Kerala High Court
G. Sukesh vs Deputy Commissioner Of Income-Tax on 22 February, 2001
Equivalent citations: [2001]252ITR230(KER)
Author: M. Ramachandran
Bench: M. Ramachandran
JUDGMENT M. Ramachandran, J.
1. Exhibit P-6 series issued by the Deputy Commissioner of Income-tax, Trivandrum, is challenged by the petitioner, who is an assesses. These are notices issued under Section 148 of the Income-tax Act, 1961, for the assessment years 1994-95, 1995-96, 1996-97, 1997-98 and 1998-99 and were issued between November 15, 2000 and December 13, 2000. On receipt thereof, the petitioner had requested the officer to furnish the reasons for resorting to such a step. By reply he was made known that when open enquiry had been made with the petitioner's creditors, it had been revealed that there was no full disclosure, and circumstances were there to reopen the assessments. It has also been revealed in the original petition that the Deputy Director (Investigation) had been making certain enquiries in the matter.
2. The attack is on two grounds. At least some of the notices, according to him, are time barred. It is further averred that the precondition for conferring jurisdiction on the first respondent was absent; there should have been definite reason for him to believe that income chargeable had escaped assessment. Mr. Pandalai, counsel for the petitioner, submits that this was not there, and the statute did not permit the Revenue to go on a fishing expedition, and it did not entitle them to reopen the assessments finalised. It was also stated that for two years, the assessment was completed after scrutiny, under Section 143(3) of the Act. The steps, accordingly, were to be quashed, and there were no bona fides in the attempt.
3. These submissions are refuted by Sri George, standing counsel for the Revenue. He refers to the position that the law on the subject has substantially changed from April 1, 1989. Sections 147 and 148 have been recast, and what is relevant is only a subjective satisfaction. Section 147 begins with the words "If an Assessing Officer has reason to believe that any chargeable income has escaped assessment" and this connotes a substantial change from the position that was existing before. Therefore, the proceedings were valid, and beyond challenge, and what has been given is an opportunity for the assessee to respond positively. Therefore, according to him, the proceedings are premature. Reference had also been made by him to reported decisions, which indicated that issue of limitation in such matters did not merit examination by the High Court in exercise of powers under Article 226 of the Constitution of India. He had relied on the decision reported in S.S.V. Kumar v. CIT [1993] 203 ITR 374 (Ker).
4. On an examination of the matter, I have to agree with counsel for the Revenue that the writ petition is premature. It is also too early for anybody to pronounce that the Assessing Officer had no business or reason to believe that income had escaped assessment. The section gives power to assess or reassess such income or any other income chargeable to tax which has escaped assessment and which comes to his notice subsequently in the course of proceedings, under the section. The petitioner is, therefore, not justified in submitting that all definite figures should be with the officer, well before hand, and then only notice is contemplated. The expression, "in the course of proceedings" is wide in its amplitude, and it will therefore be proper to conclude that the information at the time of issuing notice need not be complete and accurate.
5. Also there is power to recompute the loss or depreciation allowance, or any other allowances, and these are pointers to indicate that the reassessment can be thorough and complete. The Explanation to the section also suggest to the wide power and discretion. When an assessee makes a declaration of his income, and verifies particularly to its correctness, he has to stand by the same, and cannot object to the Department pointing out that from the materials collected, there appears to be an error in the returns. The sanctity of a return becomes susceptible to acid tests when the Assessing Officer stumbles on materials indicating that the returns were not true as is claimed. An opportunity is given for making a clean breast of affairs, and one need not be apprehensive unless he has skeletons in his cupboard. I may quote from the decision of the Supreme Court in Phool Chand Bajrang Lal v. ITO [1993] 203 ITR 456 (page 478) as following :
"One of the purposes of Section 147 appears to us to be to ensure that a party cannot get away by wilfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn around and say 'you accepted my lie, now your hands are tied and you can do nothing'. It would be a travesty of justice to allow the assessee that latitude".
6. As reliable evidence has come to the possession of the officer as he claims, the background for a reassessment has been set. It is for the asses-see to utilise the opportunity offered.
7. In the aforesaid circumstances, I am not interfering in the proceedings now. I also record the statement of counsel for the Revenue that in case there is a reassessment and fresh orders, coercive steps will not be straightaway resorted to.
8. The original petition is, therefore, dismissed.