DR. PRADEEP SIHARE V. INCOME TAX OFFICER and ANR.

WPT/7129/2008

AI Insights

The case involves Dr. Pradeep Sihare, who challenged the legality of notices issued by the Income Tax Department under various sections of the Income Tax Act, 1961, for the assessment years 2001-2002, 2002-2003, and 2003-2004. The petitioner argued that the notices were issued without jurisdiction and were barred by limitation, although the latter was not pressed during the proceedings. The core of the dispute was whether the Assessing Officer had the authority to issue a commission under Section 131 of the Act to the District Valuation Officer and whether there was a proper satisfaction recorded for reopening the cases under Section 147 of the Act. The respondents countered that a survey conducted in 2003 revealed discrepancies in the declared and assessed costs of construction, providing a valid reason to believe that income had escaped assessment.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 746911 (HC-CHHATTISGARH)
• Appeal Type: Others
• Pronouncement Date: 13-02-2025
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax Vs. Nevendram Ahuja, Assistant Commissioner of Income Tax Vs. Dhariya Construction Co., Income Tax Officer, Ward No.16(2) Vs. Techspan India Private Limited and another
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Department Lawyers: AJAY KUMRANI
• Assessee Lawyers: NEELABH DUBEY
• Keywords: Change of opinion; Jurisdiction; Limitation; Reopening of assessment; Survey; Tangible material; Valuation
• Section: 147; 148; 142(1); 143(2); 131; 133A

Judgement Text

"1 2025:CGHC:7230 NAFR HIGH COURT OF CHHATTISGARH AT BILASPUR WPT No. 7129 of 2008 1 - Dr. Pradeep Sihare, Aged About 53 Years, S/o Shri G.P Sihare, R/o Nirala Nagar, Bus Stand, Bilaspur (CG) ... Petitioner(s) versus 1 - Income Tax Officer, Ward -1(1), Mahima Complex, Vyapar Vihar, Bilaspur (CG) 2-Additional Commissioner of Income Tax, Range-1, Mahima Complex, Vyapar Vihar, Bilaspur (CG) ... Respondent(s) For Petitioner(s) : Mr. Neelabh Dubey, Advocate For Respondent(s) : Mr. Ajay Kumrani, Advocate on behalf of Mr. Amit Choudhary, Advocate SB.: Hon'ble Mr. Justice Deepak Kumar Tiwari Order On Board SHYNA AJAY Digitally signed by SHYNA AJAY Date: 2025.02.13 12:53:57 +0530 2 10/02/2025 1. The petitioner would assail the legality and validity of the Notice(s) issued under Section 148 of the Income Tax Act, 1961 (for short “the Act”) and subsequent notices issued under Section 143(2) and 142(1) of the Act as the same are issued without jurisdiction and also barred by limitation. 2. At the outset, learned counsel for the petitioner would submit that he would not press the ground of limitation. The only submission of learned counsel for the petitioner is that as no proceeding was pending relating to the Assessment Years 2001-2002, 2002-2003 and 2003-2004, the Assessing Officer had no jurisdiction to issue commission under Section 131 of the Act to the District Valuation Officer. He would further submit that a proper satisfaction was not recorded for reopening of the case under Section 147 of the Act in respect of the said Assessment Years. Therefore, on this score, the aforesaid notices are per se illegal as the same has been issued without proper application of mind by the Assessing Officer. For the above submisssion, learned counsel would place reliance on the matter of Commissioner of Income Tax Vs. Nevendram Ahuja, reported in MANU/MP/0162/2005. Learned counsel for the petitioner would submit that the powers have been used in an arbitrary manner as the Assessing Officer has only referred to the opinion of the DEO, which is per se not sufficient. For this proposition, learned counsel for the petitioner would place reliance on the matter of 3 the Assistant Commissioner of Income Tax Vs. Dhariya Construction Co., (2010) 328 ITR 515 (SC). He would further submit that for reopening of the case, while exercising powers under Section 147 of the Act, only change of opinion is not sufficient as there is no power of review of the income already assessed. However, the Assessing Officer has the power under the said Section to reopen assessment provided there is tangible material to come to the conclusion that there is escapement of income from assessment. Hence, the order passed by the Assessing Officer for reopening of the case is non-speaking and perfunctory in nature and further, the jurisdiction has also not been exercised in a proper manner. In view of the above submission, learned counsel would place reliance on the matter of Income Tax Officer, Ward No.16(2) Vs. Techspan India Private Limited and another, (2018) 6 SCC 685, in which, the following was held in para 14 to 17 : “14. The language of Section 147 makes it clear that the assessing officer certainly has the power to reassess any income which escaped assessment for any assessment year subject to the provisions of Sections 148 to 153. However, the use of this power is conditional upon the fact that the assessing officer has some reason to believe that the income has escaped assessment. The use of the words “reason to believe” in Section 147 has to be interpreted schematically as the liberal interpretation of the word would have the consequence of conferring arbitrary powers on the assessing officer who may even initiate such reassessment proceedings merely on his change of opinion on the basis of same facts and circumstances which has already been considered by him during the original assessment proceedings. Such could not be the intention of the legislature. The said provision was incorporated in the scheme of the IT 4 Act so as to empower the assessing authorities to reassess any income on the ground which was not brought on record during the original proceedings and escaped his knowledge; and the said fact would have material bearing on the outcome of the relevant assessment order.” “15. Section 147 of the IT Act does not allow the reassessment of an income merely because of the fact that the assessing officer has a change of opinion with regard to the interpretation of law differently on the facts that were well within his knowledge even at the time of assessment. Doing so would have the effect of giving the assessing officer the power of review and Section 147 confers the power to reassess and not the power to review.” “16. To check whether it is a case of change of opinion or not one has to see its meaning in literal as well as legal terms. The words “change of opinion” imply formulation of opinion and then a change thereof. In terms of assessment proceedings, it means formulation of belief by an assessing officer resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection.” “17. It is well settled and held by this Court in a catena of judgments and it would be sufficient to refer to CIT v. Kelvinator of India Ltd. (2010) 2 SCC 723, (2010) 320 ITR 561, wherein this Court has held as under: “5...… where the assessing officer has reason to believe that income has escaped assessment, confers jurisdiction to reopen the assessment. Therefore, post-1-4-1989, power to reopen is much wider. However, one needs to give a schematic interpretation to the words “reason to believe”…. Section 147 would give arbitrary powers to the assessing officer to reopen assessments on the basis of “mere change of opinion”, which cannot be per se reason to reopen.” 6. We must also keep in mind the conceptual difference between power to review and power to reassess. The assessing officer has no power to 5 review; he has the power to reassess. But reassessment has to be based on fulfilment of certain precondition and if the concept of “change of opinion” is removed, as contended on behalf of the Department, then, in the garb of reopening the assessment, review would take place.” 7. One must treat the concept of “change of opinion” as an in-built test to check abuse of power by the assessing officer. Hence, after 1-4-1989, assessing officer has power to reopen, provided there is “tangible material” to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.” 3. Per contra, learned counsel for the respondents would oppose the submissions of learned counsel for the petitioner and would submit that the concerned Officer was having jurisdiction under Sections 147 and 148 of the Act to initiate reassessment proceeding whenever the income has escaped assessment. He would submit that when a notice under Section 148 of the Act is issued, the assessee has the right only to seek a copy of the notice, which would explain the reasons behind issuing such notice. In the present case, on 29.8.2008, all the reasons have been disclosed to the assessee with regard to all the three relevant Assessment Years i.e. 2001-2002, 2002-2003 and 2003-2004 through a written communication. He submits that a Survey under Section 133A of the Act was conducted on 8.7.2003 in the professional premises of the assessee. During the course of survey, the assessee declared Rs.5 lakhs under the head construction of his nursing home as well as his residential unit. However, when the valuation was done through District Valuation Officer, a huge difference of income emerged and it was found that the 6 assessee has escaped the income and therefore, the notices have been issued. He would further submit that the assessee has raised objection for reopening of the aforesaid cases, however, the same has been decided by a speaking order dated 12.12.2008. He would lastly submit that a proper procedure has been followed by the Revenue and the proceeding is at the notice stage and moreover, the final order would be appealable under Section 246A of the Act. Hence, learned counsel for the respondents prays to dismiss the petition. 4. Heard learned counsel for the parties and also perused the documents annexed with the petition. 5. Admittedly, a Survey was conducted under Section 133 of the Act on 8.7.2003. During the said Survey, a report has been sought from the DEO with regard to construction of the Nursing Home as well as residential unit made by the assessee. From the report of the DEO, it has been revealed that certain unexplained amount of investment has been made. It was further revealed that the expenditure incurred shown by the assessee was much below the assessed cost of the construction. So considering this clear difference in the cost of construction, a reason to believe has been recorded by the Assessing Officer in respect of the subject Assessment Years and the case was reopened by exercising the powers vested in him under Section 147 of the Act. Even though the Assessee had raised objections for reopening, however, the same was turned down by a speaking order dated 12.12.2008. Thus, it is explicit that the Assessing Officer has recorded the reasons in view of the report 7 of the District Valuation Officer. Moreover, the Survey conducted reveals that the assessee has not truly disclosed his income chargeable to tax which has escaped assessment for the relevant Financial Years. 6. The case law (Nevendram Ahuja {supra}) which has been relied upon by learned counsel for the petitioner is distinguishable on facts. In the said case, there was no assessment proceeding pending with regard to the Assessment Year 1990-91 and the commission was issued prior to the commencement of the Assessment Year i.e. on 29.11.1989 and in such premise, it has been observed in para 15 therein that the Assessing Officer can issue a commission only if a proceeding is pending before him. 7. So far as the judgment in the matter of Techspan India Private Limited and another (supra) relied upon by learned counsel for the petitioner is concerned, in my view, the same is also of no help to the petitioner, inasmuch as, in the present case, a Survey was conducted, in which, the Assessing Officer has found sufficient tangible material for reopening of the case. In such circumstances, when the assessee has undervalued any income, the Assessing Officer has jurisdiction to take appropriate action by issuing commission. 8. For the foregoing reasons, this Court is of the opinion that the Assessing Officer has recorded his own valid and proper satisfaction for existence of reason to believe that the income of the relevant assessment years has escaped assessment. Thus, the notice cannot be treated to have been passed without jurisdiction. Even otherwise, the petitioner would get 8 full opportunity to raise his defence in the appellate proceedings. 9. Accordingly, the Petition being bereft of any merit is liable to be and is hereby dismissed. 10.It is made clear that any of the observations made in this order shall not come in the way of deciding the statutory appeal as in this petition, this Court, in its writ jurisdiction, has only examined the scope of interference. Sd/- (Deepak Kumar Tiwari) Judge Shyna "