AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2003 (11) TMI 30
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....direct the petitioner to raise his objections before the Assessing Officer and directing the Assessing Officer to consider and dispose of the objections in accordance with law by a speaking order. That order was expressly made in accordance with the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19. The interim relief was confirmed to the extent that reassessment proceedings pursuant to the impugned notice were stayed except for deciding the objections to be raised by the petitioner. Accordingly, the petitioner raised his objections by his representation dated October 3, 2003, and the same were decided and disposed by an elaborate order dated October 28, 2003, of the Assistant Commissioner of Income-tax, Circle-2, Vadodara. That order is placed on record by the petitioner, but it is not challenged before us and learned counsel for the petitioner insisted upon this court exercising its plenary powers to quash the notice under section 148 of the Act itself on the grounds which were canvassed before us. The notice as above was sought to be assailed mainly on the ground that the reasons statutorily required to be recorded before issuance of th....
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....ee has escaped assessment within the meaning of the provisions of section 147 of the Income-tax Act, 1961, to the tune of Rs. 1,85,40,000. (Sd.)............ ACIT, Cir. 2, Baroda." It was strenuously argued by learned counsel Mr. Dixit that the intimation under section 143(l)(a) of the Act was actually an order of assessment accepting the case of the petitioner that the non-compete fee of Rs. 1,85,40,000 was a receipt of capital nature and was accordingly not required to be taxed. It was on that basis submitted that in the absence of any new information, reason or justification, the Assessing Officer could not have any reason to believe that any income chargeable to tax had escaped assessment. Relying upon the judgment in VXL India Ltd. [1995] 215 ITR 295 (Guj), he submitted that the scope of section 147 of the Act is not for reviewing its earlier order suo motu irrespective of there being any material to come to a different conclusion apart from just having second thoughts about the inferences drawn earlier and that section 148 of the Act does not confer jurisdiction on change of opinion on the interpretation of a particular provision. It was further pointed out that th....
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.... material was on record or could have been with due diligence discerned by the Assessing Officer for the purpose of assessing a particular item of income chargeable to tax, it cannot be inferred that the Assessing Officer must necessarily have deliberated over it and taken it out while ascertaining the taxable income or that he had formed any opinion in respect thereof. If looking back it appears to the Assessing Officer (albeit within four years of the end of the relevant assessment year) that a particular item even though reflected on the record was not subjected to assessment and was left out while working out the taxable income and the tax payable thereon, i.e., while making the final assessment order, that would enable him to initiate the proceedings irrespective of the question of non-disclosure of material facts by the assessee. In fact, if there is material placed on record which would show existence of income chargeable to tax and which ordinarily ought to have been included in the ascertainment of taxable income made in the assessment order but was not so included, that would itself provide a cause or justification for a belief to the Assessing Officer that such income ha....
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......" It is also observed in the same judgment that: "The function of the Assessing Officer is to administer the Act with solicitude for public treasury and with fairness to the taxpayers. He is necessarily armed with great powers. Up to four years an assessment is open to his unreserved consideration on his formation of the requisite belief. If he has such reason, he has the power, and we may add that it is his duty, to reopen the door and demand the amount legally owing. His formation of belief is not a judicial decision, but an administrative decision. It does not determine anything at this initial stage, but the Assessing Officer has a duty to proceed so as to obtain what the taxpayer was always bound to pay if the increase is justified at all. The decision to initiate the proceedings is not to be preceded by any judicial or quasi-judicial enquiry. His reasoning may be the result of official information or his own investigation or may come from any source that he considers a reliable. His reason is not to be judged by a court by the standard of what the ideal man would think. He is the actual man trusted by the Legislature and charged with the duty of forming of a belief....
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....of Income-tax rejecting the objections of the petitioner, as per Circular No. 549 of the Department, is as under: "With the number of income-tax assessees continuously increasing, there was an urgent need to reduce the Department's work load by compliance by the assessees. The Amending Act, 1987, has, therefore, substituted a new section 143 in the Income-tax Act to introduce an entirely new scheme of assessment after a return of income has been filed. The main features of the new scheme are: (i) The requirement of passing an assessment order in all cases, where returns of income are filed, has been dispensed with and the issue of an acknowledgment slip to the assessee will be the end of the matter, if he has correctly paid tax and interest, if any, due on the basis of the return. (ii) If on the basis of the return any amount is found due from the assessee, it can be recovered; if any refund is found due to the assessee, it can be granted without passing an assessment order. (iii) Assessment orders will be passed only in a very limited number of cases selected for scrutiny." It is further observed in the said order that: "In other words in this case, the Assessing....