Section 148 of the Income-tax Act, 1961

HIGH COURT OF MADRAS BAPALAL & CO. EXPORTS v. Joint Commissioner of Income-tax (OSD) V. DHANAPALAN, J. WRIT PETITION NO. 12254 OF 2006 AND W. P. M. P. NO. 13824 OF 2006 September 8, 2006 Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for - Assessment year 2000-01 - Assessing Officer issued a notice under section 148 merely after three years of completion of assessment - Said notice was issued without assigning any reason justifying its issuance nor there was any fresh material to reopen assessment - Whether impugned notice, being violative of mandatory provisions of section 148(2), was to be set aside - Held, yes FACTS For the assessment year 2000-01, the assessee-firm filed its return of income on 13-11-2000. The assessment was completed under section 143(1) on 4-1-2002. On 19-3-2005 the Assessing Officer a notice under section 148 to the assessee seeking to reopen the assessment of relevant assessment year. The assessee filed instant petition praying to quash the impugned notice on ground that the notice issued nearly three years after the assessment and that too, without disclosing any reason, was in violation of the mandatory provision under section 148(2). The assessee further submitted that the reopening of assessment was without jurisdiction as the same was not based on any fresh material found out by the revenue and the facts now disputed were all part of the records while filing the income-tax return. HELD After a series of transactions, the respondent, without assigning any reason, had passed the impugned order on 31-3-2006 reopening the assessment, without any fresh material. As per the proviso to section 143(2), if at all any notice, such as the impugned notice had to be issued, it should not be issued after the expiry of twelve months from end of the month in which the return was furnished. In the instant case, the impugned notice had been issued by the respondent after the expiry of nearly three years. Further, from the settled legal proposition as found from one of the rulings of the Supreme Court, once an opinion is given in an assessment, it cannot be reopened by any other authority except on fresh material. That apart, a notice issued under section 148 should be a reasoned one whereas in the instant case the impugned notice had been issued without assigning any reason justifying its issuance. Also, in the absence of any new material, the Assessing Officer was not empowered to reopen an assessment irrespective of the fact whether it was made under section 143(1) or 143(3). As per the rulings of the Apex Court in this regard, there must always be a speaking order whereas the respondent had neither chosen to adduce any reason nor found any fresh material to re-open the assessment. [Para 12] Hence, the impugned order was liable to be set aside and, accordingly, it was set aside. [Para 13]