AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2002 (4) TMI 10
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....ses to reassess the petitioner. The petitioner was required to file a return within 31 days from the date of service of the notice under section 148 of the Act. The petitioner submitted annexure P3 whereby he demanded copies of certain documents. In his reply, it was also stated by the petitioner that the original return already filed by the petitioner may be considered as return in response to the notice under section 148 dated May 15, 2001. The petitioner prayed for supply of copy of the reasons recorded in support of issuance of notice. The request of the petitioner was accepted and the authorised representative of the petitioner was permitted to go through the reasons recorded by respondent No. 4. The petitioner impugns the notice stating, inter alia, on the ground that the Assessing Officer has been vested with the power under section 147 of the Act to issue a notice, only if he has reason to believe that income has escaped assessment. In fact, there is total absence of reasons. Therefore, no proceedings could be taken up under section 147 of the Act and consequently no notice under section 148 of the Act was liable to be issued. The petitioner has submitted that reasons su....
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....annexure R1 are sufficient pointer to exclude arbitrariness. The Department is processing returns of such businessmen who are engaged in similar trade. The observation of the departmental authority is that 8 per cent, to 12 per cent, profit is generally found in such business. This practical view of the assessing authority is not without foundation. Section 44AD of the Act supplies a presumption clause and statutory presumption is made available to the respondent authorities. It cannot therefore be said that notice is based on suspicion or gossip. May be such presumption is provided for turnover up to Rs. 40 lakhs. But as and when, there is a turnover exceeding Rs. 40 lakhs, it cannot be expected that profit would show a diminishing trend. The respondents have contested the stand of the petitioner that since his stand was accepted in the past, therefore, it should be accepted in the present also. The assessee cannot be permitted to say so when his falsehood comes to the ground that "you accept my lie, now your hands are tied and you can do nothing", and therefore, it has been contended that reassessment notice has rightly been issued. Learned counsel for the petitioner supportin....
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....s of reasoning for issuing a notice. The grounds supplied lack reasoning and that being the position, the notice is bad in the eye of law. Per contra, learned counsel for the Revenue has relied on the judgment of the hon'ble Supreme Court in the case of Pool Chand Bajrang Lai v. ITO [1993] 203 ITR 456, wherein it has been held as under: "Since the belief is that of the Income-tax Officer, sufficiency of the reasons for forming the belief is not for the court to judge, but it is open to an assessee to establish that there in fact existed no belief or that the belief was not a bona fide one or was based on vague, irrelevant and non-specific information. To that limited extent, the court may look into the conclusion arrived at by the Income-tax Officer and examine whether there was any material available on the record from which the requisite belief could be formed by the Income-tax Officer and further whether that material had any rational connection with or a live link for the formation of the requisite belief. It would be immaterial whether the Income-tax Officer, at the time of making the original assessment, could or could not have found by further enquiry or investigati....
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....d. The notice was issued under section 148 of the Act, and, therefore, the appellant ought to have filed the reply immediately. In our opinion, the appellant has wrongly invoked the jurisdiction of this court. As already noticed, the writ petition is directed against the notice under section 147 of the Income-tax Act. This apart, the appellant has an alternative remedy of filing appropriate appeal before the appropriate authority provided under the Income-tax Act, 1961. In our view, there is no cause of action which has arisen for the appellant-petitioner for filing a writ petition and further appeal. Since the writ petition has been filed against the notice of reassessment, we have no other option except to dismiss the appeal as not maintainable. However, the dismissal of the writ appeal will not stand in the way of the appellant's raising of legal contention by way of reply to the notice under section 147 of the Act along with the return if the return has not already been filed. On receipt of reply to the show cause notice issued under section 147, the Income-tax Officer shall decide the objections filed legally and factually and then pass final orders in accordance with law a....
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.... issue notice has no relevancy in the present matter. Had the first assessment been under section 143(3), the requirement of going into the niceties of the reasons would have been there but since the assessment was not done under section 143(3) and was only under section 143(1)(a), therefore, it would not be necessary to go for the exercise of assessing reasons, because there are none to look at. Learned counsel for the petitioner has stressed that notice should not be based on rumour or gossip. The net profit specified in the notice to range between 8 per cent, and 12 per cent, in the contract business can only be said to be a gossip and rumour. While laying stress on the question of rumour being involved in the case, learned counsel for the petitioner has lost sight of the provisions of section 44AD of the Act wherein a presumption has been provided to be drawn, may be for a case involving a turnover of Rs. 40 lakhs. In the instant case, the turnover is above Rs. 40 lakhs. But then it cannot be said that as and when the turnover increases, the net profit decreases. If the presumption of net profit is statutorily provided, then it cannot be said that the opinion of the Assessin....