Jasmine Towels Private Limited vs Commissioner of Income Tax

M. Jaichandren, J.—The main ground on which the Petitioner has challenged the notice, dated 30.03.2005, issued by the Respondent, u/s 148 of the Income Tax Act, 1961, is that the said notice had been issued by the Respondent without having the authority or the jurisdiction to issue such a notice, beyond the period of six years, prescribed u/s 147 of the Income Tax Act, 1961. Therefore, the proposal made by the Respondent to re-assess the income of the Petitioner under the ''escaped assessment'' category, within the meaning of Section 147 of the Income Tax Act, 1961, is not sustainable in the eye of law. The period of limitation prescribed by Section 147 of the Income Tax Act, 1961, may be applicable in cases of escaped assessment, when it is found to be due to the fault of the Assessee concerned. However, a reassessment cannot be done by the income tax authorities, if it cannot be shown that it had occurred due to the default of the Assessee concerned.

It has also been stated that the consequential reassessment made by the Respondent, on 24.03.2006, is also bad in law.

The learned Counsel appearing on behalf of the Petitioner had relied on the following decisions in support of his contentions:

1.Sadbhav Engineering Ltd. v. Deputy Commissioner Of income tax (OSD), Circle 8 & 1 (Special Civil Application No. 5846 of 2010 and Special Civil Application No. 5847 of 2010).

Fenner (India) Ltd. Vs. Deputy Commissioner of Income Tax, .

3 Commissioner of Income Tax and Anr. v. Foramer France (Civil Appeal Nos. 5269 to 5271 of 2001)

Thiagarajar Mills Private Limited (Formerly Known As Thiagarajar Mills Limited) Kappalur, Madurai - 625 008 v. Deputy Commissioner Of income tax, Company Circle - I, Madurai - 625002.(W.P. No. 35658 of 2003).

A counter affidavit has been filed on behalf of the Respondent, denying the averments made by the Petitioner, in his affidavit filed in support of the writ petition. It has been stated that the Petitioner is not entitled to challenge the notice issued by the Respondent, u/s 148 of the Income Tax Act, 1961. When a final order of assessment is passed, it would be open to the Petitioner to challenge the same, by way of filing an appeal, before the appropriate authority or forum, under the relevant provisions of the Income Tax Act, 1961. In support of the said contention, the learned Counsel, appearing on behalf of the Respondent, had relied on the decision of this Court, in Mavis Satcom Ltd. Vs. Deputy Commissioner of Income Tax, . While so, the present writ petition filed by the Petitioner is premature in nature and therefore, it is liable to be dismissed.

In view of the averments made in the affidavit filed in support of the writ petition and in view of the submissions made by the learned Counsels appearing on behalf of the parties concerned, and in view of the records available, as well as the decisions cited above, it is clear that the Respondent does not have the authority or the jurisdiction to cause a reassessment, within the meaning of Section 147 of the Income Tax Act, 1961, beyond the period of six years prescribed by the said Section.

The learned Counsel appearing on behalf of the Respondent has not been in a position to show that the Respondent has the power to cause such reassessment, beyond the period of six years prescribed, u/s 147 of the Income Tax Act, 1961. In such circumstances, this Court finds it appropriate to quash the impugned notice of the Respondent, issued u/s 148 of the Income Tax Act, 1961, and the consequential reassessment made by the Respondent, on 24.03.2006. Accordingly, the writ petition is allowed. No costs. Consequently, the connected Miscellaneous Petitions are closed.