The court affirmed that reopening of assessment under Section 148 is valid if the Assessing Officer has reason to believe that income has escaped assessment, based on credible information.

JUDGMENT :

(AVNEESH JHINGAN, J.)

1. Civil Writ Petition No.20943/2019 is filed ssailing the order dated 19.10.2019 dismissing the objections filed against the re- opening of assessment under Section 148 of the Income Tax Act, 1961 (hereinafter ‘the Act’) and show cause notice dated 24.10.2019 (hereinafter ‘SCN’) issued under Section 148 of the Act. Civil Writ Petition No.21086/2019 is filed seeking quashing of the reassessment order dated 11.11.2019.

2. The petitioner for assessment year 2012-13 filed return declaring ‘nil’ income. The assessment under Section 143(3) of the Act was finalized on 30.03.2014. Subsequent proceedings for assessment initiated on basis of revised return filed for correcting error in claiming depreciation were dropped on 19.03.2015 considering that the assessment has already been completed. On 29.03.2019 notice under Section 148 of the Act was issued. The reasons that the information received from Director General of Income Tax (Investigation) Mumbai (for brevity ‘DGIT’) form basis that there is escaped assessment were supplied on 05.08.2019. The petitioner filed objection dated 10.10.2019. On dismissal of objection CWP No.20943/2019 was filed. While issuing notice, the order if passed in pursuance to SCN was made subject to outcome of writ. CWP No.21086/2019 was filed challenging the reassessment order dated 11.11.2019.

3. Learned counsel for the petitioner submits that the proceedings were initiated in absence of tangible material and solely relying upon the third party information. The argument is that the assessment was finalized under Section 143(3) of the Act and impugned SCN could not have been issued after completion of four years from the relevant assessment year. Contention is that assessee had fully and truly disclosed the necessary material facts and SCN is time barred. The submission is that the reassessment order is not sustainable on merits, the addition made is without any basis. Reliance is placed upon the decision of Supreme Court in Commissioner of Income Tax, Gujarat Vs. A. Raman & Co. reported in [(1967) 68 ITR 11], decision of this Court in Micro Marbles Private Limited Vs. Office of the Income Tax Officer reported in [(2023) 457 ITR 569] and decision of High Court of Andhra Pradesh in Kohinoor Hatcheries Pvt. Ltd. Vs. Deputy Commissioner of Income Tax & Anr. reported in [(2016)389 ITR 493]

4. Learned counsel for the revenue submits that the petitioner has challenged the reassessment order by filing appeal and all the issues can be gone into by the appellate authorities. The contention is that on the basis of information received from DGIT there was material available with the department to have reasons to believe that income chargeable to tax has escaped assessment. The order dated 19.10.2019 is defended by stating that the objections were decided in accordance with law.

5. The Supreme Court in GKN Driveshafts (India) Limited Vs. Income Tax Officer & Ors reported in [(2003) 259 ITR 19] held that the reasons for reopening are to be supplied to assessee and the objections filed against reopening are to be dealt with by passing a speaking order.

6. There is no statutory remedy provided against the order dealing with the objections. The writ court can prima facie satisfy the existence of basis to reopen the assessment. The sufficiency or correctness of the material is not to be considered at this stage. The Supreme Court in Assistant Commissioner of Income Tax Vs. Rajesh Jhaveri Stock Brokers Pvt. Ltd. reported in [(2007) 72 ITR 500] held:

“16. Section 147 authorises and permits the Assessing Officer to assess or reassess income chargeable to tax if he has reason to believe that income for any assessment year has escaped assessment. The word 'reason' in the phrase 'reason to believe' would mean cause or justification. If the Assessing Officer has cause or justification to know or suppose that income had escaped assessment, it can be said to have reason to believe that an income had escaped