TaxTMI 
TaxTMI 
TaxTMI 
2017 (1) TMI 727
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....fication order dated 14/3/2011 relating to correction of assessee's status was also passed. Thereafter, as per notice dated 24/9/2012, the order was again sought to be rectified alleging that the Bank had debited in the profit and loss account certain figures as reserve for bad and doubtful debts which claim was allowed as per Section 36(1)(viia) of the Act. Ext.P4 is the said notice. Petitioner filed its objection inter alia contending that Co-operative Banks are entitled for such deduction at 7.5% of gross total income plus 10% of the aggregate average advances made by the rural branch of the Bank. In the meantime, it seems that 1st respondent issued a notice dated 27/3/2013 under Section 148 stating that the officer has reason to believe that income chargeable to tax has escaped assessment within the meaning of Section 147. Ext.P6 is the said notice. Petitioner submitted a reply to issue a copy of the reasons recorded for invoking Section 148. The 1st respondent by Ext.P8 dated 29/7/2013 informed the petitioner that the petitioner claimed a deduction as provision for bad debts at the rate of 10% of the aggregate average advances made by rural branches, whereas the petitioner....
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....9 as well, the assessee had wrongly claimed the same deduction under Section 36(1)(viia) of the Act at the rate of 10% of the aggregate average advances made in rural branches when the Bank does not have any rural branches. It is further contended that proceedings under Section 154 of the Act was not considered to be proceeded further since it was not a mistake apparent from the records whereas it was a case of escapement of income by wrong claims made by the assessee which subsequently came to the notice of the department. The respondent therefore submitted that, even on facts, materials were available for invoking Section 148 and a decision had been taken taking into account all factual circumstances. Further, the assessment orders are appealable and all questions raised by the petitioner can as well be decided in the appeal and there is no reason to invoke the jurisdiction of this Court under Art.226 of the Constitution of India. 6. Heard the learned counsel for the petitioner and the learned Standing Counsel appearing for the respondent. 7. Learned counsel for the petitioner placed reliance on the following judgments:- (i) GKN Driveshafts (India) Ltd. v. ITO & Others [(2002)....
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.... and effect of Section 147 of the Act, which reads as under:- "147. If the Assessing Officer has reason to believe that any income 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 section has been made for the relevant assessment year, no action shall be taken under this section after the expiry of four years from the end of the relevant assessment year, unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his....
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....ereafter the facts disclose that the assessing authority had passed Exts.P19 and P20 assessment orders. 13. The main contention urged by the petitioner is that the very act of the respondents passing an order of assessment without adjudicating on the objection relating to reasons to believe is bad in law. Specific reliance is placed by the petitioner to the judgment of the Apex Court in GKN Driveshafts (India) Ltd. (supra) in which it was held that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notices. The assessing officer is bound to furnish reasons within a reasonable time and on receipt of the reasons, noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. It is further held in the said case that since reasons have been disclosed in the proceedings, the assessing officer was directed to pass a speaking order "before proceeding with the assessment in respect of the aforesaid five assessment years". It is submitted that a similar view has been taken by various High Cour....
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....r challenge, a division bench of the High Court at Delhi dismissed the writ petition filed by the appellant challenging the validity of notices issued under sections 148 and 143(2) of the Income Tax Act, 1961. The High Court took the view that the appellant could have taken all the objections in its reply to the notices and that, at that stage, the writ petition was premature. Accordingly, the writ petition was dismissed on 31st January, 2001. Aggrieved by that order, the appellant is in appeal before us. 4. Mr. M.L. Verma, learned senior counsel appealing for the appellant, submits that the impugned notices relate to seven assessment years; that during the pendency of these appeals, in respect of two assessment years, viz., 1995-96 and 1996-97, assessment has been completed against which appeals have been filed. Notices relating to the other five assessment years, viz., 1992-93,1993-94,1994-95, 1997-98 and 1998-99, are now the subject matter of these appeals. 5. 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 Act is issued, the proper course of action for the noticee is to file....
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....confirm that there is valid reason to believe, definitely they can proceed with the assessment order. As far as the assessee is concerned, the right to challenge the reason to believe is not lost merely for the reason that a composite order had been passed. Therefore, the assessee's right to appeal against the reopening of the assessment as well as the assessment proceedings can as well be taken up in a regular appeal. In other words, no prejudice will be caused to the assessee on account of a composite order being passed and therefore, I do not think such a ground can be sustained. Of course from the judgments cited, it could be said that, it is appropriate to pass a separate order. But, when a composite order is passed, it has to be verified whether it is per se illegal or whether any prejudice will be caused to the assessee. I do not think that any such contingency arises in the case. 19. The next question to be considered is whether there is justification to reopen the assessment at all. 20. Perusal of the factual aspects involved in the case would show that according to the department, the assessee has wilfully made a wrong claim of deduction under section 36(1) (viia) o....
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....ssee had omitted to disclose fully and truly all material facts, and that in consequence of such non-disclosure, income had escaped assessment, he has jurisdiction to issue notices. While challenging such a notice under Article 226 of the Constitution of India, the High Court is only concerned to decide whether the conditions which invested the Income Tax Officer with power to reopen the assessment exists or not. It is not within the province of the High Court to record a final decision about the failure to disclose fully and truly all material facts bearing on the assessment and consequent escapement of income from assessment of tax. 23. In Bihar State Road Transport Corporation (supra), a Division Bench of Patna High Court placing reliance on Kantamani Venkata Narayana and Sons (supra) held that mere production of books or other evidence would not necessarily amount to disclosure. If the assessee does not discharge his duty to disclose fully and truly material facts necessary for the assessment of the relevant year by merely producing the books of account or other evidences, and even if it is assumed that from the books so produced, the Income Tax Officer, if he had been circums....