped assessment. The reasons clearly show that there is no reference to any block assessment or the proceedings pursuant thereto. 24. Mr. Nadkarni's reliance upon a decision of the Division Bench of this Court is, therefore, well founded. The Division Bench was considering, inter alia, the argument that a writ petition under article 226 would not lie to challenge such notices. After referring to the decision in the case of Ajanta Pharma Ltd. ( supra), which was relied upon by Shri Nadkarni, this is what the Division Bench has observed :- "If one read....
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....ntitled to approach the Court directly under Article 226 of the Constitution of India." (p. 206) 25. The Division Bench made the above observations after referring to earlier decisions of this Court and the Supreme Court. In our view, the observations would fully apply to the facts and circumstances of the present case and we do not see any merit in the submission of shri Rivonkar that the reasons or the notices cannot be questioned because the petitioners have filed the returns in pursuance of the notices. The writ petition is already admitted and is listed before us for final hearing and disposal. The writ petition is filed in the year 2000 and, therefore, after its admission, it is too late to urge that the Court is precluded from entertaining the challenge to the notices on the ground of jurisdiction. 26. As far as the submission on the issue of jurisdiction, once again, we are fortified in our conclusion by the law laid down by the Division Bench of this Court in the case of Bhor Industries Ltd. (supra). The Division Bench observed thus :- "In the case of IPCA Laboratories Ltd. v. Gajanand Meena, Dy. CIT [2001] 170 CTR (Bom) 582 : [2001] 251 ITR 416....
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....7 including the proviso and, if so read, the above dichotomy would be clearly spelt out. In the present case, reopening is sought to be done beyond four years. In the present case, the assessee had filed its annual report before the Assessing Officer indicating spread over of Rs. 10,02,23,735 over a period of 60 months. The Assessing Officer acted on that report by granting deduction to the extent of Rs. 33,40,818 for the year ending 31-3-1996. In the circumstances, there was no failure on the part of the assessee to disclose fully and truly the material facts. In our view, the judgment of this Court in IPCA Laboratories' case (supra) squarely applies to the facts of the present case." Some of the notices in the present case are issued admittedly after 4 (four) years. The Division Bench has observed that no action can be taken for reopening of assessment after four years unless the Assessing Officer has reason to believe that income had escaped assessment by reason of failure on the part of the assessee to disclose fully and truly all material facts necessary for assessment. The conclusion reached by the Division Bench can very well be reached in this case because the reasons fail....