Kerala High Court
Trivandrum Club vs Asstt. Director Of Income Tax ... on 6 February, 2002
Equivalent citations: [2002]256ITR61(KER)
Author: J.B. Koshy
Bench: J.B. Koshy
JUDGMENT
J.B. Koshy J.
The petitioner is questioning exhibits P1 to P3 notices issued by the Income Tax Department for reopening the assessment under section 147 of the Income Tax Act, 1961. The petitioner is an assessee to income-tax since 1972-73. The petitioner claimed exemption from payment of tax on the basis of the doctrine of mutuality. It is the contention of the petitioner that the petitioner was giving the facilities to members and their families only. The petitioner's contention was upheld by this court in CIT v. Trivandrum Club (1989) 177 ITR 550 (Ker) in respect of the year 1974-75. During the course of reassessment proceedings for the assessment year 1992-93, the Income Tax Department found that there is a hall which is used for marriage purposes and the hall is booked by non-members also. The department came to the conclusion that it is hired out to non-members also and there are separate forms for booking the hall for members and non-members with separate rates of fees. That is called "Rules and conditions for hiring Sree Subramanya Hall, Trivandrum, by non-members of the club". Therefore, the earlier decision was not applicable. Based upon that, the subsequent years' assessments were also reopened. In view of the materials found out during the reassessment proceedings for the year 1992-93, notices were issued, exhibits P1 to P3, for reopening the assessment under section 147 for the assessment years 1989-90, 1990-91 and 1991-92. Section 148 deals with issuing of notice for reopening of assessment. Section 148 reads as follows :
"148. (1) Before making the assessment, reassessment or recomputation under section 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 this Act during the previous year corresponding to the relevant assessment year, in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed; and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139.
(2) The assessing officer shall, before issuing any notice under this section, record his reasons for doing so."
2. It is the contention of the petitioner that the Supreme Court in ITO v. Lakhmani Mewal Das (1976) 103 ITR 437 (SC) held that subsequent information regarding a loan taken by the assessee in a subsequent assessment year is not a sufficient cause for reopening the previous assessments. It is also stated that there should be reason for formation of the belief that there has been escapement of the income of the assessee from assessment and it must be held in good faith and should not be a mere pretence. It was pointed out by Sri George K. George that in Phool Chand Bajrang Lal v. ITO (1993) 203 ITR 456 (SC) during the course of assessment for a subsequent year information was received that they never lent money to any person during past years also and that constituted sufficient reason for reopening previous year's assessment also.
As far as this case is concerned, according to the department, during reassessment proceedings of 1992-93 assessment year, information was received that the hall was being given on rent for non-members also not only in 1992 but also for the previous years. It is not stated by the assessee that during the assessment years 1989-90, 1990-91 and 1991-92 also the hall was rented out to non-members as was done in 1992-93. In any event, that is a question of fact to be looked into. It is true that there should be bona fide reasons for re-opening the assessment. Whether it is sufficient or not is not a matter to be considered under article 226 of the Constitution. Exhibits P1 to P3 are only notices. It is for the assessee to impress upon the officer that there was no sufficient reason for reopening the assessment. Therefore, I am of the view that the matter has to be decided with the facts of the case in question and it is for the concerned officers and thereafter the appellate authority to find out whether there are sufficient reasons or not for reopening the assessment.
3. Learned counsel for the petitioner submitted that the writ petition was admitted in 1999. Since the matter was pending here for years, on the basis of the decision of the Patna High Court in Dhanaraj Singh and Co. v. CIT (1996) 218 ITR 312 (Pat) the matter should be decided herein. It is true that at this distance of time the petitioner cannot be non-suited for the availability of alternate remedy. The petitioner should be allowed time to file further reply before the Income Tax Officer. But, I am of the view that sufficiency of reasons for the Income Tax Officer to reassess the proceedings in view of the information received during the reassessment proceedings for the year 1992-93 is a matter which cannot be considered under article 226 or 227 of the Constitution of India before even an order is passed by the concerned officer at the notice stage. The Income Tax Officer has to decide the matter. Therefore, the petitioner is allowed to press his contentions before the Income Tax Officer and give additional reply, if any, within one month from today so that the jurisdictional objection raised by the petitioner can be considered by the Income Tax Officer. Since any observation made regarding the merits will affect the decision of the authorities, I refrain from making any observation regarding the merits of the matter. Therefore, without prejudice to the right of the petitioner to make objection before the authority concerned, I dispose of the original petition as I am of the view that the writ petition is not maintainable at this stage.
OPEN