SHRI. PRASANNA V GHOTAGE, V. THE DEPUTY COMMISSIONER OF

WP/109810/2016

AI Insights

The case involves two writ petitions filed by Shri Prasanna V Ghotage against the Deputy Commissioner and Assistant Commissioner of Income-Tax, challenging the notices issued for reopening the assessments for the years 2009-10 and 2010-11 under Section 148 of the Income Tax Act. The petitioner argued that the reassessments were beyond the statutory period and that the notices were issued without jurisdiction. However, the respondents provided evidence of under-invoicing related to illegal mining activities, which constituted a valid ground for reassessment. The court examined the sufficiency of the reasons for reopening the assessments and found them adequate, leading to the dismissal of the petitions.

• Counselvise Citation: [2016] 140 COUNSELVISE.COM (IT) 694190 (HC-KARNATAKA)
• Appeal Type: Others
• Pronouncement Date: 16-12-2016
• Assessment Year: misc
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: SHASHANK HEGDE; PRAMOD VAIDYA
• Keywords: Assessment Year; Escapement of income; Income Tax; Jurisdiction; Reassessment; Under invoicing; Writ petition
• Section: 147; 148; 144; 142(1); 153A; 139; 149; 226; 227

Judgement Text

" - 1 - IN THE HIGH COURT OF KARNATAKA DHARWAD BENCH DATED THIS THE 16TH DAY OF DECEMBER 2016 BEFORE THE HON’BLE MR. JUSTICE G.NARENDAR WRIT PETITION NO.109810/2016 (T-IT) & WRIT PETITION NO.109811/2016 (T-IT) IN W.P.No.109810/2016: BETWEEN SHRI PRASANNA V GHOTAGE, \"PRERANA HOMMES\", RANADE COLONY, HINDWADI, BELAGAVI-590006 ... PETITIONER (BY SRI.SHASHANK S.HEGDE & SRI.PRAMOD VAIDYA, ADVOCATES) AND 1. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, INICOME TAX OFFICE, UDUPI 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, 3RD FLOOR, INCOME TAX OFFICE, OPP CIVIL HOSPITAL, BELGAVI-590001 ... RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS OF THE PETITIONER'S CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF QUASH AND SET ASIDE THE NOTICE DATED 30.09.2015 ISSUED BY RESPONDENT NO.1 UNDER SECTION 148 OF THE ACT TO REOPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2009-10 ENCLOSED AND MARKED AS ANNEXURE- A AS ONE WITHOUT JURISDICTION AND CONSEQUENT ORDER PASSED BY THE RESPONDENT NO.2 DISPOSING OFF THE OBJECTIONS FILED BY THE PETITIONER VIDE ORDER DATED 28.10.2016 AS ANNEXURE-J. - 2 - IN W.P.No.109811/2016: BETWEEN SHRI PRASANNA V GHOTAGE, \"PRERANA HOMMES\", RANADE COLONY, HINDWADI, BELAGAVI-590006 ... PETITIONER (BY SRI.SHASHANK S.HEGDE & SRI.PRAMOD VAIDYA, ADVOCATES) AND 1. THE DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE-1, INICOME TAX OFFICE, UDUPI 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-1, 3RD FLOOR, INCOME TAX OFFICE, OPP CIVIL HOSPITAL, BELGAVI-590001 ... RESPONDENTS THIS WRIT PETITION IS FILED UNDER ARTICLES 226 AND 227 OF THE CONSTITUTION OF INDIA PRAYING TO CALL FOR THE RECORDS OF THE PETITIONER'S CASE AND AFTER EXAMINING THE LEGALITY AND VALIDITY THEREOF QUASH AND SET ASIDE THE NOTICE DATED 30.09.2015 ISSUED BY RESPONDENT NO.1 UNDER SECTION 148 OF THE ACT TO REOPEN THE ASSESSMENT FOR THE ASSESSMENT YEAR 2010-11 ENCLOSED AND MARKED AS ANNEXURE- A AS ONE WITHOUT JURISDICTION AND CONSEQUENT ORDER PASSED BY THE RESPONDENT NO.2 DISPOSING OFF THE OBJECTIONS FILED BY THE PETITIONER VIDE ORDER DATED 28.10.2016 AS ANNEXURE-J. THESE PETITIONS COMING ON FOR PRELIMINARY HEARING, THIS DAY, THE COURT MADE THE FOLLOWING: - 3 - O R D E R Heard the learned counsel for the petitioner. 2. The petitioners and respondents in both writ petitions are common and are preferred in respect of two assessment years, that is, 2009-10 and 2010-2011. 3. The petitioner is before this Court praying for issuance of writ of certiorari calling for the records pertaining to the notice dated 30.09.2015 [Annexure-A in both petitions] issued by the first respondent under the provisions of Section 148 of the Income Tax Act (for short hereinafter referred to as ‘the Act’) seeking to reopen and reassess the assessment in respect of the period 2009-10 and 2010-2011 and the order disposing off the petitioner’s objections dated 28.10.2016, vide annexures-J to both the writ petitions, whereby the objections to the notice came to be rejected by the second respondent. 4. It is contended on behalf of the petitioner that the assessment i.e., returns were filed for both the years - 4 - 2009-10 and 2010-2011 on 17.12.2009. The petitioner had furnished the income tax returns under Section 139 of the Act and that there was no suppression nor is it the case of the respondents that there is a failure on the part of the petitioner, on account of which the income chargeable to tax has escaped assessment or such assessment order is on account of the failure, that is attributable to the assessee. He further contended that the proceedings are time barred being beyond the period of four years as mandated under the proviso to Section 147 of the Act. 5. The petitioner, upon receipt of the notice under Section 148 of the Act, has by letters dated 28.9.2016 and 29.9.2016, sought for the reasons and copy of the note for reopening of the assessment in respect of the petitioner. The same came to be furnished to the petitioner vide Annexures-G to the petitions. It is recorded therein that the Assessee filed the Income Tax returns on 17/12/2009 declaring total income of Rs.7,18,04,530/- and Rs.4,84,79,010/- and an order of assessment under Section 144 read with Section 153A of the Act was completed on - 5 - 21/3/2014 assessing the total income at Rs.9,08,05,720/- and Rs.5,96,79,010/- respectively. While completing the assessment, the Assessing Officer had added an amount of Rs.1,90,01,189/- and Rs.1,00,00,000/- respectively, being the difference in total income declared and net profit of 4% p.a. worked out on the total turnover in the absence of any submission from the assessee regarding the claim of expenditure. 6. It is stated that subsequently, the committee [Justice M.B. Shah, Commission] which was appointed by investigate the illegal iron ore mining, submitted a report. It is further stated that as per the report submitted by the Commission, the petitioner has been accused of being involved in illegal mining and the material relied upon by the Commission disclose huge under invoicing in the sale of iron ore. The details of the invoices and the relevant invoices are also furnished and the invoices are dated 14/1/2009 to 25/9/2009 pertaining to the assessment year 2009-10. The reasons and the grounds on which the respondent authorities have arrived at the conclusion of - 6 - under invoicing is also furnished in the tabular column. Based on the comparative invoices in respect of the sales effected on the same day, the authorities have arrived at the conclusion. 7. The respondents have placed on record the materials that gave them the reason to believe that there is escapement of Income. The ground for re-assessment is “under-invoicing” which in the opinion of this Court is “sufficient reason” to believe that there is escapement of income. The sufficiency of reasons cannot be gone into in a writ proceedings. The contents of the Invoices have to be ascertained which is a factual issue and to be adjudicate after hearing the assessee. 8. Hence, prima-facie. no illegality can be attached to the reasoning of the assessing authority for arriving at a conclusion, that there has been under invoicing and consequent escapement of income. 9. Secondly, the other limb of contention that the reassessment is beyond the period of four years also is not - 7 - sustainable. A reading of the first proviso to Section 147 of the Act falsifies the contention. It clearly exempts the re- assessment proceedings on account of a failure on the part of the assessee to make a return or respond to a notice under section 142(1) or 148 of the Act or to disclose fully and truly all material facts necessary for his assessment, for that assessment year. Further a conjoint reading of the provisions of the third proviso, Explanation 2 of Section 147 r/w the provisions of Sections 148 and 149 of the Act, negates the assertion on behalf petitioner. 10. The said reasons have been assailed by way of filing of objection to reopening of the assessment for the assessment years 2009-2010 and 2010-2011. The objections have been dealt with in detail by the second respondent, and it is stated that in view of the subsequent facts, which came to light on account of the material provided by the Inquiry Commission, the authorities have acquired tangible materials and based on the material, they have prima facie arrived at a conclusion that the income has escaped assessment. Hence, they justified the - 8 - proceedings under Section 148 of the Act for reassessment of the income for the year 2009-10. The reasons accorded under the impugned order dated 28/10/2016 prima facie justifies the proceedings initiated for reassessment for the assessment year 2009-10. This Court in its exercise of Jurisdiction under Article 226 of the Constitution Of India cannot go into the sufficiency of the reasons, that is, examination of the Invoices, etc., being relied upon by the Respondents for the purpose of exercising jurisdiction under Sections 147 r/w 148 of the Act. It would result in this Court entering upon and adjudicating factual issues, which is the domain of the Respondents. This Court would look into the relevancy of the material relied upon and not into the sufficiency of the same. The expression “reasons to believe” indicates a satisfaction that is subjective in nature but such satisfaction must be arrived at and must be based on relevant material. The report by the Commissions and the various invoices relied upon, can by no stretch of imagination be described as irrelevant material. But the issue whether the said ‘relevant material’ are sufficient to actually re-assess and penalize the assessee can be arrived - 9 - at only after a through examination of the material and after opportunity to the party. Thus, the same is a fact finding exercise which this court ought not to enter in the exercise of its jurisdiction under Articles 226 of the Constitution of India. The reasoning of the authorities is sound and proper. There being no illegality, the writ petitions assailing the notice and the order on the objection is premature and the proceedings initiated under Section 148 of the Act are justified and do not call for interference at the hands of this Court. Petitions being devoid of merits are accordingly, rejected. Sd/- JUDGE Vnp*/Vmb "