Calcutta High Court
Abp Ltd. vs Joint Commissioner Of Income-Tax And ... on 8 April, 2005
Equivalent citations: (2005)199CTR(CAL)404, [2005]278ITR627(CAL)
Author: Jayanta Kumar Biswas
Bench: Jayanta Kumar Biswas
JUDGMENT Jayanta Kumar Biswas, J.
1. The writ petitioner is aggrieved by the notice issued by the tax authority under Section 148 of the Income-tax Act, 1961, for reopening the case regarding the assessment year 1994-95. The notice for reopening was issued on September 27, 2000, i.e., after four years.
2. There is no dispute that on the basis of the revised return submitted by the petitioner in accordance with law the assessment order for the assessment year in question was made by the Assessing Officer on December 27, 1996/January 3, 1997. In the order, the Assessing Officer went to record :
"In response to notice under Sections 143(2) and 142(1), Sri S. Chanda, authorised representative of the assessee-company appeared. The assessee was asked to file details of sundry creditors and credit balance. Advance received against advertisement and subscription. Advance against sales, details of secured loans and sundry debtors, stores consumed, etc. Even information under Section 133(6) was called for from all the advertising agencies. All the parties have complied with their ledger copy of accounts and confirmed the transactions.
Further the assessee was asked to file the details of machinery purchased during this year with bills and vouchers which were examined. During this year the assessee has claimed deduction under Section 35 for scientific research and development work. On this point the auditor's report is examined. The assessee was asked to produce employees attached with scientific research work. Sri A. K. Sengputa and Aloke De from the scientific research group appeared on December 20, 1996, and their statement was taken. For further verification of actual work a visit was made on December 23, 1996, for verification of machinery and actual activities. It is seen that the assessee has made such progress due to the scientific research and saved time as well as money. Softwares were developed for multi channel control on total work of newspaper. Further development work is in progress."
3. On the basis of the findings recorded in his order the Assessing Officer granted the petitioner their claim of tax benefit on account of purchase of machinery for scientific research and development work. The order of the Assessing Officer attained finality and it was not questioned by either of the parties in any manner, till the time the authority issued the impugned notice dated September 27, 2000, seeking to reopen the case. Along with the opposition filed by the Revenue the reasons recorded by the Joint Commissioner of Income-tax, Special Range, on September 25, 2000 have been produced, and they are :
"It appears from the records that deduction under Section 35 was wrongly allowed for Rs 1,81,07,900 while making the assessment under Section 143(3) on January 3, 1997. I have reasons to believe that income to the extent of Rs. 1,81,07,900 has escaped assessment."
4. While counsel for the petitioner argues that the reasons disclosed in the opposition are no reasons to empower the authority to assume the jurisdiction to reopen the case, counsel for the Revenue argues that in the absence of any other remedy available to the Revenue the reopening of the case became imperative. By citing to me the apex court decision in Calcutta Discount Co. Ltd. v. ITO , counsel for the petitioner argues that the impugned notice must be set aside for lack of total jurisdiction of the authority issuing it. While I think that he is absolutely right in his submission, with due respect, I am unable to find any force whatsoever in the submission of counsel for the Revenue that since adequate alternative remedy was available to the petitioner before the Assessing Officer and also in the appeal before the authority, if the petitioner had felt aggrieved by the decision of the Assessing Officer, the writ petition should be dismissed. The whole question before me is whether the mandatory statutory conditions necessary for assumption of jurisdiction by the authority concerned were existing for the purpose of issuing the notice under challenge. Under the provisions of the Act the authority was not empowered to reopen the case on the ground that the claimed deduction under Section 35 had been wrongly allowed. I must say that counsel for the Revenue has referred to the last sentence of the document in which the competent authority recorded the reasons for reopening, also for no useful purpose. I have no doubt in my mind that by simply saying that he had reasons to believe that the amount of income (mentioned in the reasons) had escaped assessment, the authority would not be empowered to assume jurisdiction to initiate the proceeding. The requirement of recording reasons would not stand satisfied if without mentioning any reason the authority simply writes that he has reasons to believe that income had escaped assessment. This kind of exercise of power must be held to be an abuse of the power. I am therefore, of the view that the authority acted illegally and without jurisdiction in issuing the impugned notice to the petitioner ; and hence it is liable to be set aside.
5. For these reasons I allow the writ petition, and set aside the impugned notice dated September 27, 2000. In the facts and circumstances of the case, I am not inclined to make any order for costs in favour of the petitioner. Hence there will be no order for costs in the writ petition.
6. All parties shall act on a signed xerox copy of this dictated order and also on an urgent certified xerox copy thereof, both to be supplied on the usual undertaking.