Punjab-Haryana High Court
Amrinder Singh Dhiman vs Income-Tax Officer-Cum-Assessing ... on 4 September, 2003
Equivalent citations: (2004)192CTR(P&H)351, [2004]269ITR378(P&H)
Author: Hemant Gupta
Bench: Hemant Gupta
JUDGMENT Hemant Gupta, J.
1. Challenge in the present writ petition under Articles 226/227 of the Constitution of India is to a show cause notice dated April 30, 2001 (annexure P 11) issued to the petitioner in respect of the assessment year 1998-99 to the effect that income chargeable to tax has escaped assessment within the meaning of Section 147 of the Income-tax Act, 1961 (hereinafter to be referred to as "the Act").
2. The petitioner filed his return of income on October 31, 1998, for the assessment year 1998-99 relating to the previous year with effect from April 1, 1997, to March 31, 1998. The income-tax return included the income from house property, income from business and profession as well as audit report prescribed under Section 80HHC of the Act. The petitioner is engaged in the business of exporting goods outside the country.
3. The petitioner has alleged that he did not receive any intimation from the Department even after one year of the filing of the return. On June 16, 2000, the Assistant Commissioner of Income-tax, Jalandhar, intimated the petitioner that the return of income filed by him was defective for the reasons that the return and the computation of income are unsigned and that the original advance tax challan for Rs. 10,000 has not been furnished. The petitioner furnished requisite information within 10 days. But no order of assessment was communicated. Thus, the return filed by the petitioner would be deemed to be accepted. However, on April 30, 2001, the Assessing Officer issued notice under Section 148 of the Act to file return in the prescribed form on the ground that the income assessable, has escaped assessment within the meaning of Section 147 of the Act. The petitioner filed reply to the said notice and stated that the income-tax return has already been filed. Subsequently, the petitioner filed return of income showing the same income as was declared in the earlier return filed on October 31, 1998.
4. In response to the request of the petitioner to supply the reasons for initiating proceedings under Section 148 of the Act, the petitioner was informed on February 11, 2002 (annexure P 17) that he has not furnished information/ evidence with regard to the claim under Section 80HHC as sought for in the letter dated June 16, 2000. But the same was not furnished. Notice under Section 148 of the Act was issued for the reason as the petitioner has failed to furnish the necessary evidence to substantiate the deductions claimed. The petitioner has also alleged that earlier the Department has communicated on January 25, 2002, annexure P 15, that the case of the petitioner for the assessment year 1998-99 has been selected for scrutiny and sought detailed information on various accounts including the details of vehicles owned by the petitioner and his family members, details of immovable property, etc., etc.
5. The petitioner has thus filed the present writ petition challenging the issuance of show cause notice under Section 148 of the Act annexure P 11 as well as the information sought for by the Department vide communication dated January 25, 2002, annexure P 15.
6. The argument raised by learned counsel for the petitioner is that on filing of the return under Section 142 of the Act, the Assessing Officer could call upon the assessee within 12 months as provided under Section 143(2) of the Act to produce any evidence on which the assessee may rely in support of the return. Since the Assessing Officer has failed to issue any notice within 12 months, the returned income would be deemed to be accepted. The income is sought to be reassessed vide notice anneuxre P 11, dated April 30, 2001, of the reasons disclosed on February 11, 2002, that is in respect of the claim of the petitioner under Section 80HHC of the Act. Thus, the Department can seek information only in respect of the claim of the petitioner under Section 80HHHC and not in respect of other claims as fishing inquiry is sought to be made vide communication annexure P 15. Reliance was placed up on a Division Bench judgment of this court reported as Vipan Khanna v. CIT [2002] 255 ITR 220.
7. A perusal of the judgment cited shows that when proceedings under Section 147 of the Act are initiated the proceedings are open only qua items of underassessment. The finality of assessment proceedings on other issues remains undisturbed. It makes no difference whether the assessment proceedings have become final on account of framing of an assessment under Section 143(3) of the Act or on account of non-issue of a notice under Section 143(2) of the Act within the stipulated period. It has been found that general inquiry could only be made by the Assessing Officer by issuing a notice under Section 143(2) of the Act within the stipulated period. After the expiry of the stipulated period, the Assessing Officer cannot seek material unconnected for the reasons of reassessing the income.
8. In the present case as well the reasons for reassessment is in respect of the claim of the assessee under Section 80HHC of the Act. But the Department has sought information in respect of various other issues in respect of which the proceedings under Section 148 of the Act have not been initiated. Therefore, the respondents are not justified in calling upon the assessee to furnish information not connected with the reasons on the basis of which reassessment notice has been served on the assessee. It was so held by the Division Bench in Vipan Khanna's case [2002] 255 ITR 220 as follows (page 233) :
"From the letter dated July 30, 1998, it is evident that the Assessing Officer was seeking general information on other issues merely to verify the return. As already observed such general inquiry could only be made by issuing a notice under Sub-section (2) of Section 143 within the stipulated period which in the present case had already expired. Admittedly, it is not the case of the Revenue that during the course of proceedings under Section 147 of the Act it had come across any material relating to the items mentioned in the impugned letter dated July 30, 1998, suggesting escapement of income under any of those heads. In this view of the matter, the petitioner would be justified in claiming that the letter dated July 30, 1998, issued by the Assistant Commissioner is tantamount to making fishing inquiries on concluded matters unconnected with the issue on the basis of which proceedings under Section 147 had been initiated. This indeed is not permissible under the law."
9. In view of the above, the letter dated January 25, 2002, annexure P 15, issued by the Assessing Officer in so far as it relates to the matters unconnected with the claim of the petitioner of export under Section 80HHC cannot be sustained. The said letter to the extent it has sought for the information other than relating to export profit is without jurisdiction and set aside. The Assessing Officer cannot be allowed to make fishing inquiry to probe if any other income has escaped or not.
10. The Assessing Officer will now proceed with the assessment under Section 147 of the Act in accordance with the law. It is clarified that the Assessing Officer would be competent to frame assessment and to bring to tax any other item of income which might have escaped assessment and which comes to his notice during the proceedings under Section 147 of the Act.
11. The writ petition stands disposed of in the terms mentioned above.