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High Court Of Calcutta
PINAKI CHANDRA GHOSH
SIMPLEX CONCRETE PILES (INDIA) PVT.LTD. - Appellant
Versus
DEPUTY COMMISSIONER OF INCOME-TAX - Respondent
W. P. 2492 Of 1994
Decided On : 01/28/2002
INCOME TAX - Reopening of Assessment - Section 147 - Conditions Precedent - Satisfaction of - Interpretation of Legal Provisions - Applicability of Supreme Court Judgments - Validity of Notices Issued - Scope of Judicial Review.
Fact of the Case:
The petitioner challenged six notices issued under Section 148 of the Income Tax Act, 1961, for reopening assessments under Section 147 for assessment years 1984-85 to 1989-90. The petitioner contended that the conditions precedent for reopening the assessments were not satisfied and that the requirements of law were not fulfilled.
Finding of the Court:
The court found that the respondent-authorities had taken steps in accordance with the provisions laid down in the Act. The court held that the Commissioner had duly applied his mind and that the sanction order was issued after becoming satisfied. The court also held that the Supreme Court had expressed its views in the case of N. C. Budharaja and Co. and reaffirmed the said view in the case of Builders Associations of India. The court concluded that the respondent-authorities had power to reconsider the order passed by them and the deduction granted to the writ petitioners under Sections 32a, 32ab, 80hh, and 80hhb which were not legally admissible and allowed erroneously by the Department.
Issues: 1. Whether the conditions precedent for reopening the assessments under Section 147 of the Income Tax Act, 1961, were satisfied. 2. Whether the requirements of law were fulfilled in issuing the notices under Section 148 of the Act. 3. Whether the Supreme Court judgments in N. C. Budharaja and Co. and Builders Associations of India were applicable to the case.
Ratio Decidendi: The court held that the existence of reasons to believe that income has escaped assessment is sufficient to confer jurisdiction to reopen the assessment under Section 147 of the Act. The court also held that the respondent-authorities had power to reconsider the order passed by them and the deduction granted to the writ petitioners under Sections 32a, 32ab, 80hh, and 80hhb which were not legally admissible and allowed erroneously by the Department.
Final Decision: The court dismissed the petition and held that the notices issued under Section 148 of the Act were valid and proper. The court directed the authorities to take steps in the matter and to pass a final order in the matter, if not already made, after giving a hearing to the petitioner within a period of eight weeks from the date and shall communicate the same within two weeks.
( 1 ) THE writ petitioner in this application has challenged six notices all dated July 29, 1994, issued by the respondent-Department under Section 148 of the Income-tax Act, 1961 (hereinafter referred to as "the said Act"), for reopening the assessments under Section 147 of the said Act, 1961, for the assessment years 1984-85 to 1989-90. The petitioner has also challenged approvals and/or satisfactions of respondent No. 2, the Commissioner of Income-tax, West Bengal, Range-VIII, Calcutta, under Section 151 (1) of the said Act in respect of all the said assessment years. The petitioner has challenged the said notices under Section 148 of the said Act on the ground that the conditions precedent for the assessment under Section 147 of the said Act read with Section 148 of the said Act have not been satisfied and the requirements of law have not been fulfilled.
( 2 ) THE contentions of learned counsel appearing on behalf of the petitioner are as follows :
( 3 ) THE assessments for the assessment years were all completed under Section 143 (3) of the said Act and the petitioner disclosed fully and truly all material facts necessary for the said assessments. The said assessments have become final after the disposal of the said appeals by the final appellate authority under the said Act.
( 4 ) HE further contended that there is no omission or failure on the part of the petitioner to disclose fully and truly all material facts necessary for the assessments and therefore all the impugned notices under Section 148 of the said Act are illegal, invalid and without jurisdiction.
( 5 ) IT is further contended that it is the case of the respondents that in the original orders of assessment for the said assessment years reliefs, inter alia, under Section 32a as claimed, were allowed in full for the assessment years up to 1987-88 and under Section 32ab for the assessment years 1988-89 and 1989-90, The petitioner's claim for relief under Section 80hh and 80hhb was also allowed in the assessment order for the assessment year 1984-85 but the claim for reliefs under Section 80hhb for the assessment years 1985-86, 1987-88, 1988-89 and 1989-90 were not allowed in the assessments but the same were allowed in appeals by the appellate authority.
( 6 ) HE further stated that nowhere in the affidavit it was alleged that there was omission on the part of the petitioner to disclose fully and truly all material facts relating to Section 32a/ 32ab of the said Act. It is further the case that the respondents in their affidavit have escaped assessment in respect of the assessment years from 1984-85 to 1989-90 on account of the allowance of wrong claim made under Section 32a/32ab of the said Act and under Section 80hhb and as such the total sum of Rs. 3,22,46,298 has escaped assessment. The said escaped assessment income is prejudicial and it is fit case for reopening under Section 147 of the said Act.
( 7 ) LEARNED senior counsel appearing on behalf of the petitioner further contended that the escapement of income on the reason of prejudicial to the interests of the Revenue is not the valid material as it was not the condition for reopening of the assessment under Section 147 of the said Act. Therefore, the respondent has failed to disclose any material on the basis of which respondent No. 1 has reason to believe that income chargeable to tax has escaped assessment for the said assessment years and accordingly the petitioner has failed to disclose fully and truly all material facts relating to the said income.
( 8 ) HE further contended that the petitioner claimed for deduction under Section 32a and Section 32ab of the said Act and also under Section 80hh and Section 80hhb of the said Act. The respondent authorities, after verification of the said claims under Section 32a and Section 32ab of the said Act, allowed them for the said assessment years, but in respect of the claims made under Sections 80hh and 80hhb of the said Act t
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