Sujata Grover and Rohit Grover V. Commissioner of Income Tax, CC, Ludhiana

ITA/309/2011

AI Insights

The case involves two income tax appeals by Sujata Grover and Rohit Grover against the Commissioner of Income Tax, CC, Ludhiana, concerning the validity of reassessment orders under Section 147 read with Section 148 of the Income Tax Act, 1961. The primary legal question was whether the Tribunal was justified in affirming the reassessment made by the AO. The appellants argued that the AO lacked jurisdiction as there were no 'reasons to believe' that income had escaped assessment, given that their returns were filed on time and under process. However, the revenue contended that the returns were not filed by the due date with the correct jurisdictional officer, leading to a valid reassessment. The High Court dismissed the appeals, supporting the Tribunal's decision.

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 795788 (HC-MISC)
• Appeal Type: Others
• Pronouncement Date: 27-09-2013
• Assessment Year: misc
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Revenue
• Court: HIGH COURT
• Assessee Lawyers: DEEPAK AGGARWAL
• Keywords: Escape of income; Income Tax; Jurisdiction; Notice under section 148; Reassessment
• Section: 147; 148; 143(3); 132; 271(1)(b); 127; 260-A

Judgement Text

"I.T.A. No.309 of 2011 -1- IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH (1) I.T.A. No.309 of 2011. Decided on:-September 27, 2013. Sujata Grover. .........Appellant. Versus Commissioner of Income Tax, CC, Ludhiana. .........Respondent. (2) I.T.A. No.310 of 2011. Decided on:-September 27, 2013. Rohit Grover. .........Appellant. Versus Commissioner of Income Tax, CC, Ludhiana. .........Respondent. CORAM: Hon'ble Mr. Justice Rajive Bhalla Hon'ble Mr. Justice Dr. Bharat Bhushan Parsoon. ***** Present:- Mr. Deepak Aggarwal, Advocate for the appellant. Dr. Bharat Bhushan Parsoon, J These income tax appeals under Section 260-A of the Income Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document I.T.A. No.309 of 2011 -2- Tax Act, 1961 (for short, the Act) are directed against the orders dated 23.2.2011 (Annexure A-3) passed by the Income Tax Appellate Tribunal, Chandigarh “B” Benches (hereinafter referred to as, the Tribunal) in ITA No.1093 and 1094/CHD/2010 whereby adjudicatory jurisdiction of the Assessing Officer (hereinafter referred to as, the AO) for conducting proceedings under Section 147 read with Section 148 of the Act was affirmed. 2. Both these appeals are taken up together for adjudication as there is same question of law involved therein. 3. Substantial question of law posed in these appeals, is as under: “Whether in the present facts and circumstances of the case, the Ld. Tribunal was justified in terming the reassessment made by the Assessing Officer as valid?” 4. For convenience and clarity, facts are being taken from ITA No.309 of 2011. 5. Counsel for the appellant has been heard while going through the paper books. 6. The plea of the assessee is that the AO could not have assumed jurisdiction to initiate proceedings under Section 147 of the Act as there were no “reasons to believe” that income of the assessee had escaped assessment particularly when return of income had been filed in time and was under process. 7. The version of the revenue, however, is that the assessee had not furnished return of income for the assessment year 2006-07 by the due date, thus providing reasons to believe to the AO that income chargeable to tax had escaped assessment and thus the AO had found it a fit case for issuing notice under Section 148 of the Act. Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document I.T.A. No.309 of 2011 -3- 8. Evaluation of facts reveals that the assessee was being regularly assessed to income tax. Search operations under Section 132 of the Act were also carried out. Thereafter, case of the assessee was centralised under Section 127 of the Act by the Commissioner of Income Tax, Chandigarh to the office of the Assistant/Deputy Commissioner, Chandigarh. The assessee was thus well aware of the fact that the jurisdiction over her case was with the Assistant/Deputy Commissioner, Central Circle, Chandigarh. In fact, for the last many years, assessment was being finalised under Section 143(3) of the Act by the said officer. Moreover, the assessee during the course of search assessment proceedings before the Settlement Commissioner had also impleaded the said officer as the second party. 9. When return for the assessment year 2006-07 was not furnished by the due date, a notice under Section 142(1) of the Act was served upon the assessee on 2.1.2007 requiring the assessee to file the return of her income for the assessment year 2006-07 on or before 2.1.2007 but no compliance was made by the assessee and in fact, return was not filed. Consequently, recording reasons for re-opening the case, a notice under Section 148 of the Act was issued to the assessee on 24.3.2008. In response to the notice, the assessee came up with a plea that return of income for the assessment year 2006-07 had already been filed by her on 30.10.2006 with Range-IV, Chandigarh. It was found that the return had been filed surreptitiously to an office which had no connection with assessment of income of the assessee. 10. There is force in contention of the revenue that filing of return by the assessee with an office having no concern or connection with assessment of income of the assessee, in law was filing of no return, justifying action under Section 147 read with Section 148 of the Act. It was only after issuance of notice under Section 148 of the Act that the assessee had come up with a request to the competent officer for taking the said return of income as return of income of the assessee which was to be filed Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document I.T.A. No.309 of 2011 -4- with the said competent officer. The assessee filed balance sheet, profit and loss account and other relevant documents. Consequently, return of income of the assessee was received on transfer from the office of Assistant Commissioner of Income Tax, Circle-IV, Chandigarh to the assessment record of Central Circle-I, Chandigarh. It was only thereafter that assessment proceedings had started. 11. The AO in his order dated 31.12.2008 had pointedly noticed that the attitude of the assessee had continuously been non-cooperative and the assessee had willfully and intentionally filed her return of income for the assessment year 2006-07 with ITO Ward 4(4), Chandigarh whereas she was well aware that jurisdiction of her case was with Central Circle, Chandigarh. 12. Even thereafter, neither the assessee nor her authorised representative had been attending the proceedings. Resultantly, a penalty notice under Section 271(1)(B) of the Act was served upon the assessee for non-compliance with the requisite notices issued and served on her from time to time. It was later that the assessment proceedings were finalised. In short, assessment order dated 31.12.2008 of the AO has given details of the circumstances in which notice under Section 148 of the Act was issued to the assessee. 13. Vide order dated 1.6.2010, the CIT(A), rejected claim of the assessee that the AO was wrong in issuing notice under Section 148 of the Act. Conclusion of the CIT(A) rejecting claim of the assessee is to the following effect: “Admittedly the appellant had not filed her return of income before the Assessing Officer, though the appellant's case already stood transferred to Central Circle. The return of income was filed with Range-IV Chandigarh i.e. outside the jurisdiction. At the stage of recording reasons for issuing notice under section 148, the Assessing Officer should have genuine reasons to believe that income chargeable to tax has escaped assessment. Escapement of income at this stage need to be conclusively proved. If on the part of the Assessing Officer, it is Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document I.T.A. No.309 of 2011 -5- a honest belief and not mere suspicion that income chargeable to tax has escaped income then that will be a sufficient ground for issuing notice under section 148 of the Act. Therefore, I do not find any merit in the ground of appeal and the same is dismissed.” 14. Order passed by the CIT(A) qua issuance of notice under Section 148 of the Act by the AO was confirmed vide impugned order dated 23.2.2011 of the Tribunal. Relevant findings of the Tribunal contained in para 12 of the impugned order are reproduced as below: “On the appraisal of the facts of the present case, we find the assessee to have filed its return of income before Range 4, Chandigarh, though the jurisdiction of the case was, with Assessing Officer, Central Circle, Chandigarh. Though an application was claimed to be filed on 24.8.2007 for transfer of records from Ward 4, Chandigarh to Central Circle, Chandigarh but no evidence has been bought on record to prove the said transfer. The Assessing Officer, Central Circle, Chandigarh having jurisdiction over the assessee issued the notice u/s 148 of the Income Tax Act as no return of income was either filed or available with him. In the absence of the same, the Assessing Officer had reasons to believe that because of failure of the assessee to furnish the return, the income had escaped assessment for the captioned year.” 15. In para No.13, it was further observed by the Tribunal as under: “We uphold the reopening of the assessment u/s 147 of the Act that in the absence of any return of income, the Assessing Officer was under a bonafide reason to believe that the income in the hands of the assessee had escaped assessment. Accordingly, the provision of Explanation to section 2(a) to section 147 have been correctly invoked by the Assessing Officer in recording the reasons for reopening the assessment and issuing the notice u/s 148 of the Income Tax Act.” 16. Learned counsel for the assessee has not been able to unsaddle the concurrent finding of CIT(A) and the Tribunal, whereby invoking of jurisdiction under Section 148 of the Act by the AO, has been upheld. Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document I.T.A. No.309 of 2011 -6- 17. Sequelly, there is neither factual nor legal error in the findings recorded by the Tribunal. The substantial question of law is answered in favour of the revenue. 18. The appeals being devoid of merit are dismissed. (Dr. Bharat Bhushan Parsoon) Judge (Rajive Bhalla) Judge September 27, 2013 'Yag Dutt' 1. Whether Reporters of local papers may be allowed to see the judgment? 2. Whether to be referred to the Reporters or not? 3. Whether the judgment should be reported in the Digest? Yag Dutt 2013.11.06 11:38 I attest to the accuracy and integrity of this document "