TaxTMI 
TaxTMI 
2023 (12) TMI 1164
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....961") having Permanent Account Number. The Petitioner filed his return of income for the Assessment Year 2011-12 relevant to the Financial Year 2010-11 in Form No. ITR-4 on 21.09.2011 vide acknowledgement No. 287799831210911 disclosing total income chargeable to tax at Rs. 14,30,000/-. In the return of the income so filed by the Petitioner, it is the case of the Petitioner that the Long Term Capital Gains which were exempted under Section 10(38) of the Act of 1961 were duly reflected. The Petitioner had stated in the writ petition that in the said return, the Petitioner duly incorporated the details of the Long Term Capital Gains earned by him from the sale of the shares at Rs. 57,58,923/- on the basis that the sale price was Rs. 60,41,458/- and the purchase price was Rs. 2,82,535/-. In the month of March, 2013, as stated in the writ petition, a detailed scrutiny assessment was made in respect to the income of the Petitioner for the Assessment Year 2011-12 under the provisions of Sub- Section (3) of Section 143 of the Act of 1961. 4. On 30.03.2016, the Respondent No. 1 i.e. the Assistant Commissioner of Income Tax, Circle Jorhat issued a notice to the Petitioner under Section 14....
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....But as per return filed for A.Y. 2011-12 relating to F.Y. 2010-11, no income/loss in respect to sale of shares has been disclosed. On the basis of information received from the ITD - penny stock, I have reason to believe that income has been escaped from assessment. Consequently, the case for A.Y. 2011- 12 is re-opened u/s 147 by issuing notice u/s 148 of the I.T. Act." 6. Pursuant thereto, on 11.07.2016, the Respondent No. 1 issued a notice to the Petitioner under Section 143(2) of the Act of 1961. In the said notice, the Respondent No. 1 stated that there were certain points in connection with the return of income submitted by the Petitioner on 10.06.2016 for the Assessment Year 2011-12 in respect to which he would like some further information. In the said communication, the Petitioner was also requested to attend his Office on 25.07.2016 at 11:30 AM either in person or by a representative duly authorized in that behalf or produce or cause there to be produced at the said time, any documents, accounts and other evidence on which the Petitioner may rely in support of the return filed by the Petitioner. The Petitioner thereupon submitted a written submission objecting the notic....
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....r was directed to continue until further orders and vide an order dated 05.05.2017 Rule was issued. 10. On 01.12.2016, an Affidavit-in-Opposition was filed by the Respondent No. 3. In the said affidavit, it was mentioned that as per the data available from the Income Tax Department as well as from official records, no assessment under Section 143(3) of the Act of 1961 in respect to the assessment year in question was made by the Respondent Authority. It was mentioned that there was a direction of the Central Board of Direct Taxes to examine whether any assessee had made any transaction of the so called penny stock and it was confirmed from the data available from the investigation wing that the Petitioner had made transaction in respect to such stocks. It was further mentioned that the jurisdiction to be exercised by this Court is only to see whether the commencement of the reassessment proceedings was made on the basis of prima facie materials or not. Sufficiency or Insufficiency, Correctness or otherwise of the materials is not a thing that is required to be considered at the stage of recording of reasons is the specific stand taken by the Respondents. It was mentioned that th....
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.... place as provided in the return. It was mentioned that the Petitioner duly incorporated the details of Long Term Capital Gains earned by her from sale of shares at Rs. 57,51,915/- where the sale price was Rs. 60,61,154 and the purchase price was Rs. 2,89,239/-. It was alleged that the Respondent No. 1 had on 25.03.2013 passed a scrutiny assessment order in respect to the income of the Petitioner for the Assessment Year 2011-12 under the provisions of Sub-Section (3) of Section 143 of the Act of 1961. It was stated that in such assessment, the return of the income filed for the Assessment Year 2011-12 on 29.07.2011 was accepted by the said authority after going through the documents like tax computation sheet, personal balance sheet, statement of income, bank statement etc. as were required by the said authority during the course of the said assessment proceedings. 12. On 30.03.2016, the Respondent No. 1 issued a notice to the Petitioner under Section 148 of the Act of 1961 stating inter alia that he had reasons to believe that the income of the Petitioner chargeable to tax for Assessment Year 2011-12 had escaped assessment within the meaning of Section 147 of the Act of 1961 an....
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....here were certain points in connection with the return of income submitted by the Petitioner on 10.06.2016 for the assessment year 2011-12 on which the said authority would like some further information. The Petitioner was requested to attend his Office on 25.07.2016 either in person or by an authorized representative or produce or cause there to be produced at the said time any documents, accounts or other evidence on which the Petitioner may rely in support of the return filed by her. The Petitioner without waiting for the date which was fixed on 25.07.2016 submitted a written submission dated 05.07.2016 on 11.07.2016. On 18.07.2016, the Respondent No. 1 vide a communication informed the Petitioner that the objections dated 05.07.2016 furnished to the Respondent No. 1 on 11.07.2016 were rejected. 14. The record further reveals that the Petitioner on 21.07.2016 sought for adjournment of the proceedings which was fixed on 25.07.2016 as her husband was physically unfit and the hearing be adjourned for one and half months. From the said communication, it reveals that the Petitioner in WP(C) No. 5437/2016 is the husband of the Petitioner of the instant case. Thereupon on 11.08.2016....
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.... that in the said return of income, it was clearly reflected the details of the Long Term Capital Gains exempted under Section 10(38) of the Act of 1961 inasmuch as in the said return, the Petitioner claims to have duly incorporated that she earned Long Term Capital Gains from sale of shares to the extent of Rs. 16,97,115/- where the gross sale price was Rs. 17,55,250/- and the net sale price was Rs. 17,47,115/- and the purchase price was Rs. 50,000/-. On 07.06.2014, the Central Possessing Centre of the Income Tax Department passed non-scrutiny assessment order under Sub- Section (1) of Section 143 in respect to the aforesaid return filed on 07.02.2014 and the Petitioner was duly communicated. In the said order, the income as assessed in the return was accepted and an amount of Rs. 6,150/- was found refundable. 18. The record further shows that on 26.05.2016, the Respondent No. 1 issued a notice to the Petitioner under Section 148 of the Act of 1961 stating inter alia that she has reason to believe that the income of the Petitioner chargeable to Tax for the Assessment Year 2013-14 had escaped assessment within the meaning of Section 147 of the Act and she therefore proposed to a....
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....hat there were certain points in connection with return of income submitted by the Petitioner on 28.06.2016 for the Assessment Year 2013-14 on which she would like some further information. The petitioner was requested to attend her office on 27.07.2016 either in person or by a representative duly authorized in that behalf or produce or cause there to be produced at the said time any documents, accounts and other evidence on which the Petitioner may rely in support of her return. On the same date, another notice was issued under Section 142(1) of the Act of 1961 requiring the Petitioner to produce the accounts and/or documents before the Respondent No. 1 in connection with the Assessment Year 2013-14 on 27.07.2016. The Petitioner thereupon submitted a written submission dated 26.07.2016 on 27.07.2016 objecting to the initiation of the reassessment proceeding as illegal. Thereupon, on 04.08.2016, the Respondent No. 1 issued a communication intimating the Petitioner that her written objection dated 26.07.2016 furnished to the Authority on 27.07.2016 was rejected. The records reveal that the instant writ petition was filed on 14.09.2016 challenging the reasons for issuing notice under....
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.... sale of shares at Rs. 17,97,975/- where the sale price was Rs. 18,47,975/- and the purchase price was Rs. 50,000/-. On 01.08.2014, the Central Processing Centre of the Income Tax Department passed a summary on non-scrutiny assessment order under Sub-Section (1) of Section 143 in respect to the said return dated 07.02.2014 and in the said order, it was intimated that the income was assessed/accepted as per return and an amount of Rs. 1,910/- was found refundable. 23. On 26.05.2016, the Respondent No. 1 issued a notice to the Petitioner under Section 148 of the Act of 1961 stating inter alia that she had reasons to believe that the income of the Petitioner chargeable to tax for the Assessment Year 2013-14 had escaped assessment within the meaning of Section 147 of the Act of 1961 and therefore she proposed to assess/reassess the income for the said Assessment Year. The Petitioner was asked to deliver within 30 days from the service of notice, a return in the prescribed form of the Petitioner's income for the said Assessment Year. It was further mentioned that she had obtained necessary satisfaction of the Commissioner of Income Tax, Jorhat/the Central Board of Direct Taxes. The P....
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.... produced at the said time any documents, accounts and other evidence on which the Petitioner may rely in support of the return filed by her. On the same day i.e. on 12.07.2016, the Respondent No. 1 issued a notice to the Petitioner under Section 142(1) of the Act of 1961 requiring the Petitioner to produce before her in connection with the Assessment Year 2013-14 on 27.07.2016, the accounts or the documents specified therein. It was also stipulated that that all details would be required to be signed by the Principal Officer/Authorized person and that non-compliance etc. would entail penal action and/or adverse inference, rejection of books of accounts and assessment order under Section 144 of the Act of 1961. The Petitioner thereupon submitted a written submission dated 26.07.2016 on 27.07.2016 which was however rejected by the Respondent No. 1 vide a communication dated 04.08.2016. From the records, it is seen that on 14.09.2016, the instant writ petition was filed challenging the recording of reasons for issuance of notice under Section 148 of the Act of 1961 as referred to in the letter dated 11.07.2016; the notice under Section 148 dated 26.05.2016; the notice under Sub- Sect....
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....o the assessment order made under Section 143(3) of the Act of 1961, he submitted that during the said scrutiny assessment, all the documents as sought for in the detail questionnaire were furnished and thereupon the total income was assessed at Rs. 12,65,518/-. Again referring to the reasons which were furnished to the said Petitioner, the learned counsel submitted that in the said reasons, it was mentioned that there was no income/loss in respect to the sales of shares were disclosed which on the face of it would show that the said reasons were non- existent for the formation of the belief. In respect to the Petitioner in WP(C) No. 5535/2016, the learned counsel again drew the attention of this Court to the return so filed along with the computation of income enclosed therewith wherein the purchase cost was shown at Rs. 50,000/- and the net sale price was shown at Rs. 17,47,115/- and the capital gain was shown at Rs. 16,97,115/-. The learned counsel further referring to the reasons which were furnished on 11.07.2016 submitted that the reasons assigned therein were that from the information extracted from the ITD Application, the assessee had made bogus Long Term Capital Gain/S....
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....17) 390 ITR 137, Paragraph 13. 30. The second line of submissions made by the learned counsel appearing on behalf of the Petitioners is that there was a non-compliance to Section 151 of the Act of 1961 inasmuch as from the notices which were issued under Section 148 of the Act of 1961, it was mentioned that the said notices were issued after obtaining the necessary satisfaction of the Commissioner of Income Tax. He submitted that in respect to writ petitions i.e. WP(C) No. 5437/2016 and WP(C) No. 5530/2016, the Assessment Year in question was 2011-12 and as such, as per Section 151 of the Act of 1961, the end of the relevant Assessment Year would be 31.03.2012. He submitted that as the notice was issued on 30.06.2016 in both the writ petitions, the necessary satisfaction or the approval of the specified authority would be in terms with Section 151(2) that would be the Joint Commissioner. However in the said two cases the satisfaction was obtained from the Commissioner of Income Tax as stated in the said notices, the issuance of notices under Section 148 of the Act of 1961 were without jurisdiction. In the same manner, the learned counsel further submitted that in respect to the ....
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....tment failed to produce the records, this Court shall dispose of the instant batch of writ petitions on the basis of the materials available on record. When the matter was again listed on 18.11.2023, the records pertaining to reassessment proceedings of the writ petitioners in WP(C) No. 5530/2016, WP(C) No. 5535/2016 and WP(C) No. 5536/2016 were produced. The learned Standing counsel for the Income Tax Department submitted that the records pertaining to the proceedings of the writ petitioner in WP(C) No. 5437/2016 could not be traced out in spite of various endeavors. 32. During the course of the hearing on 18.11.2023, the records pertaining to the writ petitioners in WP(C) No. 5530/2016, WP(C) No. 5535/2016 and WP(C) No. 5536/2016 were duly perused. In the records pertaining to WP(C) No. 5530/2016, it was mentioned that on 30.03.2016, an online request was submitted for approval of the JCIT Range and on 30.03.2016, it was approved and the notice under Section 148 of the Act of 1961 was generated as per form and the notice was duly served on 31.03.2016. 33. In respect to the records pertaining to the writ petitioner in WP(C) No. 5535/2016, the satisfaction note on the basis o....
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....Jorhat dated 20.05.2016. The said is reproduced hereinunder: "SATISFACTION NOTE Name of the assessee & Address Laxmi Chandak, Rupahi Ali, Jorhat Status Indl. Asstt. Year 2013-14 PAN AFOPC8095C Having gone through the case records and the reasons recorded by the A.O. as above, the undersigned is satisfied that it is a fit case for issue of notice u/s 148 of the I.T. Act, 1961. Accordingly, approval for the same is hereby granted u/s 151 of the Act." 35. In respect to the writ petitioner in WP(C) No. 5536/2016, the records upon being perused also reveal that the reasons for issuance of the notice under Section 148 of the Act of 1961 was contained in the form of a satisfaction note which is reproduced hereinunder: SATISFACTION NOTE Name of the assessee & Address Shilpa Chandak, Rupahi Ali, Jorhat Status Indl. Asstt. Year 2013-14 PAN AEJPC4450P Reasons for reopening: The return of income filed by the assessee on 07.02.2014 showing total income of Rs. 4,55,760/-. The return was processed u/s 143(1) on 01.08.2014. It is seen that the assessee, under the heard profit and gains speculative business and spec....
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....e above, the learned counsel for the Petitioners submitted that as the reasons in the entirety were not furnished, the Petitioner had been prejudiced for which the entire reassessment proceedings which have been assailed in WP(C) No. 5535/2016 and WP(C) No. 5536/2016 is required to be interfered with. In that regard, the learned counsel has drawn the attention of this Court to the judgment of the Supreme Court in the case of GKN Driveshafts (India) Ltd. Vs. Income Tax Officer reported in (2003) 259 ITR 19 (SC). 38. Per contra, Mr. S. C. Keyal, the learned Standing counsel appearing on behalf of the Income Tax Department submitted that the jurisdiction of this Court in respect to a challenge to a reassessment proceedings under Article 226 of the Constitution is limited inasmuch this Court cannot look into the sufficiency of the reasons, as the same has been held to be non-justiciable by the Supreme Court in various judicial pronouncements. The learned Standing counsel however submitted that there is no bar to the Petitioners to contend before this Court that there existed no reasons for the formation of the belief for the purpose of exercise of power under Section 147 of the Act ....
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.... circumstances, this Court should not permit the Petitioner to raise the said issue as regards the non-compliance to Section 151 of the Act of 1961. The learned Standing counsel submitted that when an issue is raised which touches on the jurisdiction and authority, there has to be foundational facts and grounds pleaded. Without prejudice to the said, the learned Standing counsel further submitted that as per his instructions in all the cases, the approval were duly taken from the Joint Commissioner of Income Tax, Range. He submitted that the records in respect to the petitioners in WP(C) No. 5530/2016, WP(C) No. 5535/2016 and WP(C) No. 5536/2016 would clearly show that the approval was duly taken from the Joint Commissioner of Income Tax, Range prior to the issuance of the said notice under Section 148 of the Act of 1961. He further submitted that as per his instructions though the records of the Petitioner in WP(C) No. 5437/2016 are not traceable, then also due permission was taken from the Joint Commissioner of Income Tax prior to the issuance of notice under Section 148 of the Act of 1961. 40. The learned Standing counsel for the Income Tax Department further submitted that t....
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....ons to believe that income for any assessment year had escaped assessment. This phrase ''reason to believe'' have been the subject matter of debate before the Supreme Court and various High Courts. In the case of S. Narayanappa (supra), the Supreme Court in the context of a proceedings under Section 34 of the Income Tax Act, 1922 explained that the phrase "reasons to believe" would mean that if there are in fact some reasonable grounds for the Income Tax Officer to believe that there has been any non-disclosure as regards any fact, which could have a material bearing on the question of under assessment and the existence of such reasonable ground(s) would be sufficient to give jurisdiction to the Income Tax Officer to issue notice under Section 34 of the Income Tax Act, 1922. It was further opined that whether the grounds would be adequate or not is not a matter for the Court to investigate or in other words, the sufficiency of the grounds which induce the Income Tax Officer to act is not a justiciable issue. However, it was also opined that it was open to the assessee to contend that the Income Tax Officer did not hold the belief that there has been such non-disclosure or in other ....
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.... not is not a matter for the court to investigate. In other words, the sufficiency of the grounds which induced the Income Tax Officer to act is not a justiciable issue. It is of course open for the assessee to contend that the Income Tax Officer did not hold the belief that there had been such non-disclosure. In other words, the existence of the belief can be challenged by the assessee but not the sufficiency of the reasons for the belief. Again the expression "reason to believe" in Section 34 of the Income Tax Act does not mean a purely subjective satisfaction on the part of the Income Tax Officer. The belief must be held in good faith : it cannot be merely a pretence. To put it differently it is open to the court to examine the question whether the reasons for the belief have a rational connection or a relevant bearing to the formation of the belief and are not extraneous or irrelevant to the purpose of the section. To this limited extent, the action of the Income Tax Officer in starting proceedings under Section 34 of the Act is open to challenge in a court of law. (See Calcutta Discount Co. Ltd. v. Income Tax Officer, Companies District I, Calcutta)." 43. In the backdrop of....
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....tions which were there to confer jurisdiction upon the Assessing Officer to make a back assessment was done away with by the amendment made to Section 147 w.e.f. 01.04.1989 and the only condition which remained was where the Assessing Officer had reasons to believe that the income had escaped assessment. It was observed by the Supreme Court that post 01.04.1989, the power to reopen assessment is much wider for which one needs to give a schematic interpretation to the words 'reasons to believe' so that the power under Section 147 to the Assessing Officer is not arbitrary and unbridled to reopen assessment. It was observed in paragraph No. 7 that post 01.04.1989, the Assessing Officer would have the power to reopen, provided that there is/are "tangible material" to come to the conclusion that there is escapement of income from assessment. Paragraph Nos. 5, 6 and 7 of the said judgment are quoted hereinbelow: "5. On going through the changes, quoted above, made to Section 147 of the Act, we find that, prior to the Direct Tax Laws (Amendment) Act, 1987, reopening could be done under the above two conditions and fulfillment of the said conditions alone conferred jurisdiction on....
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....ds it pertinent to take note of the observations of the Supreme Court in the case of M/s Phool Chand Bajrang Lal and Another Vs. Income Tax Officer and Another reported in (1993) 4 SCC 77 which throws light on the aspect of subsequent information being taken into account for reopening of assessment. It was observed by the Supreme Court that an Income Tax Officer acquires jurisdiction to re-open an assessment under Section 147(a) (as it then existed) read with Section 148 of the Act of 1961, only if on the basis of specific, reliable and relevant information coming to his possession subsequently, for which he had reasons, which he must record, to believe that, by reason of omission or failure on the part of the assessee to make a true and full disclosure of all material facts necessary for his assessment during the concluded assessment proceedings, any part of his income, profits or gain, chargeable to income tax had escaped assessment. It was further opined that the Assessing Officer may start reassessment proceedings either because some fresh facts comes to light which were not previously disclosed or some information with regard to the facts previously disclosed comes into his po....
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....ot be a 'reason to believe' that a case of escaped assessment exists, requiring reassessment proceedings to be reopened. The Supreme Court also explained what would amount to 'change of opinion' in the case of Aryaverth Chawal Udhyog (supra) and opined that if a conscious application of mind is made to the relevant facts and materials available or existing at the relevant point of time while making the assessment and again a different or divergent view is reached, it would tantamount to 'change of opinion'. It was opined by the Supreme Court that if an Assessing Authority forms an opinion during the original assessment proceedings on the basis of material facts and subsequently finds it erroneous, it is not a valid reason for reassessment. 48. This Court further finds it relevant to take note of the judgment of the Supreme Court in the case of Income Tax Officer, Ward No. 16(2) Vs. Techspan India Pvt. Ltd. and Another reported in (2018) 6 SCC 685. This judgment in the opinion of this Court is very pertinent for the purpose of deciding the issues in the present writ petitions in view of the fact that the assessment orders which were sought to be reopened are non speaking assessme....
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....cessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable. If the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the assessing officer any opinion on the questions that are raised in the proposed reassessment proceedings. Every attempt to bring to tax, income that has escaped assessment, cannot be absorbed by judicial intervention on an assumed change of opinion even in cases where the order of assessment does not address itself to a given aspect sought to be examined in the reassessment proceedings." 49. Therefore from the above analysis of the settled principles of law, the following propositions emerges. (a) The power of the Assessing Officer to initiate proceedings for reassessment has to be based upon the existence of some reasonable grounds for the Income Tax Officer to believe that there has been a non- disclosure as regards any fact which would have a material bearing on the question of under assessment. (b) The jurisdiction of the Assessing Officer under Section 147 to initiate reassessment proceedings is subject to the Assessing ....
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....d assessment exists requiring assessment proceedings to be reopened. Thus, 'reason to believe' cannot be said to be the subjective satisfaction of the Assessing Authority but means an objective view on the disclosed information in the particular case and must be based on firm and concrete facts that some income has escaped assessment. (j) The words 'change of opinion' imply formulation of opinion and then change thereof. In terms of assessment proceedings, it means formulation of belief by an Assessing Officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. (k) While deciding the question of change of opinion, the Court is required to verify whether the assessment earlier made had either expressly or by necessary implication expressed an opinion on a matter which is the basis of alleged escapement of income that was taxable. However, if the assessment order is non-speaking, cryptic or perfunctory in nature, it may be difficult to attribute to the Assessing Officer any opinion on a question that are raised in the proposed reassessment proceedings. It is also required to take into account that every....
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....Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner or the Joint Commissioner, as the case may be, being satisfied on the reasons recorded by the Assessing Officer about fitness of a case for the issue of notice under section 148, need not issue such notice himself." 52. Section 151 of the Act of 1961 stipulates who would be the authority for the purpose of Section 148 of the Act of 1961. In that view of the matter for a better understanding, this Court before dealing with Section 151 finds it relevant to take note of Section 148 of the Act of 1961. Section 148 of the Act of 1961 provides that before making the assessment, reassessment or re-computation under Section 147, the Assessing Officer shall serve on the assessee a notice requiring the assessee to furnish within such period as may be specified in the notice, a return of his income or the income of any other person in respect to which he is assessable. It also says no notice under Section 148 shall be issued unless the Assessing Authority records reasons for doing so. 53. This Court also finds it relevant to take note of Section 149(1)(a) of the Act of 1961 wherein it is stipulated ....
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...., it stipulates that as in respect of notice to be issued under Section 148 by the Assessing Officer after the expiry of four years from the end of the relevant assessment year, would be the Principal Chief Commissioner or the Chief Commissioner or Principal Commissioner or Commissioner. However, in terms with Sub-Section (2) of Section 151, the authority would be the Joint Commissioner. This Court further finds it relevant at this stage to take note of Section 2 of the Act of 1961 wherein various terms have been defined. Section 2(15A) defines the term "Chief Commissioner" to mean a person appointed to be the Chief Commissioner of Income tax or a Principal Chief Commissioner of Income-tax under Sub- Section (1) of Section 117. Section 2(16) defines the term "Commissioner" to mean a person appointed to be a Commissioner of Income Tax or a Director of Income Tax or a Principal Commissioner of Income Tax or a Principal Director of Income Tax under Sub-Section (1) of Section 117. In the same way, Section 2(28C) defines "Joint Commissioner" as a person appointed to be a Joint Commissioner of Income Tax or an Additional Commissioner of Income Tax under Sub-Section (1) of Section 117. Th....
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....suance of notice under Section 148" the Commissioner just noted the word "yes" and affixed his signature. 58. Therefore, from the above analysis, two pertinent aspects can be culled out. First, the power to be exercised by the authority to grant the approval for issuance of the notice under Section 148 is not a mere formality but is an important safeguard against any arbitrary exercise by the Income Tax Officer to reopen reassessment proceedings. The second aspect is that Section 151 of the Act of 1961 specifically mandates who would be the authority inasmuch Sub-Section (1) of Section 151 of the Act of 1961 relates to issuance of notice under Section 148 after the expiry of the period of 4 (four) years from the end of the relevant assessment year and the authority would be the Principal Chief Commissioner or the Chief Commissioner or the Principal Commissioner or the Commissioner who had to arrive at the satisfaction on the reasons recorded by the Assessing Officer for issuance of such notice. On the other hand, in respect to all other cases, i.e. up to four years, the authority would be the Joint Commissioner which is the authority defined in Section 2(28C). It is also pertine....
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....f Section 148 to 153 do not mention that the reasons so recorded prior to issuance of notice under Section 148 is required to be furnished to the assessee. In fact, if this Court again refers to the judgment of the Supreme Court in the case of S. Narayanappa (supra), the Supreme Court though in the context of Section 34 of the Income Tax Act, 1922, observed that the proviso to Section 34 requires that the officer should record his reasons for initiating action under Section 34 and obtain the sanction of the Commissioner who must be satisfied that the action under Section 34 was justified. It was categorically observed by the Supreme Court that there is no requirement in any of the provisions of the Act or any Section laying down as a condition for initiation of proceedings that the reasons which induced to the Commissioner to accord sanction to proceed under Section 34 must also be communicated to the assessee. Paragraph No. 4 of the said judgment rendered in S. Narayanappa (supra) is quoted herein below: "4. It was also contended for the appellant that the Income Tax Officer should have communicated to him the reasons which led him to initiate the proceedings under Sectio....
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....ithstanding that the reasons for such issue have not been included in the reasons recorded under sub-section (2) of section 148." 63. The explanatory note to the provisions of Finance (No. 2) Act, 2009 as notified vide Circular No. 05/2010 dated 03.06.2010 reveals as to why the clarificatory amendment was made thereby inserting Explanation-3. It was mentioned in Clause 47.2 of the said Circular that various Courts have held that the Assessing Officer had to restrict the assessment proceedings only to the reasons recorded for reopening of assessment and the Assessing Officer was not empowered to touch upon any other issue for which no reasons have been recorded. It was mentioned that the said interpretation was contrary to the legislative intent. It was under such circumstances, to articulate the legislative intent clearly, Explanation-3 was inserted in Section 147 to provide that the Assessing Officer may examine, assess/reassess any issue relevant to the income which comes to his notice subsequently in the course of proceedings under Section 147 of the Act of 1961, notwithstanding that the reasons for such issue has not been included in the reasons recorded under Sub-Section (2....
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....on is filed on the basis of the reasons so provided and the said objection is rejected, then it may be a good ground for the assessee to assail the assessment/reassessment order in an appeal. However, the reassessment proceedings cannot be nullified by way of writ petition on the ground that the reasons in the entirety was not furnished. The rationale behind the said opinion of this Court is taking into account that it is well settled that the existence of the belief is justiciable whereas the sufficiency of the reasons for forming the belief is not. Therefore, if an assessee has to challenge the existence of the belief, the same can be done so in a proceedings under Article 226 of the Constitution which is also well settled. Further, it is also the opinion of this Court that the existence of the belief cannot be challenged before the Assessing Officer as it touches upon his own jurisdiction. However, as the sufficiency of reasons for forming the belief cannot be challenged in a proceeding under Article 226 of the Constitution, the assessee would have a right to file objections against the sufficiency of the reasons for forming the belief by the Assessing Officer. It is in that con....
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....hares were shown in the computation of the income as purchased at nil value whereas were sold at certain amounts. The learned counsel for the Petitioner submitted that they were bonus shares which had no purchase costs. He however admitted that in the computation of the income, the same were not reflected as bonus shares issued at nil value. Under such circumstances also this Court is of the opinion that there existed reasons to believe for reopening of the assessment. WP(C)/5530/2016 69. In the instant writ petition, a perusal of the return so submitted on 29.07.2011 by the Petitioner revealed that the Petitioner earned capital gains to the tune of Rs. 57,51,915/- which as per the Petitioner was exempted under Section 10(38) of the Income Tax Act, 1961. From the said computation of income, it is seen that Odycorp (6500) shares were purchased at Rs. 1,09,912/- on 24.11.2008 and were sold at Rs. 9,89,824/- on 20.09.2010. In respect to the Company Splash M (35000), shares were purchased on 16.06.2009 at Rs. 1,79,327/- and was sold at Rs. 13,56,029/- on 21.03.2011. It is also seen that in respect to Company Splash M (35000) shares, Splash M (35000) shares and Splash M (35000) sh....
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....In the reasons which were communicated to the Petitioner on 11.07.2016, it was mentioned that as per the information extracted from the ITD Application, the assessee (the petitioner herein) had made bogus long term capital gain/short term capital loss by way of transaction made through penny stock amounting to Rs. 17,55,360/- during the financial year 2012-13. It was mentioned in the investigation conducted by the Investigation Directorate of Income Tax Department that the trading in the said penny stock was manipulated affair to generate entries of bogus LTCG/STCL facilitating tax evasion. This Court also finds it relevant to take note of the reasons for opening as have been already quoted hereinabove. Apart from what has been said, it was also mentioned that the source of the fund for purchase of the shares for which the capital gain was raised was from the Petitioner's sources which was not declared in the return of income, for which it was opined that the assessee had undeclared income in the return furnished which has escaped assessment. It was also mentioned that the income of the assessee from long term capital gain was not shown as income and the source for purchase of the ....
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.... shares as mentioned for which the capital gain was raised was from the Petitioner's sources which was not declared in the return of income, for which it was opined that the assessee had undeclared income in the return furnished, which has escaped assessment. It was also mentioned that the income of the assessee from long term capital gain was not shown as income and the source for purchase of the said script for the assessment year 2013-14 was also not shown in the return of income for which the income has escaped assessment. From the above reasons which were furnished to the Petitioner as well as the satisfaction note which have been quoted hereinabove, the computation of income so filed by the Petitioner for the assessment year 2013-14, in the opinion of this Court, it cannot be said that there was no existence of reasons for formation of the believe for initiating of proceedings under Section 147 of the Act of 1961. Further to that, the reasons so assigned were neither vague nor distant. The reasons had a live link for the formation of the requisite belief. ISSUE B :- 73. The Issue-B pertains to the question of non-compliance to Section 151 of the Act of 1961. Surprisingl....
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....iation from them by way of modification or supplementation except through the well known process of formally applying for amendment. It was further observed that if undue laxity and a too easy informality is permitted to enter the proceedings of a Court, it will not be long before a contemptuous familiarity assails its institutional dignity and ushers in chaos and confusion undermining its effectiveness. It was categorically observed that oral submissions raising new points for the first time tend to do grave injury to a contesting party by depriving it of the opportunity to which the principles of natural justice hold it entitled of adequately preparing its response. Paragraph No.6 of the said judgment being relevant is quoted hereinbelow: "6. Shri Raghubir Malhotra, appearing on behalf of the petitioners, opened with the contention that the reservation of vacancies for members of the Scheduled Castes and Scheduled Tribes by the Office Memorandum dated July 20, 1974 was invalid. It was urged that the office memorandum possessed at best the status of departmental instructions and could not amend the Central Secretariat Service Rules. It is not, it was said, a case of admin....
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....principles of natural justice hold it entitled, of adequately preparing its response." 75. In view of the above settled propositions and the facts that the Petitioners in all the writ petition including WP(C) No. 5437/2016 have not taken the plea of non-compliance to Section 151 of the Act of 1961, the same cannot be allowed to be raised by way of an oral submissions. 76. However, this Court finds it relevant to observe as regards WP(C) No. 5437/2016 with utter surprise and anguish, the conduct of the Income Tax Department and more particularly the Assessing Officer as to how the records of the said reassessment proceedings could be lost/not traced that too when the records of the Petitioner in WP(C) No. 5530/2016 which were contemporaneously pursued and kept by the same Assessing Officer. It is the opinion of this Court that such callous attitude on the part of the Assessing Authority in maintaining the records should be strictly viewed by the Department and more particularly by the Central Board of Direct Taxation. Be that as it may, if the records are not available pertaining to the Petitioner in WP(C) No. 5437/2016, it is not known as to how any reassessment proceedings i....
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....ed notices as well as the reasons for issuance of the notice under Section 148 of the Act of 1961 on the ground that the records were not produced. (ii) The initiation of the reassessment proceedings against the Petitioners in WP(C) No. 5530/2016, WP(C) No. 5535/2016 and WP(C) No. 5536/2016 is not interfered with as the respective Assessing Officer had reasons to believe on the basis of tangible materials that the income of the Petitioners had escaped assessment for the relevant assessment year. Under such circumstances, this Court is not inclined to quash the impugned notices as well as the reasons for issuance of the impugned notice under Section 148 of the Act of 1961. (iii) The plea of non-compliance to Section 151 which touches on the exercise of the jurisdiction to reopen assessment cannot be allowed to be raised on the basis of oral submissions without there being foundational pleadings. Even otherwise, from the records so produced pertaining to the Petitioners in WP(C) No. 5530/2016, WP(C) No. 5535/2016 and WP(C) No. 5536/2016 shows that the approval was taken from the Joint Commissioner of Income Tax prior to issuance of notice under Section 148 of the Ac....