Wp/4013/2022 Of Jiyand Ram Ahuja v. Principal Commissioner Of Income Tax I I

IN THE HIGH COURT OF MADHYA PRADESHAT JABALPURBEFORE HON'BLE SHRI JUSTICE SHEEL NAGU & HON'BLE SHRI JUSTICE MANINDER S BHATTI WRIT PETITION No.4013 of 2022 Between:- 1.JIYAND RAM AHUJA, PROPRIETOR OFM/S AHUJA FILING STATION SON OFSHRI TULSI DAS AHUJA AGED ABOUT79 YEARS, OCCUPATION : BUSINESS,R/O 11, AHUJA SADAN MAIN ROAD,SUBHASH NAGAR SIDHI (M.P.) . .....PETITIONER (BY SHRI SAPAN USRETHE, ADVOCATE) AND 1.PRINCIPALCOMMISSIONEROFINCOME TAX-I CENTRAL REVENUEBUILDING, NAPIER TOWN, JABALPUR(M.P.) . 2.INCOME TAX OFFICER, WARDSINGRAULI , INCOME TAX OFFICETALI, WAIDHAN, SINGRAULI (M.P.) . 3.ADDITIONAL/JOINT/DEPUTY/ASSISTANT CIT/INCOME TAX OFFICERNATIONAL FACELESS ASSESSMENTCENTRE, INCOME TAX DEPARTMENT,DELHI. CBDT, MINISTRY OF FINANCE,C-BLOCK, 4 FLOOR, CIVIC CENTRE,NEW DELHI. ....RESPONDENTS (BY SHRI SANJAY LAL, ADVOCATE) ------------------------------------------------------------------------------------------- Reserved on :23.03.2022Passed on : .06.2022 ------------------------------------------------------------------------------------------- Per : Justice Sheel Nagu : ORDER This petition under Article 226/227 of the Constitution of India assailsthe notice dated 27.03.2021 (Annexure P/3) issued u/S 148 of the Income TaxAct,1961 (for brevity “the IT Act”) asking the petitioner to explain as to whythe assessment proceedings be not re-opened to assess escaped income forassessment year 2013-14. Further challenge is made to the rejection videAnnexure P/7 of the reply objecting to the re-opening of assessment. 2.Learned counsel for petitioner and that of the Revenue are heard on thequestion of admission so also on final disposal. 3.The principal contention of learned counsel for petitioner is that in thelight of proviso to Section 147 of the IT Act, assessment proceedings cannotbe re-opened after expiry of four years from the end of the relevantassessment year and since the relevant assessment year in the instant case was2013-14, the notice vide Annexure P/3 issued on 27.03.2021 is non est in theeyes of law. 4.Learned counsel for the Revenue on the other hand has read over therejection of objection filed by petitioner vide Income Tax Officer (ITO). It issubmitted by the Revenue that to understand the controversy, it is essential notonly to read proviso to Section 147 of the IT Act but also Explanation-1 to thesaid proviso. By referring to the said Explanation, it is submitted that anexception has been carved out in Explanation-1, which circumscribes thejurisdiction available to the Assessing Officer while re-opening cases relatingto income which has escaped assessment. It is submitted that Explanation-1vests Assessing Officer with the authority to invoke Section 147 of the IT Actin respect of cases pertaining to assessment year more than four years oldwhen it is found that their account books or other material furnished by theassessee were insufficient for the Assessing Officer to discover escapedincome despite exercise of due diligence. 5.For the purpose of proper adjudication of the issue involved, it wouldbe apt to reproduce Section 147 of the IT Act as it stood prior to 01.04.2021 intoto as follows :- “[Income escaping assessment- If the [Assessing Officer],[has reason to believe] that any income chargeable to tax hasescaped assessment for any assessment year, he may, subjectto the provisions of sections 148 to 153, assess or reassesssuch income and also any other income chargeable to taxwhich has escaped assessment and which comes to his noticesubsequently in the course of the proceedings under thissection, or recompute the loss or the depreciation allowanceor any other allowance, as the case may be, for theassessment year concerned (hereafter in this section and insections 148 to 153 referred to as the relevant assessmentyear): “[Income escaping assessment- If the [Assessing Officer],[has reason to believe] that any income chargeable to tax hasescaped assessment for any assessment year, he may, subjectto the provisions of sections 148 to 153, assess or reassesssuch income and also any other income chargeable to taxwhich has escaped assessment and which comes to his noticesubsequently in the course of the proceedings under thissection, or recompute the loss or the depreciation allowanceor any other allowance, as the case may be, for theassessment year concerned (hereafter in this section and insections 148 to 153 referred to as the relevant assessmentyear): Provided that where an assessment under sub-section (3)of section 143 or this section has been made for the relevantassessment, no action shall be taken under this section afterthe expiry of four years from the end of the relevantassessment year, unless any income chargeable to tax hasescaped assessment for such assessment year by reason of thefailure on the part of the assessee to make a return undersection 139 or in response to a notice issued under sub-section (1) of section 142 or section 148 or to disclose fullyand truly all material facts necessary for his assessment forthat assessment year : [Provided further that nothing contained in the firstproviso shall apply in a case where any income in relation toany asset (including financial interest in any entity) locatedoutside India, chargeable to tax, has escaped assessment forany assessment year:] [Provided also] that the Assessing Officer may assess orreassess such income, other than the income involvingmatters which are the subject-matter of any appeal, referenceor revision, which is chargeable to tax and has escapedassessment.] Explanation 1.-Production before the Assessing Officer ofaccount books or other evidence from which materialevidence could, with due diligence, have been discovered by the [Assessing Officer] will not necessarily amount todisclosure within the meaning of the foregoing proviso. Explanation 2.-For the purposes of this section, thefollowing shall also be deemed to be cases where incomechargeable to tax has escaped assessment namely :- (a)where no return of income has been furnished by theassessee although his total income or the total income of anyother person in respect of which he is assessable under thisAct during the previous year exceeded the maximum amountwhich is not chargeable to income-tax; (b)where a return of income has been furnished by theassessee but no assessment has been made and it is noticedby the Assessing Officer that the assessee has understated theincome or has claimed excessive loss, deduction, allowanceor relief in the return; [(ba) where the assessee has failed to furnish a report inrespect of any international transaction which he was sorequired under section 92E;]. (c)where an assessment has been made, but- (i)income chargeable to tax has beenunderassessed; or (ii)such income has been assessed at loo low arate; or (iii)such income has been made the subject ofexcessive relief under this Act; or (iv)excessive loss or depreciation allowance orany other allowance under this Act has been computed.] [(ca) where a return of income has not been furnished bythe assessee or a return of income has been furnished by himand on the basis of information or document received fromthe prescribed income-tax authority, under sub-section (2) ofsection 133C, it is noticed by the Assessing Officer that theincome of the assessee exceeds the maximum amount notchargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss,deduction, allowance or relief in the return;] [(d)where a person is found to have any asset (includingfinancial interest in any entity) located outside India.] (iii)such income has been made the subject ofexcessive relief under this Act; or (iv)excessive loss or depreciation allowance orany other allowance under this Act has been computed.] [(ca) where a return of income has not been furnished bythe assessee or a return of income has been furnished by himand on the basis of information or document received fromthe prescribed income-tax authority, under sub-section (2) ofsection 133C, it is noticed by the Assessing Officer that theincome of the assessee exceeds the maximum amount notchargeable to tax, or as the case may be, the assessee has understated the income or has claimed excessive loss,deduction, allowance or relief in the return;] [(d)where a person is found to have any asset (includingfinancial interest in any entity) located outside India.] Explanation 3.- For the purpose of assessment orreassessment under this section, the Assessing Officer mayassess or reassess the income in respect of any issue, whichhas escaped assessment, and such issue comes to his noticesubsequently in the course of the proceedings under thissection, notwithstanding that the reasons for such issue havenot been included in the reasons recorded under sub-section(2) of section 148.] Explanation 4.- For the removal of doubts, it is herebyclarified that the provisions of this section, as amended, bythe Finance Act, 2012, shall also be applicable for anyassessment year beginning on or before the 1[st] day of April,2012.]” 6.A bare perusal of the aforesaid provision contained in Section 147 ofthe IT Act including the proviso and Explanation-1, reveals that the barexcluding jurisdiction of Assessing Authority to re-open cases relating toassessment year more than four years old, is subject to exceptions, which areas follows :- i)The first being that if any income chargeable to tax hadescaped assessment for any assessment year by reason offailure of the assessee to make a return u/S 139 of the IT Act,or ii)Failure of the assessee to disclose fully and truly allmaterial facts necessary for assessment for the particularassessment year. 6.1The Explanation-1 circumscribes the aforesaid exception (ii) that if thematerial and account books produced by the assessee for the relevantassessment year are such where despite exercise of due diligence, theAssessing Officer could not discover escaped income then such disclosurewould not provide immunity to assessee from the clutches of Section 147 ofthe IT Act. 7.The reasons assigned by the Assessing Officer in Annexure P/7 dated04.02.2022 is that the material and accounts books furnished qua the relevantassessment year were insufficient despite exercise of due diligence to discoverescaped income. The contents of Explanation-1 to proviso of Section 147 ofthe IT Act vests the Assessing Authority with ample power to invoke Section147 of the IT Act qua assessment year more than four years old. 8.This Court cannot go into the sufficiency of reasons assigned speciallywhen the case is pending before the Assessing Authority to adjudicate upon inregard to alleged escaped income of year 2013-14. 9.Writ jurisdiction of this Court under Article 226 of the Constitution ofIndia or supervisory jurisdiction of this Court under Article 227 of theConstitution of India cannot be invoked to attack the sufficiency of thereasons assigned for re-opening of a case of escaped income so long as thepower exercised and the reasons assigned therefore are traceable to any statutory provision. Thus, it cannot be said that the impugned notice of theassessment and re-opening of the case u/S 147 of the IT Act is bereft ofjurisdiction. 10.In view of the above, this Court declines interference and relegates thepetitioner to avail the remedy of participating in the assessment proceedingspending before Assessing Officer or any other remedy available to him inlaw. 11.With the aforesaid liberty, the petition stands dismissed. (SHEEL NAGU) JUDGE (MANINDER S BHATTI) JUDGE YS statutory provision. Thus, it cannot be said that the impugned notice of theassessment and re-opening of the case u/S 147 of the IT Act is bereft ofjurisdiction. 10.In view of the above, this Court declines interference and relegates thepetitioner to avail the remedy of participating in the assessment proceedingspending before Assessing Officer or any other remedy available to him inlaw. 11.With the aforesaid liberty, the petition stands dismissed. (SHEEL NAGU) JUDGE (MANINDER S BHATTI) JUDGE YS Digitally signed by YOGESH KUMAR SHIRVASTAVA Date: 2022.06.16 12:06:03 +05'30'