Dayanidhi Maran v. The Assistant Commissioner Of Income Tax, Non-Corporate Circle

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED : 10-10-2018 CORAM THE HON'BLE MR.JUSTICE S.M.SUBRAMANIAM W.P. Nos.3405 and 43944 of 2016AndW.M.P.Nos.2780 and 37778 of 2016 Dayanidhi Maran .. Petitioner in both WPsvs The Assistant Commissioner of Income Tax,Non-Corporate Circle-1,Aayakhar Bhavan,#121, Nungambakkam High Road,Chennai-600 034... Respondent in wp.no.3405/16 The Assistant Commissioner of Income Tax,Non-Corporate Circle-1,Room No.309, III Floor,wanarparthy block,121,Mahathma Gandhi Road,Chennai-600 034. .. Respondent in wp.no.43944/16 WP No.3405 of 2016 is filed under Article 226 of theConstitution of India praying to issue a Writ ofCertiorari, calling for the records relating to the noticeissued by the respondent dated 27.3.2015 under Section 148of the Income Tax Act, 1961 and the consequential orderdated 13.1.2016 of the respondent and quash the same. WP No.43944 of 2016 is filed under Article 226 of theConstitution of India praying to issue a Writ ofCertiorari, calling for the records relating to the noticeissued by the respondent in PAN: dated 18.2.2016under Section 148 of the Income Tax Act, 1961 and theconsequential order dated 8.12.2016 in PAN: ofthe respondent and quash the same. For Petitioner in WP 3405/16 : Mr.G.Masilamani, Senior Counsel & WP 43944/16 for M/s.M.Sneha and L.S.M.Hasan Fizal. https://hcservices.ecourts.gov.in/hcservices/ For Respondents in both WPs : Mr.G.Rajagopal, Additional Solicitor General of India assisted by M/s.Hema Murali Krishnan and D.Naveen Durai Babu, Standing Counsel for Income Tax. C O M M O N O R D E R The notice issued by the respondents dated27.3.2015 under Section 148 of the Income Tax Act, 1961(hereinafter referred to as the 'Act') and theconsequential order dated 13.1.2016 are under challenge inWP No.3405 of 2016. The notice issued by the respondent inPan AGRPM1800D dated 18.2.2016 under Section 148 of the Actand the consequential order dated 8.12.2016 are underchallenge in WP No.43944 of 2016. 2. WP No.3405 of 2016 is in relation to theassessment year 2008-2009. WP No.43944 of 2016 is withregard to the assessment year 2009-2010. Thus, two separatenotices issued for the assessment years 2008-2009 and 2009-2010 are challenged by way of two separate writ petitions. 3. The facts in general in respect of both thewrit petitions are common. The writ petitioner Mr.DayanidhiMaran assumed the Office of the Union Minister forCommunications and Information Technology on 21.5.2004 andhe resigned from the Office of the Union Minister on13.5.2007. The writ petitioner states that he filed theincome tax returns for the assessment year (AY) 2008-2009within the prescribed time stipulated under Section 139(1)of the Act on 31.7.2008. The returns filed by the writpetitioner was assessed and the same reached finality. 4. While-so, the impugned notice has been issuedby the respondent on 27.3.2015 under Section 148 of the Actto reopen the assessment of the year 2008-2009. On receiptof notice, the writ petitioner addressed a letter to therespondent to provide reasons for reopening the assessmentfor the assessment year 2008-2009. The said letter was sentto the respondent on 24.4.2015. However, on expiry of thestatutory period of six years, in letter dated 8.5.2015,the respondent furnished the reasons for reopening theassessment year 2008-2009. By way of a letter dated13.5.2015, the writ petitioner sought time for a detailedreply to the said letter of the respondent dated 8.5.2015. 5. On 1.6.2015, the writ petitioner requested therespondent to furnish the copies of the letter relied on bythe respondent for reopening the assessment proceedings. 5. On 1.6.2015, the writ petitioner requested therespondent to furnish the copies of the letter relied on bythe respondent for reopening the assessment proceedings. https://hcservices.ecourts.gov.in/hcservices/ The respondent in turn furnished the letters to the writpetitioner as sought for vide letter dated 1.6.2015. Theletters were sent on 1.7.2015 by the respondent. On22.7.2015, the writ petitioner raised detailed objectionsfor reopening the assessment proceedings for the assessmentyear 2008-2009. 6. On 8.12.2016, the respondents passed theimpugned order, rejecting the objections and confirmed thereopening of the assessment proceedings for the assessmentyear 2008-2009. The writ petitioner states that at the timeof issuing the notice under Section 148 of the Act, thecharge sheet filed by the Central Bureau of Investigationin respect of the allegations was pending. However, thewrit petitioner filed a discharge petition before theCentral Bureau of Investigation Court and on 2.2.2017, thewrit petitioner was discharged from the charges framed bythe CBI Court under the Prevention of Corruption Act. Underthese facts and circumstances, the learned Senior Counsel,appearing on behalf of the writ petitioner, made thefollowing submissions. PLEADINGS OF THE PETITIONER AS WELL AS THE ARGUMENTS: 7. Section 147 of the Act, states that “if theAssessing Officer has reason to believe that any incomechargeable to tax has escaped assessment for any assessmentyear, he may, subject to the provisions of Sections 148 to153, assess or reassess such income and also any otherincome chargeable to tax which has escaped assessment andwhich comes to his notice subsequently in the course of theproceedings under this section, or recompute the loss orthe depreciation allowance or any other allowance, as thecase may be, for the assessment year concerned. Providedthat where an assessment under sub-section (3) of section143 or this Section has been made for the relevantassessment year, no action shall be taken under thisSection after the expiry of four years from the end of therelevant assessment year, unless any income chargeable totax has escaped assessment for such assessment year byreason of the failure on the part of the Assessee to make areturn under Section 139 or in response to a notice issuedunder subsection (1) of Section 142 or Section 148 or todisclose fully and truly all material facts necessary forhis assessment, for that assessment year." 8. The learned Senior Counsel, while elaboratingthe amended phrase by the Direct Tax laws (Amendment) Act,1989 with effect from 1.4.1989 that "has reason to believe"emphasises that the right to get reason for reopening theassessment is the vested right of an Assessee. It iscontended that such a vested right provided by way of a Statute, more specifically, by amendment, cannot be takenaway by the Assessing Officer. Thus, the vested rightcontemplated in respect of the reasons to be provided atthe time of reopening of the assessment is mandatory andthe same cannot be tinkered with by the respondents inorder to harass the Assessees, who had already filed theirreturns long back and the same was assessed during therelevant point of time under the provisions of the IncomeTax Act, 1961. Statute, more specifically, by amendment, cannot be takenaway by the Assessing Officer. Thus, the vested rightcontemplated in respect of the reasons to be provided atthe time of reopening of the assessment is mandatory andthe same cannot be tinkered with by the respondents inorder to harass the Assessees, who had already filed theirreturns long back and the same was assessed during therelevant point of time under the provisions of the IncomeTax Act, 1961. 9. Section 147 of the Act, mandates the reasons tobe recorded at the time of issuance of notice for reopeningof the closed assessment. In the absence of recording thereasons for reopening the notice is to be construed as nonest in law. The executive power conferred under the Act tothe Executives, cannot be interpreted, so as to take awaythe vested right of an Assessee in respect of the closedassessments. Reopening of the assessment is not a routineaffair or a normal event. Only in case of suppression offact or the availability of new materials on record, thenalone, the executive power can be exercised under Section147 of the Act, for reopening the escaped assessment. Thereasonsings are mandatory. In the absence of adequatereasons, the notice issued under Section 148 is invalid.Thus, the notice itself must contain the reasons and theAssessing Officer must have a reason to believe that thereis a suppression of material facts or the availability ofany new materials for the purpose of reopening the closedassessment. 10. In all such cases, the subjective satisfactionof the Assessing Officer is contemplated under Section 147of the Act, when the language employed in Section 147, "ifthe Assessing Officer has reason to believe". Therefore,there is no ambiguity in respect of the recording ofreasons by the Assessing Officer for invoking Sections 147and 148. Only if the Assessing Officer has recorded thereasons as contemplated under Section 147, he is empoweredto issue notice to the Assessee under Section 148 byrecording the reasons and communicating the same to theAssessee, enabling the Assessee to furnish his reply anddefend his case in respect of reopening of the allegedescaped assessment. Thus, the very ingredients of Section147 has not been satisfied in respect of the actions of therespondents in the present writ petitions. In view of thefact that the notice does not satisfy the requirements ofthe mandatory provisions of "reason to believe" andrecording the reasons and communicate the same to theAssessee, the impugned notice issued under Section 148 isliable to be scrapped as in violation of the provisions ofSections 147 and 148 of the Act. 11. The learned Senior Counsel further urged thisCourt by stating that if a notice is decided to be issuedby the Assessing Officer under Section 148 of the Act, thenthe reasons for reopening of the escaped assessment must bestated and communicated to the Assessee. The learned SeniorCounsel is of a firm opinion that providing reasonssubsequently after issuance of notice is not sufficient.The learned Senior Counsel further contended that it is aprecondition that in the event of any reason to believe anda decision is taken by the Competent Authorities, then, thereasons must be recorded in the notice and the same shouldbe communicated to the Assessee. Thus, the twinrequirements as per the Act is that the Assessing Officermust have a reason to believe and such reasons which formsthe basis for the reopening of the escaped assessment mustbe reduced in writing and communicated to the Assessee atthe time of issuance of the notice. Thus, subsequentcommunication of the reasons will not save the defectivenotice issued by the Assessing Officer under Section 148 ofthe Act. 12. Section 148 defines issue of notice where theincome has escaped assessment. Thus, even the decision istaken under Section 147 of the Act by the AssessingOfficer. Such reasons must be communicated to the Assesseealong with the notice issued under Section 148 of the Act.13. Section 149 deals with time limit for notice,which reads as under:-"(1) No notice under section 148shall be issued for the relevantassessment year,—(a) if four years haveelapsed from the end of the relevantassessment year, unless the case fallsunder clause (b); (b) if four years,but not more than six years, haveelapsed from the end of the relevantassessment year unless the incomechargeable to tax which has escapedassessment amounts to or is likely toamount to one lakh rupees or more forthat year.Explanation.—In determining incomechargeable to tax which has escapedassessment for the purposes of thissub-section,theprovisionsofExplanation 2 of section 147 shallapply as they apply for the purposes ofthat section." 14. Section 149(1)(b) states that six years timelimit is fixed from the end of the relevant assessment yearunless the income chargeable to tax which has escapedassessment amounts to or is likely to amount to one lakhrupees or more for that year. Thus, the case of the writpetitioner falls under the said category and accordingly,the time limit prescribed for reopening of the closedassessment is six years. 15. Section 151 speaks about the sanction forissue of notice. "(1) In a case where an assessment undersub-section (3) of Section 143 or Section 147 has been madefor the relevant assessment year, no notice shall be issuedunder Section 148 by an Assessing Officer, who is below therank of Assistant Commissioner or Deputy Commissioner,unless the Joint Commissioner is satisfied on the reasonsrecorded by such Assessing Officer that it is a fit casefor the issue of such notice: Provided that, after theexpiry of four years from the end of the relevantassessment year, no such notice shall be issued unless theChief Commissioner or Commissioner is satisfied, on thereasons recorded by the Assessing Officer aforesaid, thatit is a fit case for the issue of such notice." 16. Thus, it is made clear that in the event ofreopening of the closed assessment, the CompetentAuthorities are bound to follow all the procedurescontemplated under Sections 147 to 153 of the Act. 17. Referring the above provisions of the Act, thelearned Senior Counsel for the writ petitioner contendedthat the impugned notice issued under Section 148 is barredby the period of limitation. As per the writ petitioner,the period of limitation is six years. However, in thepresent cases on hand, the notice under Section 148 of theAct, was issued before the expiry of the period of sixyears. However, the reasons for reopening of theassessments were provided after the expiry of the sixyears. Thus, the learned Senior Counsel for the writpetitioner is of an opinion that the date of communicationof the reasons for reopening of the assessment must betaken into consideration for the purpose of reckoning theperiod of limitation. In other words, the reasonscommunicated to the writ petitioner after the expiry of theperiod of limitation of six years will vitiate the entireproceedings. Since law requires that along with the notice,the reasons must be communicated. If the reasons arecommunicated belatedly, then also the actions become nulland void. Thus, the impugned notice under Section 148 ofthe Act, is hit by the law of limitation prescribed under Section 149(1)(b) of the Act. Section 149(1)(b) of the Act. 18. The learned Senior Counsel for the writpetitioner further contended that the Assessing Officer hasnot provided any independent reasons for reopening of theassessment. The Assessing Officer relying on the chargesheet filed by the CBI, issued notice under Section 148 ofthe Act. The writ petitioner has already been dischargedfrom the CBI case. However, it is informed that the appealfiled against the order of discharge is now under challengebefore the High Court of Delhi. The above cited "hasescaped assessment" is construed as a quid pro quo. 19. Thus, in the event of not establishing thereasons for such reopening of the assessment quid pro quo,the impugned orders are non est in law. In the event ofcoming to the conclusion that the criminal case registeredby the CBI is a source of new information for therespondents to reopen the closed assessment, then the orderof discharge will have an impact in respect of the noticeissued under the Act. 20. The learned Senior Counsel for the writpetitioner is of an opinion that even the said amount hasnot been traced out in the accounts of the writ petitioner.The respondents are of the opinion that there is a commoneconomic interest in respect of company belongs to hisblood brother himself. The concept of common economicinterest is unknown to the Income Tax Law. Unlike theCompanies Act, 1956, such a principle of common economicinterest cannot be invoked for the purpose of making anAssessee liable, more specifically, in the absence ofproviding reasons for reopening of the closed assessment. 21. The writ petitioner is no way connected withthe company of his brother, namely, M/s.Sun Direct TV Pvt.Ltd. The respondents have not conducted any independentinvestigations in respect of the connectivity. The writpetitioner is a third party to the Company of his brother.The concept of common economic interest contemplated by therespondents are certainly inapplicable in the case of thewrit petitioner. Such a concept can never be adoptedagainst an Assessee for imposing tax under the Income TaxAct, 1961. 22. This apart, on the basis of the very samecharge sheet filed by the CBI, notice under Section 148 ofthe Act was given to four persons, the writ petitioner, SunDirect TV Pvt. Ltd., the writ petitioner's blood brotherMr.Kalanithimaran and his wife Smt.Priya Maran. Thus, themultiple choice cannot be a source of issuance of notice https://hcservices.ecourts.gov.in/hcservices/ under the provisions of the Act. Absolutely, no evidence toshow that the writ petitioner is having any connection withthe company belongs to his blood brother. The writpetitioner is neither a partner nor having any otherinterest in respect of the company, namely, M/s.Sun DirectTV Pvt. Ltd. 23. This apart, for the same charge sheet inrespect of the same amount, there cannot be notice for fourdifferent persons. Thus, the respondents themselves are notclear in respect of the transactions done between a foreigncompany and the company belongs to the blood brother of thewrit petitioner. Under those circumstances, a meresuspicion would not provide a cause of action for reopeningof the closed assessment. Reopening of the closedassessment cannot be done in a routine manner. There mustbe some concrete evidence and the authorities must have areason to believe and such reasons must be reduced inwriting and communicated to the Assessee. In the absence ofcomplying all these ingredients under the provisions of theAct, the notice impugned cannot be sustained at all. A meresuspicion in respect of certain transactions cannotconstitute a cause of action for the respondents to reopenthe closed assessment. Thus, the very basis for theissuance of the impugned reopening of assessment is notsupported with the provisions of the Income Tax Act, 1961and accordingly, the same is liable to be scrapped. 24. The learned Senior Counsel for the writpetitioner in support of the arguments cited the judgmentof the Allahabad High Court in the case of Shrawan Kumarvs. U.P. Institutional Service Board through its Chairman,Lucknow and others [decided on 30.8.2006 in CMWP No.19260of 2005 connected with CMWP No.53585 of 2004] and reportedin 2006 SCC Online ALL 766, wherein in paragraph-12, it hasbeen held as follows:- "12. Co-operation is a movement.People with similar interests and goalget together to form a society. A co-operative society by its very natureis an organization where peoplevoluntarily associate together on thebasis of equality for the promotion oftheir common economic interest whichthey cannot achieve by individualisolated action because of theweakness of the economic position of alarge majority of them. It is purely aprivate organization having no nexuswith the affairs of the State. Nodoubt, it is controlled and regulated by the U.P. Co-operative Society Act,1965, but its character remainsprivate and individual. Rules havebeen framed for maximizing economicoutcomeandtoregulatetherecruitment and conditions of serviceof its employees. The employees arepaid from the coffers of the societyand are its employees for all purposesand do not hold any civil post underthe State. As noticed in the openingpart of this judgment, Rules have beenframed under the 1965 Act. Rules of1972 only apply to Government Servantsand not to employees of CooperativeSocieties, therefore neither ratio inRaj Vikram Khare (supra) nor the rulesapply in the present case." 25. Relying on the above judgment, the learnedSenior Counsel for the writ petitioner is of an opinionthat the concept of common economic interest can be invokedonly in certain areas like co-operative movement, peoplewith similar interest and goal get together to form aSociety and in certain company matters. However, the veryprinciple of common economic interest cannot be applied inthe absence of any clinching materials to show that theAssessees had acted in violation of the provisions of theAct. Thus, the usage of the term "Common Economic Interest"by the respondents for invoking the provisions underSections 147 and 148 of the Act, is untenable. 26. In the case of Shri Balwant Rai Wadhva vs.ITO, decided by the Income Tax Appellate Tribunal, DelhiBench on 14.1.2011 in I.T.A.No.4806/Del/10, the period oflimitation was considered and paragraph-4 of the judgment,is partly extracted:- "4. We have duly considered therival contention and gone through therecord carefully. Admittedly the reasonswere not supplied to the assessee by31st March, 2008 i.e. within a period of6 years from the end of the asstt. year.The question before us is whether validservice of notice has been served uponthe assessee within the limitationprovided u/s 149 (1) (b) of the Act.According to this section the noticeought to be served within 6 years fromthe end of the asstt. year. Thecontention of the assessee is that Hon’ble Delhi High Court has held thatif the reasons recorded by the AO forreopening of assessment has not beensupplied or served within 6 years thenit will be construed that no validnotice has been served upon the assesseewithin 6 years." "4. We have duly considered therival contention and gone through therecord carefully. Admittedly the reasonswere not supplied to the assessee by31st March, 2008 i.e. within a period of6 years from the end of the asstt. year.The question before us is whether validservice of notice has been served uponthe assessee within the limitationprovided u/s 149 (1) (b) of the Act.According to this section the noticeought to be served within 6 years fromthe end of the asstt. year. Thecontention of the assessee is that Hon’ble Delhi High Court has held thatif the reasons recorded by the AO forreopening of assessment has not beensupplied or served within 6 years thenit will be construed that no validnotice has been served upon the assesseewithin 6 years." 27. In the case of Haryana Acrylic ManufacturingCo. vs. Commissioner of Income Tax [(2008) 175 Taxman 262(Delhi)], wherein the Hon'ble High Court of Delhi, inparagraphs-20 and 24, it has been held as follows:-"20. In the reasons supplied tothe petitioner, there is no whisper,what to speak of any allegation, thatthe petitioner had failed to disclosefully and truly all material factsnecessary for assessment and thatbecause of this failure there has beenan escapement of income chargeable totax. Merely having a reason to believethat income had escaped assessment, isnot sufficient to reopen assessmentsbeyond the four year period indicatedabove. The escapement of income fromassessment must also be occasioned bythe failure on the part of the assesseeto disclose material facts, fully andtruly. This is a necessary conditionfor overcoming the bar set up by theproviso to section 147. If thiscondition is not satisfied, the barwould operate and no action undersection 147 could be taken. We havealready mentioned above that thereasons supplied to the petitioner doesnot contain any such allegation.Consequently, one of the conditionsprecedent for removing the bar againsttaking action after the said four yearperiod remains unfulfilled. In ourrecent decision in Wel Intertrade (P.)Ltd.’s we had agreed with the viewtaken by the Punjab and Haryana HighCourt in the case of Duli ChandSinghania that, in the absence of anallegation in the reasons recorded thatthe escapement of income had occurredby reason of failure on the part of theassessee to disclose fully and trulyall material facts necessary for his assessment, any action taken by theAssessing Officer under section 147beyond the four year period would bewhollywithoutjurisdiction.Reiterating our viewpoint, we hold thatthe notice dated 29-3-2004 undersection 148 based on the recordedreasons as supplied to the petitioneras well as the consequent order dated2-3-2005 are without jurisdiction as noaction under section 147 could be takenbeyond the four year period in thecircumstances narrated above.24.............This means that a notice under section148, in the present case, could not, inany event, have been issued after sixyears from the end of the assessmentyear 1998-99, i.e., after 31-3-2005. Inwhichever way we look at it, a noticeunder section 148 without thecommunication of the reasons thereforis meaningless inasmuch as theAssessing Officer is bound to furnishthe reasons within a reasonable time.In a case, where the notice has beenissued within the said period of sixyears, but the reasons have not beenfurnished within that period, in ourview, any proceedings pursuant theretowould be hit by the bar of limitationinasmuch as the issuance of the noticeand the communication and furnishing ofreasons go hand-in-hand. The expression‘within a reasonable period of time’ asused by the Supreme Court in GKNDriveshafts (India) Ltd.’s case cannotbe stretched to such an extent that itextends even beyond the six yearsstipulated in section 149. For thisreason also, even assuming that weoverlook all that has happened between11-5-2004, when the petitioner soughtthe reasons, and 5-11-2007, when thesaid form annexed to the counter-affidavit was filed in this court, thevalidity of the notices under section148 issued on 29-3-2004 and anyproceedings pursuant thereto cannot beupheld." 28. In respect of exhausting the alternate remedy,the learned Senior Counsel for the writ petitioner relyingon the case of Union of India vs. Ajit Jain [(2003) 129Taxman 74 (SC)], wherein the Hon'ble Supreme Court held asfollows:- "The availability of an alternativeremedy is not an absolute bar to theentertainment of a petition underArticle 226 of the Constitution, thoughon account of availability of statutoryremedies Courts normally do notentertain the writ petitions but wherean action is wholly without jurisdictionand results in the infringement of anyfundamental right, the plea ofalternative remedy is of no avail. Theinstant case did fall in that category." This is the bare minimum mandatoryrequirement of the first part ofSection 147 (1) of the Act. 26. The first part of Section 147(1) of the Act requires the AO to have"reasons to believe" that any incomechargeabletotaxhasescapedassessment. It is thus formation ofreason to believe that is subjectmatter of examination. The AO being aquasi judicial authority is expected toarrive at a subjective satisfactionindependently on an objective criteria.While the report of the InvestigationWing might constitute the material onthe basis of which he forms the reasonsto believe the process of arriving atsuch satisfaction cannot be a mererepetitionofthereportofinvestigation. The recording of reasonsto believe and not reasons to suspectis the pre- condition to the assumptionof jurisdiction under Section 147 ofthe Act. The reasons to believe mustdemonstrate link between the tangiblematerial and the formation of thebelief or the reason to believe thatincome has escaped assessment." Relying on the abovesaid judgment, the learned SeniorCounsel urged this Court by stating that in any angle, theimpugned order cannot survive for want of legal support andaccordingly, the same is liable to be quashed. PLEADINGS OF THE RESPONDENT AS WELL AS THE ARGUMENTS:-30. The respondent raised a preliminary objectionwith regard to the maintainability of the writ petitions inview of the fact that an alternate remedy is available andprovided under the Income Tax Act itself. Without exhausingthe remedies provided under the Statute, the present writpetitions cannot be entertained and accordingly, they areliable to be rejected in limine. 31. In this regard, reliance is placed on thejudgment of the Allahabad High Court in the case of DOKINandan Singhania vs. CIT [190 ITR 289], Zigma Commodity PLtd vs. ITO, Ward-5(3), Kolkatta [46 Taxmann.com 339],Dr.Nedunchezhian vs. CIT [279 ITR 342 (Madras)], CIT vs.Chhabil Das Agarwal [357 ITR 357 SC] and that of KoneElevators India Ltd [35 Taxmann.com 102 (Madras)]. 32. It is contended that the information provided bythe CBI would fall under the category of new informationbased on which the Assessing Officer has reason to believeand formed his opinion. It is pertinent to state that incase of Mrs.Rama Sinha vs. CIT [(2003) 130 Taxman 139(P&H)] has held that the reassessment proceedeings cannotbe questioned since the Assessing Officer initiated thereassessment proceedings on the basis of the definiteinformation received from the CBI about the Assessee.Further, in the case of Balram Jagar vs. CIT [(2002) 120Taxman 464 (P&H)], it was held that the question whetherthe petitioner could held liable for an offence under thePrevention of Corruption Act or any other contemporaneousStatute could not have any bearing on his liability to betaxed under the Act and the Competent Authority constitutedunder the Act would not be denuded of his jurisdiction todetermine the petitioner's liability to pay tax in relationto the particular assessment year simply because in acriminal case, charge had not been framed. 33. The settled position of law is that there isno mandatory requirement as per the Income Tax Act, 1961,furnishing the reasons to the Assessee at the time of theissuance of the notice. As per the decision of the ApexCourt, in the case of GKN Driveshaft [259 ITR 19], it washeld that the due procedure to be followed during reopeningproceedings was that once the notice is served the Assesseewould have to necessarily file its return and then onrequest, the Assessing Officer should furnish the reasonsfor reopening of the assessment. The time limit providedunder the Act is therefore, only for proper issue andservice of notice which had been duly followed in thepresent cases. 34. The writ petitioner questioned the sufficiencyof the reasons and the modus operandi of the investigationif any conducted which is not for the writ petitioner toquestion. The fact that scrutiny proceedings were conductedin a different entity does not absolve the writ petitionerof the proceedings being initiated against him in the lightof the new information concerning the writ petitioner'scase. Further, in the following cases, the Courts have heldthat the information received from the Investigation Wingwould constitute material based on which reason to believecould be formed. [See AGR Investment Ltd vs. Additional CITand Another [333 ITR 146 (Del); and Salimar Builtcon P. Ltdvs. ITO-ITAT, Jaipur [136 TTJ 701]. 35. The settled position of law regardingsufficiency of the reason is not up for questioning whenthe Assessing Officer has formed his belief for the same. https://hcservices.ecourts.gov.in/hcservices/ 35. The settled position of law regardingsufficiency of the reason is not up for questioning whenthe Assessing Officer has formed his belief for the same. https://hcservices.ecourts.gov.in/hcservices/ Substantive proof for escapement of income in order to makeany additions can only be made after verification ofdetails during the proceedings. The writ petitioner hadquoted from the speaking order but had conveniently omitteda line in between there by changing the context of thesentence with the intention to mislead this Court. Courtshave consistently held that at the time of reopening, theAssessing Officer should possess of some material and isnot required to establish the escapement of income, thevalidity of the reassessment on the basis of the finaloutcome of the reassessment proceeding on that item couldnot be proper. [See Sri Krishna P. Ltd vs. CIT [221 ITR 538(SC)] and in the case of Central Province Manganese Ore Co.Ltd vs. ITO [191 ITR 662], which support the stand of theDepartment. 36. The Assessee contends that foreign investmentswere brought into the country after obtaining variousapproval from the Government Agency. However, the CBIreport suggest that the Assessee has used his personalinfluence and had obtained illegal gratification during thesaid process. Further, during the relevant time, when thewrit petitioner was holding a key position in theGovernment of India and therefore, the transaction cannotbe simply brushed aside sighting that it was approved invarious stages by the Government. The writ petitioner canprove the same by availing this opportunity for due hearingduring the scrutiny proceedings. The writ petitioner isentering into the shoes of the Assessing Officer and wasciting method of investigations which should be carried outfor forming a reason which is an entirely subjectiveposition provided under the Statute. 37. The proceedings under the Income Tax Act and theproceedings conducted by CBI are different and distinctfrom each other. The Income Tax Act provides for limitationof time, for reopening of the assessment upto six yearsfrom the relevant assessment year whereas the proceedingsunder the CBI would take more time for Courts to decide andif the Department has to wait till the outcome of theproceedings of the CBI then the proceedings under theIncome Tax Act would get time barred leading to a potentialleakage of revenue for the Nation. Thus, both are differentand distinct proceedings and the level of evidence vary. Anotice under Section 148 can be issued once the reason forbelief is formed on the information in the possession ofthe Assessing Officer. Proceedings are initiated to verifythe same and the writ petitioner would be given a fairopportunity for defending his case by submitting proof andarguments. In fact the Hon'ble Apex Court in a casereported in 103 ITR 437 has held that Court cannot go into adequacy of material if reason for information of believeshas a rational connection with the formation of belief. 38. In the case of Raymond Woolen Mills reportedin 236 ITR 34, the Hon'ble Supreme Court had reiterated theposition that Courts can only consider whether there was aprima facie case for reassessment and that sufficiency ofmaterial or correctness of the material is not to beconsidered at that stage. 39. The writ petitioner has filed the above writpetitions, challenging the notice issued by the Departmentdated 27.3.2015 under Section 148 of the Act and theconsequential order dated 13.1.2016 disposing of theobjection of the writ petitioner and for quashing the same.The Statute has provided an alternate remedy under theIncome Tax Act whereby the writ petitioner can challengethe said order by filing an appeal and therefore on thissole ground, the above writ petitions have to be dismissedin limine. 39. The writ petitioner has filed the above writpetitions, challenging the notice issued by the Departmentdated 27.3.2015 under Section 148 of the Act and theconsequential order dated 13.1.2016 disposing of theobjection of the writ petitioner and for quashing the same.The Statute has provided an alternate remedy under theIncome Tax Act whereby the writ petitioner can challengethe said order by filing an appeal and therefore on thissole ground, the above writ petitions have to be dismissedin limine. 40. The learned Additional Solicitor General ofIndia, at the first instance, made a submission that inrespect of WP No.3405 of 2016, the order of assessment hadalready been passed by the Assessing Officer and the samehas not given effect to on account of the pendency of thepresent writ petition. In respect of WP No.43944 of 2016,the order passed by the Assessing Officer is kept under thesealed cover, so also the assessment order passed withreferrence to WP No.44311 of 2016 has not given effect to. 41. The learned Additional Solicitor General ofIndia, at the outset, disputed the interpretations providedby the learned Senior Counsel appearing for the writpetitioner with reference to Sections 147 and 148 of theIncome Tax Act, 1961. In respect of maintainability of thewrit petitions, it is contended that the writ petitioner isbound to participate in the process of assessment based onthe notice issued by the Competent Authority under Section148 of the Act and after passing of the assessment order,the writ petitioner is having appellate remedy under theprovisions of the Act. 42. Pursuant to the amendment made on 1.4.1989,there is a change in the provisions of the Income Tax Actand the original term "reasons to be recorded in writing"has been amended as "has reason to believe". Thus, it isthe subjective satisfaction of the Assessing Officerwhether there is any reason to believe for the purpose ofreopening the escaped assessment. The Assessing Officer,undoubtedly, has to record the reasons for reopening of the https://hcservices.ecourts.gov.in/hcservices/ escaped assessment. However, the sufficiency of thematerials available with the Assessing Officer cannot bequestioned nor provide a cause of action for the writpetitioner to challenge the very notice by way of a writpetition under Article 226 of the Constitution of India.There is an application of mind on the part of theCompetent Authorities while recording the reasons as theprovision warrants such an exercise. However, the same neednot be communicated at the notice stage and the reasonswere already communicated in respect of the writ petitionerat his request. Thus, the procedures contemplated under theAct, are followed scrupulously by the Competent Authoritiesand there is no infirmity or irregularity. 43. The learned Additional Solicitor General ofIndia once again gone through the ingredients of Section147. The language employed in Section 147 of the Act isthat "If the Assessing Officer 'has reason to believe' thatany income may, subject to the provisions of Sections 148to 153, assess or reassess such income and also any otherincome chargeable to tax which has escaped assessment andwhich comes to his notice". 43. The learned Additional Solicitor General ofIndia once again gone through the ingredients of Section147. The language employed in Section 147 of the Act isthat "If the Assessing Officer 'has reason to believe' thatany income may, subject to the provisions of Sections 148to 153, assess or reassess such income and also any otherincome chargeable to tax which has escaped assessment andwhich comes to his notice". 44. The learned Additional Solicitor General ofIndia is of an opinion that it is the subjectivesatisfaction of the Assessing Officer in respect of therequirement that he has a reason to believe. Secondly, theAssessing Officer is empowered to assess or reassess suchincome and also any other income chargeable to tax whichhas escaped assessment. The intention of the Section isunambiguous that the Assessing Officer is empowered to makean assessment or reassess the assessment already reachedfinality. Thus, the fresh assessment in respect of certainmaterials is also permissible under Section 147 as well asreassessment is also permissible under the Act. Whenassessment as well as the reassessment is permissible andif the Assessing Officer has got a reason to believe thatthere are some materials for reopening of the assessment,then he can issue notice under Section 148 of the Act. 45. Explanation 1 to Section 147 states that"production before the Assessing Officer of account booksor other evidence from which material evidence could withdue diligence have been discovered by the Assessing Officerwill not necessarily amount to disclosure within themeaning of the foregoing proviso". Explanation 1 toSection 147 enumerates that mere production of a documentis not a ground to dispute the reopening of the assessmentnor amount to a disclosure in respect of the escapedassessment. It clarifies that even in case where theAssessee had produced the document showing the income which was not assessed earlier, is also a ground for reopening ofthe assessed returns. Thus, the Assessee cannot plead thathe had already produced the documents along with thereturns at the time of filing and therefore, the AssessingOfficer cannot reopen the assessment already reachedfinality with reference to Section 143(1) of the Act. 46. It is further contended that an Explanation 2(c)(1) to Section 147 of the Act, reads as under:-"(c) where an assessment has beenmade, but—(i) income chargeable to taxhas been underassessed ; or (ii) suchincome has been assessed at too low arate ; or (iii) such income has beenmade the subject of excessive reliefunder this Act ; or (iv) excessive lossor depreciation allowance or any otherallowance under this Act has beencomputed." The above Explanation 2 also provides power to theAssessing Officer that income chargeable to tax has beenunderassessed or such income has been assessed at too low arate or such income has been made the subject of excessiverelief under the Act or excessive loss or depreciationallowance or any other allowance under this Act has beencomputed. 47. It is stated by the respondent that variouscircumstances are provided under the provisions of Section147 for the reopening of the assessment. Thus, theprovision does not restrict a particular circumstance orevent, number of circumstances and the reasons are providedfor reopening of the assessment in order to protect therevenue and to ensure that the Assessees are brought underthe Taxnet in respect of the entire income. Suchcircumstances are enumerated in Section 147 to ensure thatthe Act is implemented in its letter and spirit and theobject is achieved. 47. It is stated by the respondent that variouscircumstances are provided under the provisions of Section147 for the reopening of the assessment. Thus, theprovision does not restrict a particular circumstance orevent, number of circumstances and the reasons are providedfor reopening of the assessment in order to protect therevenue and to ensure that the Assessees are brought underthe Taxnet in respect of the entire income. Suchcircumstances are enumerated in Section 147 to ensure thatthe Act is implemented in its letter and spirit and theobject is achieved. 48. The learned Additional Solicitor General ofIndia contended that under Section 252 of the Act, after anorder is passed, the writ petitioner shall approach theAppellate Tribunal by way of an appeal. Section 260-Aprovides an appeal to the High Court and Section 261provides an appeal to the Supreme Court. Thus, the presentwrit petitions cannot be entertained in view of the factthat it is only an initiation and the Assessing Officer hasnot yet arrived a conclusion in respect of the escapedassessment. The power of the Assessing Officer cannot bequestioned in view of the fact that the notice underSection 148 has been issued based on certain materials brought to the notice of the Assessing Officer. Thus, theAssessing Officer has every authority to cull out the truthbehind such materials or informations made available tohim. In the event of curbing the powers of the AssessingOfficer, the Department will not be in a position to imposethe tax in respect of all such escaped assessments andfurther the same will pave the way for the Assessees toavoid or evade payment of income tax as per the provisionsof the Act. 49. Notice is a proposal mooted out by theAssessing Officer under Section 148 on coming to theconclusion that the authorities has got a "reason tobelieve" in respect of the materials available on record.Thus, the very notice will not provide a cause of actionfor the writ petitioner to file the present writ petitions.This apart, the writ petitioner had already been respondedto the notice and pursuant to the request made by the writpetitioner, the reasons recorded by the Assessing Officerwere furnished to the writ petitioner, enabling him tosubmit his assessment as required under the provision