High Court refuse to entertain writ against reopening notice u/s 148 in the absence of concluded findings of facts

High Court refuse to entertain writ against reopening notice u/s 148 as benefit of concluded finding of facts was not available because petitioner had directly approached the Court.

ABCAUS Case Law Citation:
ABCAUS 2491 (2018) 08 HC

Important Case Laws Cited/relied upon by the parties:
Income-Tax v. Agarwalla Brothers
Income Tax Officer Vs. M/S TechSpan India Private Ltd. & Anr
Commissioner of Income Tax, Delhi Vs. Kelvinator of India Ltd
Commissioner of Income Tax & Ors. Vs. Chhabil Dass Agarwal

The instant writ was preferred questioning the notice under Section 148 of the Income Tax Act, 1961 (the Act) issued by the Assistant Commissioner of Income Tax (Assessing Officer) initiating proceedings for reassessment against the petitioner.

The assessee was a limited company. The original assessment u/s 143(3) was completed after making disallowance of weighted part of deduction under Section 35(2AB) and allowance of research and development expense actually incurred by the petitioner.

The assessment was subjected to revision u/s  263 of the Act by the Commissioner of Income Tax and no illegality or infirmity was found in assessment order passed under Section 143(3).

Information was received by the AO from the DSIR, Ministry of Science and Technology. It was found that the petitioner had not complied with the requirements which would have made it eligible to get the benefit of R&D expenses.

The AO was of the view that the out of total claim under Section 35(2AB) of the Act, the part allowance was made without any basis. The Assessing Officer had thus reasons to believe that such amount is escaped amount and, therefore, notice u/s 148 was served in the assessee.

submits that the initiation of reassessment of proceeding is based upon certain facts which have given reasons to believe that income chargeable to tax has escaped assessment.

Before the Hon’ble High Court, the quoting numerous judgments, the assessee contended that in the light of law laid down by the Hon’ble Supreme Court, the Court can always enquire and ascertain whether the reasons to believe entertained by the Income-Tax Officer can validly afford a foundation for assumption of jurisdiction by him or it is a mere pretence and an effort to undergo a change of opinion.

The Revenue contended that Assessing Officer had reasons to believe that such amount escaped and, therefore, it was being a pure question of fact cannot be gone into in a writ proceeding. It was submitred that the judgments relied upon on behalf of the petitioner would not be applicable in the facts and circumstances of the present case.

A further objection was taken that maintaining the hierarchical system for redressal of the grievance, the petitioner should have approached the statutory remedy before moving the High Court in its writ jurisdiction.  It was submited that the Hon‟ble Supreme Court had in a catena of decision held that though Article 226 confers a very wide powers in the matter of issuing writs, the remedy of writ is absolutely discretionary in character and if the High Court is satisfied that the aggrieved party can have an adequate or suitable relief elsewhere, it can refuse to exercise its jurisdiction.

The Hon’ble High Court observed that at this stage it would not be just and proper for the writ Court to entertain the present writ application.

In case referred to the Hon’ble High Court by the Income Tax Appellate Tribunal under Section 256(1) of the Act, the Court found that in the said case, it was not necessary for this Court to come to an independent finding to ascertain whether, by reason of any omission or failure on the part of the assessee to disclose fully and truly all materials facts necessary for his assessment for the assessment year in question, any income chargeable to tax has escaped or not, the Court observed that it is essentially a question of fact and because in the said case, the Tribunal, after examining the entire records, have recorded that, at the time of the original assessment, the facts were disclosed by the assessee and the Income-Tax officer found the investments shown to be reasonable, this Court proceeded to hold that the Tribunal had rightly quashed the entire assessment order.

In the instant case, the Hon’ble High Court observed that the benefit of concluded finding of facts was not available because the petitioner had directly approached the Court in its writ jurisdiction. The Hon’ble High Court agreed with the contentions of the Revenue that the Act of 1961 provides for certain statutory authorities vested with the powers to examine the materials based on which a finding may be recorded.

It was noted that the in a case relied upon by the Revenue, the Hon‟ble Supreme Court while setting aside the judgment and order by which the High Court had interfered with the notice under Section 148 of the Act, granted liberty to the respondents to file an appropriate petition/appeal against the order of reassessment passed under Section 148 of the Act.

The Hon’ble High Court in absence of any concluded facts being available, declined to to interfere  with the impugned notice u/148.

Accordingly, the writ application was dismissed giving liberty to the petitioner to avail statutory alternative remedies.

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