Phoenix Poulty vs. Assistant And Deputy Commissioner Of Income Tax

HIGH COURT OF MADHYA PRADESH, JABALPUR (DIVISION BENCH: HON'BLE CHIEF JUSTICE S.K. SETH AND HON’BLE SHRI JUSTICE VIJAY KUMAR SHUKLA)

Writ Petition No.28602 of 2018

Phoenix Poultry

...PETITIONER

V/s.

Assistant & Dy. Commissioner ...RESPONDENT of Income Tax Jabalpur

...

Shri G.N.Purohit Senior Advocate with Ms. Uma Parasher Advocate for the petitioner.

Shri Sanjay Lal Standing Counsel for the Revenue.

RESERVED FOR O R D E R (13.3.2019)

ORDER PRONOUNCED ON (19.3.2019)

Per Seth C.J.

1) Petitioner is praying to set aside the Show Cause Notice dated 29.3.2018 issued u/s. 148 of the Income Tax Act by the Assistant Commissioner Income Tax Jabalpur and the Order dated 29.11.2018 passed by the Dy. Commissioner of Income Tax rejecting the objections raised by the petitioner firm against the Show Cause Notice.

2) Shorn of unnecessary details, relevant facts lie in a narrow compass.

3) Petitioner is a partnership concern engaged in the business of hatcheries poultry feed layer eggs and allied activities. For the A.Y- 2011-12 assessment order was passed. However, it was sought to be reopened by the show cause notice u/s 148. Instead of showing cause 2

against the proposed reopening and additions, petitioner firm sent communication dated 30.3.2018 demanding copy of reasons for reopening of assessment. The Dy. Commissioner Income Tax Jabalpur on 17.11.2018 supplied the copy of reasons along with the requisite approval of Principal CIT for reopening of the assessment. Petitioner submitted reply/objection which was after consideration rejected vide impugned communication dated 29.11.2018.

4) During the pendecy of the writ petition, the A.O. has passed fresh assessment order dated 28.12.2018., Petitioner filed it along with application for amendment, which was opposed by the learned standing counsel for the Revenue at the time of hearing on the ground that the petitioner without availing the efficacious, alternative statutory remedy of appeal, cannot assail the assessment order dated 28.12.2018 hence amendment application merits rejection along with the writ petition.

5) Petitioner is assailing the reopening of assessment basically on the ground that the assesse had furnished full and true discloser of P & L account therefore, on a mere change of opinion, the assessment passed earlier could not be reopened. A feeble attempt was made to contend that reopening was beyond time, however, when confronted with statutory provisions, this submissions was given up during the course of arguments. According to Shri Purohit, since the show cause notice itself is void ab initio that the entire proceedings are bad in law and no useful purpose would be served by relegating petitioner to the remedy of appeal provided under the Act. Hence this writ petition for the relief claimed above.

6) Per contra, Shri Lal, Standing Counsel for the revenue supported the departmental action in reopening of assessment and contended that the reopening was not account for change of opinion, but because substantial part of the income escaped assessment, therefore, show cause notice was issued to the petitioner. After considering the reply/objection of the petitioner,, the Dy. 3

Commissioner of Income Tax reopened the earlier assessment order. It was emphatically denied that the reopening of the assessment is based on change of opinion. He further submitted that after the reopening, fresh assessment order has been passed on 28.12.2018, therefore, the reopening of assessment as well as fresh assessment order can more efficaciously challenged in statutory appeal rather than in this writ petition under Article 226 of the Constitution.

7) After having heard rival submissions at length and on a careful consideration of material available on record, we find force in the submissions of the learned counsel for the Revenue that the petitioner, if so advised, should resort to statutory remedy..

8) It is well settled by now that Section 147 of the Income Tax Act does not permit reassessment of an income merely because of the fact that the AO has a change of opinion. Section 147 confers the power of reassess and not the power of review. The change of opinion implies formulation of an opinion and then a change thereof. It has been held in ITO Vs. Techspan India (P) LTD. (2018) 404 ITR 10 (SC) that in terms of assessment proceedings :

“it means formulation of belief by an AO resulting from what he thinks on a particular question. It is a result of understanding, experience and reflection. Before interfering with the proposed reopening of assessment on the ground that the same is based only on a change of opinion, the Court ought to verify whether the assessment earlier made has either expressly or by necessary implication expressed an opinion on a matter which is the basis of the alleged escapement of income that was taxable………………Every attempt to bring to tax income that has escaped assessment, cannot be absorbed by judicial intervention. One must treat the concept of change of opinion as an in built test to abuse of power by the AO who has power to reopen, provided there is ‘tangible material’ material to come to the conclusion that there is escapement of income from assessment. Reasons must have a live link with the formation of the belief.” 4

9) On the anvil of tests laid down by their Lordships of the Supreme Court, when we carefully examine the facts of the case in hand, we find that there is tangible material as pointed by the CITC in huge amount of income escaping assessment, therefore assessment was reopened. Thus there is tangible material forming a live link for change of opinion. It is not in dispute that after reopening, fresh assessment order has been passed. Thus, the reopening of assessment and the resultant assessment order dated 28.12.2018 both could be challenged more effectively in statutory remedies provided under the Income Tax Act, We, therefore, decline to exercise our extra ordinary powers conferred by article 226 of the Constitution of India..

10) In view of the foregoing discussion, writ petition fails and is hereby dismissed summarily. Petitioner is free to take recourse to legal remedies available to it under the law against the reopening of assessment and the fresh order of assessment and while doing so, this order shall not come in way. Resultantly petition fails and is hereby dismissed.

11) Ordered accordingly.

(S.K.SETH.)

(VIJAY KUMAR SHUKLA) CHIEF JUSTICCE

JUDGE

mn MANOJ NAIR 2019.03.20 18:57:22 +05'30'