High Court Of Calcutta
West Bengal State Co-Operative Bank Ltd. vs. JCIT & ORS.
Section 148
Asst. Year 1996-97, 1997-98, 1998-99, 1999-2000, 2000-01
Kalyan Jyoti Sengupta, J.
Writ Petn. No. 232 of 2004
12th February, 2004
Counsel Appeared
Dr. Pal, for the Petitioner : S.K. Kapoor, for the Respondents
JUDGMENT
Kalyan Jyoti Sengupta, J. :
The impugned notice under s. 148 of the IT Act, 1961 (hereinafter referred to as “the said Act”), dt. 18th Dec., 2002, and the other four orders dt. 19th Dec., 2002, one each relating to the asst. yrs. 1996-97 to 2000-2001 are under challenge in this present application.
2. In regular assessment, the petitioner filed returns of income for the asst. yrs. 1996-97 to 200001. The assessment orders were passed by the AO allowing refund in each assessment year of a substantial amount. The petitioner accordingly from time to time claimed refund in view of the aforesaid orders. Instead of refunding the above amount, the impugned notices for each year have been issued on 18th Dec., 2002, and the impugned orders were passed, whereby and whereunder the respondents want to reassess. Pursuant to the said notice and orders, the petitioner did not submit separate returns, however, reiterated that the earlier returns should be treated to be the returns for reassessment. The Revenue thereafter issued several notices under s. 142 of the said Act and passed order directing the petitioner to get their accounts specially audited by the auditor as nominated by the AO under the provisions of s. 142(2A) of the said Act. The said order of special audit has been under challenge in this Court and by the judgment and order dt. 23rd Feb., 2004, the said writ petition was disposed of and whereby and whereunder order of special audit was quashed but liberty has been granted to proceed afresh after having examined the books of account of the petitioner and having formed opinion as to the complexity and nature of the accounts for such special audit. Thereafter, the petitioner by a letter dt. 5th Jan., 2004, asked the Jt. CIT to divulge the reasons for formation of belief. In response to this letter the AO being the Jt. CIT, Range-56, Kolkata, has disclosed his reasons for reassessment for each of the above assessment years. The reasons divulged by him are that the petitioner is detected to have made investment in Government securities in Rs. 59,77,96,150 and other securities in Rs. 43,25,43,630 both in permanent nature. Therefore, income derived therefrom is taxable in view of the decision of the Supreme Court in the case of Madhya Pradesh Co-operative Bank Ltd. vs. Addl. CIT (1996) 134 CTR (SC) 92 : (1996) 218 ITR 438 (SC), though deduction under s. 80P of the said Act was granted previously by the AO. Therefore, the aforesaid income on account of the interest and discount from the aforesaid investments has escaped assessment. The orders containing reasons to believe in relation to the aforesaid assessment years are same.
Dr. Pal, learned senior counsel appearing for the petitioner, contends that the basis of formation of belief has no legal support, as the judgment relied on by the AO reported in Madhya Pradesh Cooperative Bank Ltd. vs. Addl. CIT (supra) has been overruled by a subsequent decision of a larger Bench of the Supreme Court reported in CIT vs. Karnataka State Co-operative Apex Bank (2001) 169 CTR (SC) 486 : (2001) 251 ITR 194 (SC) by which it is held amongst others that the above income is deducted under s. 80P of the said Act. According to him if the basis is unacceptable under the law there is no material to form any opinion. Assumption of jurisdiction by the AO under s. 147 of the said Act is conditioned “. . . unless any income chargeable to tax has escaped assessment for such assessment year by reason of the failure on the part of the assessee to make a return under s. 139 or in response to a notice issued under sub-s. (1) of s. 142 …” He says in this case in all the assessment years the petitioner disclosed everything and the then AO has allowed deduction of the income under s. 80P of the said Act, and there was no failure on part of the petitioner. Therefore, the conditions for exercising jurisdiction are not fulfilled. According to him this action on the part of the AO is without jurisdiction. As far as the approval of the CIT is concerned, he has ignored the contentions of the petitioner as to the aforesaid illegality; rather, he has supplanted his own opinion without examining the legality and validity of that of the AO. He further contends that the CIT in his turn relied on another decision of the Supreme Court which he cannot do while granting approval of the action of the AO. This decision according to him supports the case of the petitioner and it has got nothing to do with the question involved therein.
Mr. S. K. Kapoor, the learned Addl. Solicitor General of India, contends that the writ petition should be dismissed in limine as the whole motive of the petitioner, which is anything but honest, is to stall the lawful proceedings commenced in exercise of lawful jurisdiction of the authority concerned. The petitioner after accepting the order under s. 142, sub-s. (2A) of the said Act for special audit challenged the same in the writ jurisdiction by filing previous writ petition and this time almost after two years from the date of receipt of the impugned notice they have come to challenge the same questioning the correctness of reasons. This unexplained delay is a great factor for not entertaining this application in writ jurisdiction. If any adverse order is passed it will be open for the writ petitioner to challenge before the appropriate appellate forum. There is a statutory time-limit within which the assessment is to be completed, such limitation will be expiring on 31st March, 2004, since this Court did not grant any order of injunction and assessment will automatically become time-barred and this should occur is the sole motive of the petitioner.
Having heard the respective contentions of learned counsel for the parties in this matter, I find the question is whether, on the facts and circumstances of this case, the AO has exercised his jurisdiction properly or not. I accept the contention of the learned Addl. Solicitor General that in the matter of granting stay in a case of this nature, the delay in bringing challenge against the aforesaid impugned notices is a factor to be reckoned seriously. Now, it is a well-settled principle of law if the assessee wants to know the reasons for the formation of the belief or opinion that there has been an escapement of income to assessment, then the authority concerned must disclose the same either immediately, or if such notices are challenged in Court, in the affidavit. The Supreme Court recently had laid down this procedure. [Reference here seems to the decision of the Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. ITO (2003) 179 CTR (SC) 11 : (2003) 259 ITR 19 (SC)—Ed.] In this case I find the petitioner did not ask for the reasons for almost two years, rather, they accepted the notices by contending that no new returns would be filed, the earlier returns would be treated to be the returns to these notices. The petitioner did not ask for the reasons initially because they knew that prima facie there are grounds for the reopening. The petitioner should have approached this Court challenging the aforesaid notices much earlier on these grounds. They have chosen not to do so. Therefore, the approach, act and conduct of the petitioner is not convincing so as to grant interim relief as asked for. Whether the reasons are good or bad or for that matter the same is having foundation for assumption of jurisdiction or not, can very well be decided without any doubt by the AO. It would be open for the writ petitioner to contend the same before him. Therefore, interim order as prayed for is refused. The AO will proceed in accordance with law. However, effect thereof shall not be given without leave of the Court. Affidavit-in-opposition may be filed within four weeks from date. Reply, if any, within two weeks thereafter. Matter to appear eight weeks hence. Since the matter relating to the special audit was pending for hearing judgment from 18th Sept., 2003 to 12th Feb., 2004, therefore, this period is excluded and order of injunction is deemed to have been granted in this case to that extent.
[Citation : 268 ITR 462]
