CA Aman Rajput
The Income-tax Officer is not only an adjudicator but also an investigator. He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry.
It is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent and the word "erroneous" in section 263 of the Act includes the failure to make such an inquiry.
Section 148A casts upon the Assessing Officer a duty to conduct enquiry on certain information that he is possessed with and it is after considering reply filed by the assessee and material in his possession he shall decide whether to reopen the case of the assessee or not.
The words 'consider the reply of assessee furnished' in section 148A clearly suggests requirement for application of mind. The Supreme Court has held that the Assessing Officer cannot remain passive in the face of a return which is apparently in order but calls for further inquiry.
In a recent case, the Bombay High Court declined to admit the writ against order passed u/s 148A stating that the matter involved mere dispute on question of facts and that prima facie, there is some material on the basis of which a notice for reopening of escaped assessment has been issued.
However, the High Court did not appreciate the fact that the assessee had submitted details of indexed cost and capital gains indicators in his reply, which were ignored by the AO.
The High Court also failed to consider the fact that the AO has a duty to write whether it is a fit case to issue notice after considering reply of the assessee and not solo on the basis of some material without carrying any verifications and without considering the facts and the law on capital gains and without even dealing with the reply/objections on merits with any valid reasoning.
There is a certain amount of jurisdiction failure entitling the Courts to intervene in such case instance.
The role of AO as an adjudicator and an investigator is crucial. He cannot remain passive and not investigate the facts stated in the return when circumstances would make such an inquiry prudent.
The word "erroneous" in section 263 of the Act includes the failure to make such an inquiry. Thus, in the case of Duggal & Co., the order completely lacked any application of mind.
Section 148A casts upon the Assessing Officer a duty to conduct enquiry on certain information that he is possessed with and it is after considering reply filed by the assessee and material in his possession he shall decide whether to reopen the case of the assessee or not.
The words 'consider the reply of assessee furnished' in section 148A clearly suggests requirement for application of mind.
The High Court in SAHJEEVAN CO-OPERATIVE case failed to appreciate that the assessee had submitted details of indexed cost and capital gains indicators in his reply, which were ignored by the AO.
The High Court also failed to consider the fact that the AO has a duty to write whether it is a fit case to issue notice after considering reply of the assessee and not solo on the basis of some material without carrying any verifications and without considering the facts and the law on capital gains and without even dealing with the reply/objections on merits with any valid reasoning.
There is a certain amount of jurisdiction failure entitling the Courts to intervene in such case instance. The Delhi High Court in Duggal & Co. case further held that the Income-tax Officer is not only an adjudicator but also an investigator.
He cannot remain passive in the face of a return which is apparently in order but calls for further inquiry. It is incumbent on the Income-tax Officer to further investigate the facts stated in the return when circumstances would make such an inquiry prudent and the word "erroneous" in section 263 of the Act includes the failure to make such an inquiry. Thus, the order in this case completely lacking any application of mind.
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