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May 27, 2022

Reassessment notice that deals with a factual issue cannot be disputed in front of the HC

by CA Shivam Jaiswal in Income Tax

Reassessment notice that deals with a factual issue cannot be disputed in front of the HC

Facts and Issue of the case

The writ petitioner filed return of income qua said AY on 25.09.2014 under Section 139(1) of IT Act; that the original assessment order (based on such return) was made by the Assessing Officer vide an order dated 22.12.2016; that thereafter the impugned notice under Section 148 of IT Act came to be issued; that impugned notice reverted the matter to the earlier part of Chapter XIV of IT Act and therefore a notice dated 23.11.2021 being a notice under Section 142(1) of IT Act with an annexure came to be issued; that the writ petitioner on 07.12.2021 filed return of income in response to the impugned notice; that the writ petitioner also sent in its electronic response on 13.12.2021; that a speaking order came to be made by the first respondent on 24.12.2021; that another notice under Section 142(1) of IT Act came to be issued by the first respondent for continuing the reassessment; that the writ petitioner uploaded an e-response on 04.01.2022 proceedings of re-assessment and also taking exceptions to the speaking order dated 24.12.2021 made by the first respondent; that the reassessment is pursuant to impugned notice and therefore, the captioned writ petition has been presented in this Court on 27.01.2022 assailing the impugned notice.

The  counsel for writ petitioner in his campaign against the impugned notice, notwithstanding very many averments in the writ affidavit and notwithstanding very many grounds raised in the writ affidavit made pointed submissions, a summation .In support of some of the aforementioned points, learned counsel for writ petitioner pressed into service certain case laws and the same wil l be discussed infra elsewhere in the latter portion of this order.The Revenue Counsel, who accepted notice on behalf of respondents, on the basis of papers which has been served on him made      three simple submissions . The Revenue Counsel also pressed into service two case laws and the same will be discussed elsewhere infra in the latter part of this order. In response to the submissions of learned Revenue Counsel by way of reply, learned counsel for writ petitioner reiterated the submissions made in his opening arguments.

Observation of the court

The court does not really hold water at this stage in a challenge to a notice under Section 148 of IT Act. This is also a judgment of Delhi High Court but here again the facts are completely different as that is a case where there was nothing to show what triggered issuance of notice of reassessment. In other words, no information or no new facts which led the Assessing Officer to believe that full disclosure had not been made has been set out. The last case law pressed into service by the learned counsel for writ petitioner. In the considered and respectful view of this Court, the Indi- Aden ratio is in favour of the Revenue in the case on hand. In Indi-Aden case where the assessee claimed depreciation at 6 per cent on masonry works qua what actually comprised of substantial portion relating to earth work was considered and the Court held that the non disclosure of such primary facts caused escapement of income in the assessment and these are all clearly questions of fact. This supports the first argument raised by learned Revenue Counsel which has been captured supra.

Before proceeding further, this Court makes it clear that in discussing the case laws supra, the law declared by a Constitution Bench of Hon’ble Supreme Court in the celebrated and oft quoted Padma Sundara Rao casehas been respectfully followed . To be fair to the learned counsel for writ petitioner, who argued with specificity, this Court deems it appropriate to make it clear that learned counsel for writ petitioner very fairly said he would not press into service Kelvinator case only when Padma Sundara Rao declaration of law was brought to the notice of the learned counsel and when the learned counsel was faced with the situation of setting out the facts in Kelvinator case before this Court. In the case on hand, this Court finds that the facts in Honda Siel Power Products have similarity qua case on hand as the reasons recorded by the Assessing Officer for reopening assessment.

In the light of the annexure to Section 142 (1) owing to the facts and circumstances of the case on hand, it does come to the help of the Revenue Counsel.  The Revenue Counsel also drew the attention of this Court to M/s.SUN Direct TV Private Ltd case. This was rendered by a Hon’ble Single Judge of this Court. The Revenue Counsel drew the attention of this Court wherein another Hon’ble Single Judge of this Court has taken the view that the assessing officer is bound to furnish reasons when the same was raised by an assessee, it should be held in favour of the Revenue and not in favour of the tax payer. This Court deems it appropriate to not to express any opinion on this view of another Hon’ble Single Judge as the facts in M/s.SUN Direct TV Private Ltd caseare very different as that is a case where the Assessing Officer had not disclosed the details qua share premium being derived. The facts being different, this Court deems it appropriate to leave it at that. This takes us to the argument on limitation.

Conclusion

The court dismissed the writ petition.     

Tamilnad-Mercantile-Bank-Ltd.-Vs-ACIT-Madras-High-Court

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