IMPORTANT POINT
The court established that the Income Tax Officer must have a rational basis for forming a belief that income has escaped assessment, and that mere conjecture or vague conclusions do not satisfy the legal requirements for reopening assessments under Section 147.

JUDGMENT :

Deepak Roshan, J.

Heard learned counsel for the parties.

2. The instant application has been preferred by the petitioner for the following reliefs: -

(a) For quashing the Assessment Order dated 31.03.2022 bearing no. ITBA/AST/S/147/2021-22/1042312253(1) whereby an addition of Rs.15,54,42,417/- has been made to the income of the Petitioner in the reassessment proceedings for the Assessment Year 2015-2016 under Section 147 read with Section 144 read with Section 144B of the Income-tax Act, 1961;

(b) For quashing the Notice of Demand under Section 156 of the Income-Tax Act, 1961, dated 31.03.2022 bearing no. ITBA/AST/S/156/2021-22/1042313074(1) pertaining to Assessment Year 2015-2016;

(c) For quashing the Notice for Penalty under Section 274 read with Section 271(1)(c) of the Income-Tax Act, 1961, dated 31.03.2022 bearing ITBA/PNL/S/271(1)(c)/2021-22/1042312815(1) pertaining to Assessment Year 2015-2016;

(d) For a direction upon the Respondents to produce entire records pertaining to the reassessment proceedings of the Petitioner for the Assessment Year 2015-2016;

(e) For a declaration that the entire reassessment proceedings have been conducted in gross violation of Principles of Natural Justice and also that the entire reassessment proceedings including the Impugned Order and the consequent Demand and Penalty Notices are in contravention of the Income-Tax Act, 1961, including Sections 144, 144B, 147, 148, 151, 156 and 271(1)(c);

(f) For issuance of any other appropriate writ(s) or direction(s) or order(s) as Your Lordships may deem fit and proper in view of the facts & circumstances of the case for doing conscionable justice to the Petitioner.

During pendency of this case the petitioner had filed one interlocutory application being I.A. No. 6387 of 2022 for amendment of prayer in the main writ application for quashing the notice dated 31.03.2021 issued under Section 148 of the Income Tax Act, 1961 (Annexure-2 of the writ petition). The said I.A. was allowed vide order dated 05.10.2023.

Subsequently, another interlocutory application being I.A. No. 2189 of 2023 was filed for amendment of the prayers for quashing the order disposing objection dated 16.03.2022 (Annexure-10) and also the penalty order dated 28.09.2022 passed by respondent nos. 3 and 4 under section 271 (1)(c) of the Income Tax Act and also for quashing notice of demand dated 28.09.2022 issued by respondent nos. 3/4 under section 156 of the Income Tax Act. The said I.A. was allowed vide order dated 05.10.2023.

3. The brief facts of the case as disclosed in the writ application is that the Petitioner-Company Pasari Casting & Rolling Mills Pvt. Ltd., is engaged in the business of manufacture of iron and steel products in the state of Jharkhand. It is the case of the petitioner that in the above assessment year, it had filed its Return of Income on time and its books of Accounts were audited duly. However, the proceeding has been initiated under Section 147/148 of the Income Tax Act, 1961.

The case of the petitioner is that without the existence of material and reasons to form a reasonable belief that the income of the petitioner has escaped assessment, the reasonable belief has been formed on the borrowed satisfaction. Also, the relied upon document leading to the formation of the purported reasonable belief is not supplied in spite of repeated requests and further, the petitioner has been extended only 24 hours’ time to file its Show Cause Notice.

4. The detailed facts are that the petitioner was served notice ITBA/AST/S/147/2021-22/1042312253(1) under Section 148 dated 31.03.2021 from the respondent alleging that the income has escaped assessment for the relevant Assessment year. In the notice issued, there was no mention about the reason for reopening of the same. Later, on 27.09.2021, the respondent issued a notice under Section 142(1) whereby certain details were sought and reasons for reopening were supplied by the Revenue. The reason provided therein f