High Court Of Madras
S. Harinivas Chowdry vs. Assistant Commissioner Of Income Tax
Asst. Year 1978-79, 1979-80
Y. Venkatachalam, J.
W.P. Nos. 6283 & 6284 of 1989 & W.M.P. Nos. 9118 & 9119 of 1989.
18th July, 1998
K. Mani, for the Petitioner : S.V. Subramaniam for C.V. Rajan, for the Respondent
Y. VENKATACHALAM, J. :
Since the subject-matter involved herein and also the parties to the litigation are common, both these writ petitions are disposed of by this common order with the consent of the parties concerned.
2. Invoking Art 226 of the Constitution of India, the petitioner herein has filed these writ petitions seeking for a writ of certiorari to call for records in the proceedings in 44-005-PY-0311 dt. 29th March, 1989, and 44-005-PY- 0311 dt. 7th April, 1989, and to quash the same. In support of the writ petitions, the petitioner herein has filed separate affidavits wherein he has narrated all the facts and circumstances that forced him to file there writ petitions and prayed and his writ petitions may be allowed as prayed for. Though no counter affidavit has been filed by the respondent, they argued the matter.
3. Heard the arguments advanced by learned counsel appearing for the petitioner and also that of learned senior counsel appearing for the Department. I have also gone through the contents of the affidavit filed by the petitioner and also all the necessary material documents available on record in the form of typed set of papers. I have also taken into consideration the various points raised by learned counsel appearing for the respective parties during the course of their arguments.
4. The common point that arises for consideration in these writ petitions is, as to whether there are any valid grounds to allow these writ petitions or not.
5. The petitioner herein has been assessed to income-tax regularly for the past many years. He submitted his return of income for the years 1978-79 and 1979-80 and his assessments were completed under s. 143 and the tax due thereon were also paid. It is stated by the petitioner that along with the returns of income, he submitted statement of account including trial balance, statement of total income and account copies of the creditors. These documents were examined by the ITO who completed the aforesaid assessment. In the statement accompanying the return for the year 1979-80, in the trial balance accompanying the return, there were two credits, one in the name of Raghbir Singh for Rs. 75,000 and another in the name of B.T. Bajan for Rs. 65,000. In respect of both the credits, full particulars were furnished in the statement. Both the creditors were income-tax assessees and their GIR numbers were furnished. While the assessment was completed by the ITO, under s. 143(1), the ITO was satisfied about the genuineness of the credits and it was only thus being bona fide satisfied about the genuineness of the credits, that the ITO accepted the return and completed the assessment by orders of assessment dt. 26th May, 1982, for both the years. While the assessments had thus become final and tax due pursuant to the assessment had also been paid, the petitioner received a letter from the respondent dt. 2nd March, 1989, stating that regarding the two credits referred to in the return filed by the petitioner, it was seen from the records that one Raghbir Singh had given the petitioner certain amounts had that therefore it was stated in the said letter that it was proposed to reopen his assessment for the year 1978-79 under s. 147(a). A Similar letter dt. 3rd March, 1989, was received for the asst. yr. 1979-80. In the said notices it was stated that the petitioner has not given the full particulars, i.e., full address of the creditors, and he was also required to furnish his objections to the said proposals by 8th March, 1989 and 9th March, 1989, respectively. On 8th March, 1989 and 9th March, 1989, the petitioner forwarded his objections to the respondent and requested them to drop the reopening proposal. In the said letters it has been stated by petitioner that he had disclosed the full particulars of the credits and also had furnished the name and the amount of the parties, in whose case, there was no opening balance. In the case of the other party, where admittedly, there was an opening balance, the matter and been accepted in the previous year; nevertheless, the relevant particulars, were furnished. Consequently there was no omission to furnish the relevant particulars of the creditors as alleged in the said letters. It was clearly stated that there was no basis or justification for reopening the assessments under s. 147(a) of the Act, since there was no escapement of income, much less escapement of income consequent on the failure or furnish material particulars by the petitioner or by reason of furnishing of any inaccurate particulars.
Hence, s. 147(a) was not attracted to the facts of these cases. Thus detailed objection were furnished to the proposal to reopen the assessments for the years 1978-79 and 1979-80. However, notwithstanding the objections submitted by the petitioner, the respondent has issued two notices, one dt. 29th March, 1989, for the year 1978-79 and another dt. 7th April, 1989, for the year 1979-80. In the notice for the year 1978-79, the respondent has stated that the notice was being issued after obtaining the necessary satisfaction of the CBDT, in C.No. 289/233/89-IT (Inv. II), dt. 28th March, 1989. There is not such noting in the notice dt. 7th April, 1989, relating to the year 1979-80. But the said notice is stated to have been issued, after obtaining the necessary satisfaction of the CIT, Central- I. Therefore, it is stated by the petitioner that the aforesaid notices proposing to reopen the assessments for the years 1978-79 and 1979-80 are totally illegal, violative of the provisions of the IT Act and without jurisdiction. Citing the several provisions of the IT Act and it is contended by the petitioner that under the said provisions where the income chargeable to tax, which has escaped assessment amounts to or is likely to amount of Rs.50,000 or more the assessment can be reopened within the limitation provided under cl. (ii). This provisions was amended by the Direct Tax Laws (Amendment) Act, 1987, w.e.f. 1st April, 1989. The aforesaid provisions for reopening of the assessment would apply only if there is an escapement of income. It is contended by the petitioner that where there is no finding on the basis of materials on record that there is an ascapement of income, the assessment is reopened merely to faciliated a fishing or roving enquiry, the reopening of assessment would not be permitted. The only reason mentioned in the letter sent by the respondent is that the petitioner has not given full particulars, i.e., full address of the creditors. There is not even an allegation that these credits are not genuine or that income has escaped assessment. In fact full information an particulars have been furnished regarding the credits and there is no basis or justification to assume that income has escaped assessment. While calling for the objection to the proposed reopening of the assessment, the only averment is that there are certain credits and the full particulars of the creditors have not been furnished. Obviously it is on the basis of this averment alone that the approval of the Board for the reopening of the assessment appears to have been obtained on 28th March, 1989, in respect of the asst. yr. 197879 and the approval of the CIT obtained in respect of the year. Therefore, in the abovecircumstances, the proposed reopening is totally illegal, violative of the provisions of the Act and without jurisdiction and the reopening proceedings of the Act and without jurisdiction and the reopening proceedings pursuant to the notice under s. 148 are liable to be quashed. Hence, these writ petitions.
Having seen the entire documents available on record, the following are the admitted facts in this case. The petitioner herein is an income-tax and assessee and he submitted his returns of income for the year 1978-79 and 1979-80 and his assessments were completed under s. 143. The tax due thereon was also paid. That being so, while the assessements had thus become final and the tax due pursuant to the assessment had also been paid the respondent issued notices proposing to reopen the assessment for the years. 1978-79 and 1979-80. Therefore, now the issue before the Court is as to whether the said notices under s. 148 proposing to reopen the assessments are in accordance with the provisions of the Act or not. The relevant sections in this connection are ss. 147(a) and 148 to 153. Sec. 149 prescribes the time-limit for issue of a notice under s. 148, for reopening the assessment under s. 147. After the careful perusal of the provisions of the above sections, it is clear that where the income chargeable to tax, which has escaped assessment amounting to or is likely to amount to Rs. 50,000 or more, the assessment can be reopened with in the limitation provided under cl. (ii). Thus the aforesaid provisions for reopening of the assessment would apply only if there is an escapement of income. Therefore, now the Court has to examine whether there is any proved escapement of income. It is significant to note that in the letter dt. 2nd March, 1989, issued by the respondent in respect of the asst. yr. 1978-79, the respondent has merely stated that he proposes to reopen the assessment under s. 147(a) for the mere reason that prima facie the petitioner has not given full particulars, i.e., full address of the creditors. The same reason is adduced for reopening the assessment for the year 1979-80. It is also significant to note that there is not even an allegation that these credits are not genuine or that income has escaped assessment. Apart from that even in the detailed letter preceding the issue of the printed notice, the respondent has not even alleged that there has been escapement of income. Even while calling for an objection to the proposed reopening of the assessment, the only averment is that there are certain credits and the full particulars of the creditors have not been furnished. But from the records it is seen that even the income-tax assessment proceedings of the creditors have been furnished, which would be more than sufficient to show that all relevant particulars have been furnished. Further, the credit have been disclosed with the GIR numbers of the creditors. No information relating to the credit which has been sought has been withheld. Hence, in these cases, there is not failure to furnish material particulars nor escapement of income. Further, there is no allegation at all that income has escaped assessment either by reason on non-furnishing of particulars or otherwise.
It is contended on behalf to the petitioner that even assuming without conceding that some more particulars with regard to certain credits can be furnished, that would not constitute a valid reason for assuming that income has escaped assessment, particularly in the absence of even an allegation to the effect in the notice proposing to reopen the assessment. There is force in this contention of the petitioner. It is also contended by the petitioner that the assessment is sought to be reopened within the extended limitation and, hence, the notice should be self- contained and the necessary ingredients for invoking the jurisdiction should be established and that has not been done here. But, on the other hand, there is not even an averment to this effect. It is significant to note that the IT Act has been amended to ensure finality of assessment, and thus Parliament has recognised the importance of the assessment reaching a finality and the necessity to ensure that assessments are not reopened without any basis or justification. Therefore, it is crystal clear that unless the necessary ingredients of s. 147 are established, the assessment cannot be reopened. But, that aspect is apparently absent in these cases. There is not even an averment on the side of the respondent that there is any escapement of income. That being so, the proposed reopening is illegal and without jurisdiction, as there is not escapement of income warranting the reopening of the assessment already completed.
Therefore, for all the aforesaid reasons and in the facts and circumstances of these cases and also in the light of my above discussions regarding several aspects of this case, I am of the clear view, that the proposed reopening of the assessment already completed on these cases is illegal and without jurisdiction and that, therefore, it is liable to the quashed. Thus, both the writ petitions succeed and are allowed. In the result, both the writ petitions are allowed and, consequently, the proceedings of the respondent impugned in these writ petitions are hereby quashed. W.M.Ps. are dismissed No costs.
[Citation : 246 ITR 256]