M/s. Techtron Polylenses Limited, vs. The Joint Commissioner of Income Tax

THE HONOURABLE SRI JUSTICE L. NARASIMHA REDDY and THE HON’BLE SRI JUSTICE CHALLA KODANDA RAM

WRIT PETITION No.21987 of 2000

ORDER: (per the Hon’ble Sri Justice L.Narasimha Reddy) This Writ Petition is filed challenging the notice dated 09.06.2000 issued by the respondent in exercise of power under Section 148 of the Income Tax Act, 1961 (for short ‘the Act’). In a way, the relief is couched in a broader manner to restrain the respondent from reopening the proceedings at all. Briefly stated the facts are that the petitioner, an assessee under the Act, submitted its returns for the Assessment Year 1992-93. One of the items mentioned in the returns was a sum of Rs.65,64,740/- received by it in the form of interest from investments before it commenced the business. In the return itself, it was mentioned that the said amount is not liable to tax in view of certain precedents. On 07.01.1995, the Assessing Officer, on the one hand, issued an intimation under Section 143(1)(a) of the Act disallowing the claim of the petitioner vis-à- vis the said amount and on the other hand, passed an order under Section 143 (3) of the Act. The petitioner filed two separate appeals before the Commissioner (Appeals) challenging the two orders, referred to above. The appeals were dismissed by the Commissioner through order dated 26.06.1995. The petitioner approached Hyderabad Bench ‘A’ of the Income Tax Appellate Tribunal by filing I.T.A.Nos.1216&1217/Hyd/95. The appeals were allowed and the matter was remanded to the Commissioner. On such remand, the Commissioner passed a common order dated 31.07.1996 upholding the intimation given under Section 143 (1)(a) of the Act, but setting aside the order passed under Section 143(3) of the Act. The Department filed I.T.A.No.1402/Hyd/1997 before the Tribunal feeling

aggrieved by the order of Commissioner. The appeal was dismissed through order dated 22.09.2000. The result was that the intimation under Section 143(1)(a) was upheld and the order under Section 143 (3) was set aside by the Tribunal. It is after these developments that the impugned notice was issued proposing to deal with the amount. The petitioner submits that issuance of notice cannot be sustained in law and it is contrary to Sections 147 and 148 of the Act. The respondent filed a counter affidavit opposing the Writ Petition. It is stated that a show cause notice can be challenged, if only it is issued by an authority, who is not conferred with the power and once the authority is competent to issue notice, the recipient thereof has to present his version by submitting explanation. Other grounds are also urged. Heard Sri S. Ravi, learned Senior Counsel for the petitioner and Sri S.R.Ashok, learned Senior Counsel for the respondent. The notice issued by the respondent is silent about its details. A general statement is made to the effect that it has come to his knowledge that some amount referable to the concerned assessment year has escaped tax. It is not in dispute that Sections 147 and 148 of the Act confer power upon the Assessing Officer to reopen an assessment subject, of course to fulfillment of the conditions stipulated therein. The occasion for this Court to interfere with the show cause notice would arise, if only it is issued by an authority not vested with the power or if it is otherwise barred under law. The possibility of the very circumstances under which the above show cause notice was issued, being proved to be non-existent, cannot be a ground to interfere with the same. The recipient of a notice can put forward all his contentions, touching on merits and even his understanding about the provision of law in the explanation. There is no reason to believe that the respondent would not take such objections into account before he passes the final order. We, therefore, dismiss the Writ Petition leaving it open to the

petitioner to submit his explanation, within six weeks from today. It is needless to observe that the respondent shall take into consideration the explanation that may be submitted by the petitioner before any final order is passed. There shall be no order as to costs. The Miscellaneous Petitions filed in this Writ Petition shall stand disposed of.

L.NARASIMHA REDDY, J

Date: 25.09.2014

CHALLA KODANDA RAM, J Note: Issue C.C in one week B/o va