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Judgment
Akil Kureshi, J.—This petition is filed by an Assessee praying for quashing and setting aside notice annexure E dated 29th March 2010 issued by the Assessing Officer, seeking to reopen assessment of the assessment year 1996-97 in the following factual background.
The Petitioner is a proprietary concern and is engaged in the business of construction and other related activities. For the assessment year 1996-97, the Petitioner filed return of income on 30th October 1996 declaring total income of Rs. 4,79,460/-. The return was taken in scrutiny and assessment order was passed u/s 143(3) of the Income Tax Act (''the Act'' for short) on 26th March 1999. The Assessing Officer ruled against the Petitioner-Assessee on several contentious issues. In particular, Assessing Officer made addition of Rs. 37,79,713/- in the income of the Assessee towards "unaccounted receipt in the invoice of sale/on-money receipt". The Petitioner carried the matter in appeal before the CIT(Appeals), who by order dated 31st March 2000 allowed the appeal.
By an order dated 4th January 2008, the Tribunal remanded the matter back to the CIT (Appeals) for passing a speaking order with respect to certain deposits. However, the issue of addition of unaccounted receipt of Rs. 37,79,713/- was sent back to the Assessing Officer for verification of 17 depositors who had made deposits for booking flats, shops, offices, etc. Relevnt portion of the order of the Tribunal reads as under:
As is seen from the above finding of the CIT(A), it is clear that all the seventeen customers who have deposited money with the Assessee for purchase of the premises are identifiable. As these five persons who have denied on-money but they could not prove the withdrawals and the purpose of withdrawal, in the absence of these, the CIT(A) should not have deleted the addition rather should have remitted the matter to the file of Assessing Officer. In view of the above, we feel that the issue requires verification. Therefore, we set aside this issue to the file of Assessing Officer for verification on the issues mentioned below:
(i) to examining the depositors who has deposited the advance for purchase of premise; (ii) the Assessing Officer should examine the price prevailing in the same locality; (iii) the instances which are comparable to the present premises, and (iv) referring the matter to the valuer for proper valuation of the property in respect to the order of the CIT(A).
The Assessee is directed to cooperate with the Department and produce all the depositors as and when directed by the Assessing Officer. The Assessing Officer shall give fair and adequate opportunity of being heard to the Assessee.
In the result, Revenue''s appeal stands partly allowed in the manner indicated above.
It is the case of the Assessee that upon such remand, the Assessing Officer instead of confining himself to the question of addition of Rs. 37,79,713/-, went beyond the order of the Tribunal and undertook the exercise of finding out the fair market value of the property in question. However, since the valuer''s report was not available till 29th December 2009 when the order was passed, he did not pursue this issue, but independently upheld the addition of advance from purchases of flats to the extent of Rs. 37,79,713/-.
After thus having passed the assessment order upon remand from the Tribunal, the Assessing Officer, issued a fresh notice u/s 148 of the Act on 29th March 2010 seeking to reopen the assessment previously framed. It is this notice that the Petitioner-Assessee has challenged in this petition.
The reasons recorded by the Assessing Officer for reopening the assessment were communicated to the Petitioner. Such reasons read as under:
In this case, return of income was filed on 30.10.1996 declaring total income of Rs. 4,79,460/-. The same was processed u/s 143(1)(a) of the I.T. Act. Order u/s 143(3) was passed on 26.3.99 determining total income at Rs. 64,45,473/-. Additions were made on account of,
i) Unsecured loan Rs. 13,37,000
ii) Unaccounted receipt in the invoice of sale/on money receipt Rs. 37,79,713
iii) Non genuine exp. of lift Rs. 2,50,000
iv) Undervaluation of closing stock Rs. 5,99,300
Aggrieved by the order, Assessee preferred an appeal. CIT(A), vide his order No. CAB/I-77/99-2000 dt. 31.3.2000 deleted all the additions.
Aggrieved by the order of CIT(A)-I, Baroda, Department filed an appeal before ITAT. Hon''bel ITAT, vide its order No. ITA No. 1612/Ahd/2000 dt. 4.1.2008 set aside the issue regarding deletion of addition of Rs. 37,79,713/- by the CIT(A) to the file of the Assessing Officer for verification on the issues mentioned below:
i) to examine the depositors who has deposited for purchase of premise, (ii) to examine the price prevailing in the same locality, (iii) the instances which are comparable to the present premises and (iv) referring the matter to the valuer for proper valuation of the property in respect to the order of the CIT(A).
Assessee is carrying out construction business under the name and style of M/s. Shakti Construction Co. Assessee has shown construction receipts of Rs. 58,86,570/- and net profit is shown at Rs. 4,51,486/-. The profit from construction activity is 7.66%. During the course of original assessment proceedings, books of accounts were rejected u/s 145(2) of the I.T. Act and unaccounted receipt in the invoice of sale/non-money receipt was determined at Rs. 37,79,713/-.
As per the direction of the ITAT, a notice u/s 143(2) and u/s 142(1) was issued to the Assessee on 5.10.2009.
The immovable property was referred to the Valuation Officer vide this office letter dated 13.10.2009 and 16.1.2009 to arrive at fair market value. Reminder was issued on 11.12.2009 for expediting the report called for in view of the matter getting barred by limitation on 31.12.2009. However, no report was received till 29.12.2009 and accordingly, assessment was finalized u/s 143(3) r.w.s. 254 and 145(3) of the I.T. Act, 1961 on the basis of the details furnished during the course of assessment proceedings and the details available on records, and additional consideration in the form of on-money in addition to sale consideration recorded in his regular books received by the Assessee, is valued at Rs. 37,79,713/-. As per the valuation report, the costing details as on 31.3.96 is arrived at Rs. 2,37,14,700.
Therefore, it is believed that the income to the extent of Rs. 2,37,14,700 + as per valuation report, chargeable to tax has escaped assessment with the meaning of Section 147 of the I.T. Act for A.Y.1996-97 and I am satisfied that this is a fit case for issuance of notice u/s 148 of the Act.
The Petitioner raised objection to such re-opening vide his communication dated 25th November 2010 raising several contentions including that valuation report was obtained after completion of the assessment. Such report cannot be made basis for reopening completed assessment proceedings. It was contended that notice u/s 148 of the Act could not have been issued in view of the provisions contained in Section 149(1)(b) of the Act after a lapse of more than six years from the end of assessment year in question.
The objections of the Petitioner were disposed of by the Assessing Officer by order dated 9.12.2010. With respect to the objection on limitation for issuance of the notice, the Assessing Officer recorded that this is a case where previous assessment was set aside and finalized after six years of the relevant assessment and further that notice u/s 148 was issued after obtaining necessary satisfaction of the Commissioner of Income Tax. The Petitioner has, therefore, approached this Court challenging the notice of reopening.
In response to the notice issued, the Respondents have appeared and filed affidavit in reply contending, inter alia, that the Tribunal had restored the issue regarding addition of Rs. 37,79,713/- to the file of the Assessing Officer. As per the direction of the Tribunal, question of valuation of immovable property was referred to the Valuation Officer to arrive at a fair market value. Despite reminders, such report was not available from the Valuer till 29th December 2009. Since the assessment was getting time-barred on 31st December 2009, order of assessment was passed on 29th December. The valuation report was received on 31st December 2009 in which total value of the property was estimated at Rs. 2,37,14,700/-. The Assessing Officer, therefore, believed that the income chargeable to tax has escaped assessment. Notice for reopening of assessment was, therefore, issued.
In the above factual background, learned advocates appearing for the parties have made submissions before us for final disposal of the petition.
Learned Counsel Shri Shah appearing for the Petitioner focused mainly on the power of the Assessing Officer to reopen the assessment in view of the provisions contained in Sections 147, 148 and 149 of the Act. He primarily contended that once the assessment was framed pursuant to the order of the Tribunal, there was no scope thereafter to reopen such assessment, that too beyond a period of six years from the end of the relevant assessment year.
Though counsel also fleetingly touched the question whether the assessment order passed by the Assessing Officer could be stated to be pursuant to the directions issued by the Tribunal, he did not press this argument in service. Equally, though the counsel briefly touched on the question of interpretation of Sub-section (2) of Section 150 of the Act, namely, whether even for the purpose of making an assessment or re-assessment to give effect to any finding or direction of any authority or court, question of limitation would arise or not. However, this question also, the counsel did not press. Even otherwise such questions do not arise before us since it is not the order of the Assessing Officer dated 29.12.2009 which is in challenge before us but the notice of reopening the assessment. We have, therefore, proceeded on the basis that the order of assessment passed by the Assessing Officer on 29th December 2009 was for giving effect to the Tribunal''s order in appeal and further that such order was validly passed in terms of Sub-section (1) of Section 150 of the Act.
On the other hand, counsel for the Revenue submitted that the Assessing Officer passed an order on 29th March 2010 framing fresh assessment to give effect to the Tribunal''s directions. Though Valuer''s report was called for at that time, the same was not being made available. In the meantime, the assessment was getting time-barred on 31st December 2009. Once the Valuer''s report was available, the Assessing Officer realized that there is considerable gap in the valuation of the property. He, therefore, found that income chargeable to tax escaped assessment.
Counsel further submitted that in any case, the Petitioner has approached this Court at notice stage. He has an equally efficacious alternative remedy. This writ petition, therefore, should not be entertained.
Having thus heard the learned Counsel for the parties and having perused the documents on record, we may note that the central issue that calls for consideration is whether, in the facts of the case, the Assessing Officer had the authority and jurisdiction to issue notice of reopening of the assessment. Answer to such question would depend on the combined effect of the provisions contained in Sections 147, 148, 149 and 150 of the Act.
Section 147 of the Act, as is well known, pertains to the power of the Assessing Officer to assess or reassess any income which has escaped assessment. In short, it provides that if the Assessing Officer has reason to believe that any income chargeable to tax escaped assessment for any assessment year, he may subject to the provisions of Sections 148 to 153, assess or reassess such income and also any other income chargeable to tax which has escaped assessment. Section 148 of the Act pertains to issuance of notice where the Assessing Officer is of the opinion that any income chargeable to tax has escaped assessment. Sub-section (1) of Section 148 in particular provides that before making the assessment, reassessment or recomputation u/s 147, the Assessing Officer shall serve on the Assessee a notice requiring him to furnish within such period as may be specified in the notice a return of his income or the income of any other person in respect of which he is assessable under the Act. Section 149 of the Act lays down the time limit for issuance of such notice u/s 148 of the Act. Section 149 reads as under:
149(1) No notice u/s 148 shall be issued for the relevant assessment year -
(a) if four years have elapsed from the end of the relevant assessment year, unless the case falls under Clause (b);
(b) if four years, but not more than six years, have elapsed from the end of the relevant assessment year unless the income chargeable to tax which has escaped assessment amounts to or is likely to amount to one lakh rupees or more for that year.
Explanation - In determining income chargeable to tax which has escaped assessment for the purpose of this Sub-section, the provisions of Explanation 2 of Section 147 shall apply as they apply for the purposes of that section.
(2) The provisions of Sub-section (1) as to the issue of notice shall be subject to the provisions of Section 151.
(3) If the person on whom a notice u/s 148 is to be served is a person treated as the agent of a non-resident u/s 163 and the assessment, reassessment or recomputation to be made in pursuance of the notice is to be made on him as the agent of such no n-resident, the notice shall not be issued after the expiry of a period of two years from the end of the relevant assessment year.
Section 150 of the Act pertains to the provision for cases where assessment is required to be made in pursuance of an order on appeal, reference or revision, etc. Section 150 reads as follows:
150.(1) Notwithstanding anything contained in Section 149, the notice u/s 148 may be issued at any time for the purpose of making an assessment or reassessment or recomputation in consequence of or to give effect to any finding or direction contained in an order passed by any authority in any proceeding under this Act by way of appeal, reference or revision or by a Court in any proceeding under any other law.
(2) The provision of Sub-section (1) shall not apply in any case where any such assessment, reassessment or recomputation as is referred to in that Sub-section relates to an assessment year in respect of which an assessment, reassessment or recomputation could not have been made at the time the order which was the subject-matter of the appeal, reference or revision, as the case may be, was made by reason of any other provision limiting the time within which any action for assessment, reassessment or recomputation may be taken.
Section 153 of the Act pertains to time limit for completion of assessment and re-assessment. It is not necessary to reproduce the entire section. Suffice it to say that Sub-section (1) thereof, provides for time limit for completion of assessment beyond which period, the assessment would be time-barred.
The question that we need to decide in the present petition is whether, having undertaken the exercise of reassessing the income of the Assessee u/s 150 of the Act, to give effect to the directions of the Tribunal and having finally passed the order, was it permissible for the Assessing Officer to reopen such assessment, that too, several years after the end of completion of period of six years from the end of assessment year in question.
Chapter XIV of the Act pertains to procedure for assessment and starts with Section 139 of the Act. Section 139 of the Act pertains to return of income which every person, company, etc. is duty bound to file if assessable to tax. Section 142 of the Act pertains to inquiry before assessment. Section 143 pertains to assessment and lays down the procedure for the Assessing Officer to frame assessment. Section 144 pertains to best judgment assessment.
From the above provisions contained in Chapter XIV of the Act, in particular, Sections 147, 148, 149 and 150 of the Act, we may discern that for reopening assessment already framed, there are certain restrictions and limitations provided in the statute. Proviso to Section 147 provides for a time limit of four years from the end of expiry of the assessment year unless the Assessing Officer has reason to believe that any income chargeable to tax has escaped assessment by reason of failure on part of the Assessee to make a return u/s 139 or in response to the notice u/s 142(1) or u/s 148 or to disclose fully and truly all material facts necessary for assessment.
Sub-section (1) of Section 148 envisages issuance of notice before reopening of the assessment u/s 147. Sub-section (1) of Section 149 lays down the time limit for issuance of such notice. We may recall that ordinarily such notice has to be issued within four years from the end of the relevant assessment year unless the case falls under Clause (b) of Sub-section (1) of Section 149. Clause (b) of Sub-section (1) of Section 149 permits issuance of notice beyond four years but within six years from the end of the relevant assessment year and that too in a case where income chargeable to tax escaped assessment is likely to be more than one lakh rupees. Thus, for reopening of any assessment already framed, except in respect of the cases specified in Section 150 of the Act, the Assessing Officer is required to issue notice for reopening in any case not later than six years from the end of the relevant assessment year.
Section 150 of the Act provides an exception to this rule and permits making of assessment or re-assessment or recomputation to give consequential effect to any finding or direction contained in order passed by any authority under the Act by way of appeal, reference or revision or by a court in any proceedings under any other law. Sub-section (1) of Section 150 is a non-obstante clause and states that notwithstanding anything contained in Section 149, notice u/s 148 may be issued at any time for the above purposes.
We may notice that reopening of assessment is envisaged u/s 147 or to the extent provided in Section 150. As already noticed, reassessment or reopening of assessment u/s 147 is governed by the provisions of Section 148 and 149 of the Act and reopening would be permissible only within six years from the end of the relevant assessment year and not beyond. On the other hand, Sub-section (1) of Section 150 of the Act obviates the requirement of adhering to the time limit specified in Section 149 if the case falls within the parameters of said section. Other than these provisions, no provision has been pointed out to us where assessment can be reopened. We are conscious that for the period prior to 1st April 2003, Chapter XIV B of the Act contains special provisions for assessment of search cases and for the period post 1.4.2003, provisions have been made in Chapter XIV itself in the form of Section 153A onwards making special provisions for assessment in case of search or requisition. Such assessment proceedings cannot be confused with reopening u/s 147 of the Act of a closed assessment. In any case, in the present case, we are not concerned with such eventuality.
In short, we are of the opinion that an assessment already framed can be reopened provided it fulfills the statutory requirements. If it is sought to be reopened u/s 147 of the Act on the basis of Assessing Officer''s belief that any income chargeable to tax escaped assessment, it must fulfill the requirements of Section 148 and 149 of the Act. Any assessment or reassessment or recomputation of income in exercise of powers under Sub-section (1) of Section 150 of the Act, on the other hand, does not have to adhere to the time limit specified in Section 149 of the Act.
It was precisely for this reason, the Assessing Officer could frame an assessment on 29th December 2009 for the assessment year 1996-97 without having to worry about completion of six years from the end of assessment year in question since the Assessing Officer was giving effect to the Tribunal''s direction. Once having framed such assessment, he could not have thereafter reopened it without fulfilling the requirement of Section 148 and 149 of the Act. In other words, in order to reopen an assessment already framed by him, he had to be within the statutory time limit for issuance of notice specified in Section 149 of the Act. We do not see how, in any other manner the Assessing Officer would derive power to reopen the assessment already framed. To accept the stand of the Revenue would amount to giving unlimited power to the Assessing Officer to reopen an assessment order passed under Sub-section (1) of Section 150 of the Act without any time frame.
There is yet another reason why we are inclined to take this view. The Assessing Officer was of the opinion that the assessment would get time barred if final order is not passed by 31st December 2009. Counsel for the Petitioner, however, raised some doubt with respect to this belief. He referred to the provisions contained in Section 153 and in particular Sub-section (2A) and (3) thereof to contend that since the Tribunal had not set aside or cancelled the entire assessment, the case would fall under Sub-section (3) of Section 153 and no time limit would apply. We are, however, not confronted with this controversy. We proceed on the basis that the Assessing Officer was of the opinion that time limit was getting over on 31st December 2009.
Permitting the Assessing Officer to reopen an assessment already framed, which if he had not done in time would have been rendered time barred, that too several years after completion of six years from the end of relevant assessment year, in our opinion, is not supported by any statutory provisions.
This brings us to the question of alternative remedy raised by the counsel for the Revenue. It is by now well settled that writ jurisdiction is essentially a discretionary jurisdiction. It is often stated that writ may not be issued only because it is lawful to do so. Such discretion, however, is governed by well laid down principles and self imposed restrictions by the courts. One such ground on which the court may refuse to entertain a writ is availability of equally efficacious alternative remedy particularly if it is a statutory remedy. This again is never considered as an absolute bar and is in the nature of self imposed restriction. Such restriction, however, may not be applied if the remedy is found to be illusory, onerous or burdensome. To this rule, there are certain exceptions carved out through judicial pronouncements. Even if alternative efficacious remedy is available, the Court may entertain a writ petition if, for example, it is pointed out that there is breach of fundamental rights or that there is total violation of principles of natural justice or that action or order of the authority is shown to be inherently lacking in jurisdiction.
In the case of Calcutta Discount Company Limited Vs. Income Tax Officer, Companies District, I and Another, the Apex Court observed that existence of alternative remedy is not always a sufficient reason for refusing a party quick relief by prohibiting the authority acting without jurisdiction from continuing such action. It was held and observed:
Mr. Sastri mentioned more than once the fact that the company would have sufficient opportunity to raise this question, viz., whether the income tax Officer had reason to believe that under assessment had resulted from non-disclosure of material facts, before the income tax Officer himself in the assessment proceedings and if unsuccessful there before the appellate officer or the appellate tribunal or in the High Court u/s 66(2) of the Indian income tax Act. The existence of such alternative remedy is not however always a sufficient reason for refusing a party quick relief by a writ or order prohibiting an authority acting without jurisdiction from continuing such action.
In the present case the company contends that the conditions precedent for the assumption of jurisdiction u/s 34 were not satisfied and came to the court at the earliest opportunity. There is nothing in its conduct which would justify the refusal of proper relief under Article 226. When the Constitution confers on the High Courts the power to give relief it becomes the duty of the courts to give such relief in fit cases and the courts would be failing to perform their duty if relief is refused without adequate reasons. In the present case we can find no reason for which relief should be refused.
24.1 In the case of A.V. Venkateswaran, Collector of Customs, Bombay Vs. Ramchand Sobhraj Wadhwani and Another, the Apex Court observed that the rule that the party who applies for issuuance of writ should, before he approaches the Court have exhausted other remedies is not one which bars the jurisdiction of the High Court to entertain a petition or to deal with it, but is rather a rule which courts have laid down for the exercise of their discretion.
24.2 In the case of State of Madhya Pradesh Vs. Bhailal Bhai and Others, the Apex Court held and observed as under:
At the same time we cannot lose sight of the fact that the special remedy provided in Article 226 is not intended to supersede completely the modes of obtaining relief by an action in a civil court or to deny defences legitimately open in such actions. It has been made clear more than once that the power to give relief under Article 226 is a discretionary power. This is specially true in the case of power to issue writs in the nature of mandamus. Among the several matters which the High Courts rightly take into consideration in the exercise of that discretion is the delay made by the aggrieved party in seeking this special remedy and what excuse there is for it. Another is the nature of controversy of facts and law that may have to be decided as regards the availability of consequential relief. Thus, where, as in these cases, a person comes to the court for relief under Article 226 on the allegation that he has been assessed to tax under a void legislation and having paid it under a mistake is entitled to get it back, the Court, if it finds that the assessment was void, being made under a void provision of law, and the payment was made by mistake, is still not bound to exercise its discretion directing repayment. Whether repayment should be ordered in the exercise of this discretion will depend in each case on its own facts and circumstances. It is not easy nor is it desirable to lay down any rule for universal application. It may however be stated as a general rule that if there has been unreasonable delay the Court ought not ordinarily to lend its aid to a party by this extraordinary remedy of mandamus. Again, where even if there is not such delay the Government or the statutory authority against whom the consequential relief is prayed for raises a prima facie triable issue as regards the availability of such relief on the merits on the grounds like limitation the Court should ordinarily refuse to issue the writ of mandamus for such payment. In both these kinds of cases it will be sound use of discretion to leave the party to seek his remedy by the ordinary mode of action in a civil court and to refuse to exercise in his favour the extraordinary remedy under Article 226 of the Constitution.
24.3 In the case of Dr (Smt.) Kuntesh Gupta Vs. Management of Hindu Kanya Mahavidyalaya, Sitapur (U.P.) and Others, the Apex Court observed as under:
The next question that falls for our consideration is whether the High Court was justified in dismissing the writ petition of the Appellant on the ground of availability of an alternative remedy. It is true that there was an alternative remedy for challenging the impugned order by referring the question to the Chancellor u/s 68 of the U.P. State Universities Act. It is well established that an alternative remedy is not an absolute bar to the maintainability of a writ petition. When an authority has acted wholly without jurisdiction, the High Court should not refuse to exercise its jurisdiction under Article 226 of the Constitution on the ground of existence of an alternative remedy. In the instant case, the Vice-Chancellor had no power of review and the exercise of such a power by her was absolutely without jurisdiction. Indeed, the order passed by the Vice-Chancellor on review was a nullity; such an order could surely be challenged before the High Court by a petition under Article 226 of the Constitution and, in our opinion, the High Court was not justified in dismissing the writ petition on the ground that an alternative remedy was available to the Appellant u/s 68 of the U.P. State Universities Act.
24.4 In the case of Whirlpool Corporation Vs. Registrar of Trade Marks, Mumbai and Others, the Apex Court observed as under:
Much water has since flown beneath the bridge, but there has been no corrosive effect on these decisions which, though old, continue to hold the field with the result that law as to the jurisdiction of the High Court in entertaining a writ petition under Article 226 of the Constitution, in spite of the alternative statutory remedies, is not affected, specially in a case where the authority against whom the writ is filed is shown to have had no jurisdiction or had purported to usurp jurisdiction without any legal foundation.
24.5 In the case of Veeri Chettiar v. S.T. Officer, Bombay, AIR 1971 Mad 155, the Madras High Court turned down the objection to the writ petition on the ground of availability of alternative remedy making following observations:
We shall immediately dispose of the contention regarding the maintainability of the writ petition. It is by now well settled that a writ of prohibition will issue in a case where it has been reasonably established that the assessing authority or the authority which issues the impugned order acted without jurisdiction and without any necessary power statutorily derived, to act in the manner it did. It is fundamental to expect an assessing authority to find materials on which to act and which as it were forms the jurisdictional fact on the bed rock of which its exercise of power depends. An arbitrary and naked attempt on the part of the Revenue to attempt to bring to tax dealings which never took place and which have not been prima facie established to have taken place has to be checkmated even at its threshold of operation....
Under the circumstances, we are of the opinion that when we find that the Assessing Officer lacks jurisdiction to issue notice for reassessment, alternative remedy would not be a bar in entertaining this petition.
In the result, petition is allowed. Impugned notice dated 29.3.2010 is quashed. The petition is disposed of accordingly.