Facts of the Case

  1. The Income Tax Department issued a notice dated 27 February 2009 under Section 148 of the Income Tax Act, 1961 seeking to reopen the petitioner’s assessment for Assessment Year 2002-03.
  2. The notice was dispatched through speed post and also delivered through a notice server.
  3. According to the Department, the notice was hand-delivered at the petitioner’s chamber at Tis Hazari Courts on 16 March 2009.
  4. The petitioner disputed service of the notice and contended that it was allegedly received by a person named Sandhya Mittal, whom he claimed not to know.
  5. On 23 November 2009, the petitioner inspected the records maintained by the Assessing Officer and received:
    • Reasons recorded for reopening the assessment;
    • Notice under Section 142(1);
    • Notice under Section 143(2);
    • Communication dated 23 October 2009 seeking information and documents.
  6. The petitioner subsequently filed detailed objections running into approximately 35 pages challenging the reassessment proceedings.
  7. The Assessing Officer disposed of the objections through a speaking order dated 4 December 2009.
  8. The petitioner earlier approached the Delhi High Court through W.P.(C) No. 13977/2009 challenging the reassessment proceedings.
  9. By order dated 22 December 2009, the High Court directed service of a copy of the notice issued under Section 148.
  10. Thereafter, the Assessing Officer completed assessment proceedings and passed an assessment order dated 30 December 2009 under Section 144 of the Income Tax Act.
  11. Aggrieved by the assessment order, the petitioner filed the present writ petition seeking its quashing.

 

Issues Involved

  1. Whether reassessment proceedings initiated under Sections 147 and 148 were invalid on account of alleged non-service of notice under Section 148.
  2. Whether the petitioner was denied a reasonable opportunity of hearing before completion of reassessment proceedings.
  3. Whether the assessment order passed under Section 144 was liable to be quashed.
  4. Whether issues already adjudicated in the earlier writ petition could be re-agitated in a subsequent writ proceeding.

Petitioner’s Arguments

The petitioner contended that:

  • Notice under Section 148 had never been properly served upon him.
  • The alleged service upon Sandhya Mittal could not be treated as valid service.
  • Pursuant to the earlier High Court order directing service of notice, he should have been granted a fresh opportunity to respond.
  • The assessment order was passed hastily and without providing an effective opportunity of hearing.
  • Consequently, the reassessment proceedings and the assessment order deserved to be quashed.

Respondent’s Arguments

The Revenue submitted that:

  • Notice under Section 148 had been duly issued and served.
  • The petitioner was provided reasons recorded for reopening the assessment.
  • Copies of notices and relevant communications were supplied to him during inspection of records.
  • The petitioner filed detailed objections which were duly considered.
  • A speaking order disposing of the objections was passed on 4 December 2009.
  • Despite repeated opportunities, the petitioner failed to file the return required in response to the notice under Section 148.
  • Since no return was filed, the Assessing Officer was justified in framing the assessment under Section 144.
  • The issues raised had already been considered in the earlier writ petition and could not be reopened.

 

Court Findings

The Delhi High Court held that:

1. Earlier Issues Could Not Be Re-agitated

The Court observed that the petitioner was attempting to reopen matters already examined and adjudicated in W.P.(C) No. 13977/2009.

The earlier Division Bench had already dealt with the controversy regarding service of notice under Section 148 and had merely directed service of a copy of the notice.

Therefore, the petitioner could not seek reconsideration of issues already settled.

2. No Fresh Notice Was Directed

The Court clarified that its earlier order did not direct issuance of a fresh notice under Section 148.

The order merely required service of a copy of the notice already issued on 27 February 2009.

Thus, the petitioner’s contention that a fresh opportunity should have followed was misconceived.

3. Adequate Opportunity Was Provided

The Court found that:

  • Reasons for reopening were supplied;
  • Copies of statutory notices were furnished;
  • Relevant correspondence was provided;
  • Detailed objections filed by the petitioner were considered;
  • A speaking order disposing of objections was passed.

Accordingly, there was no denial of natural justice or reasonable opportunity.

4. Failure to File Return Justified Assessment under Section 144

The Court noted that despite being aware of reassessment proceedings, the petitioner did not file a return in response to the notice under Section 148.

Therefore, the Assessing Officer was legally justified in completing assessment under Section 144 of the Income Tax Act.

5. Alternative Statutory Remedy Available

The Court observed that if the petitioner was aggrieved by the assessment order, the appropriate remedy was to pursue the statutory appellate mechanism available under the Income Tax Act.

 

Important Clarification

The Court relied upon the Supreme Court judgment in:

GKN Driveshafts (India) Ltd. v. Income Tax Officer & Others, (2003) 259 ITR 19 (SC)

The Supreme Court had clarified that when a notice under Section 148 is issued:

  1. The assessee must first file a return.
  2. The assessee may seek reasons for reopening.
  3. The Assessing Officer must furnish the reasons.
  4. The assessee may file objections.
  5. The Assessing Officer must dispose of those objections by a speaking order.

The Delhi High Court held that this procedure had substantially been followed in the present case.

Court Order

The Delhi High Court held that:

  • The reassessment proceedings were valid.
  • Adequate opportunity had been granted to the petitioner.
  • The petitioner failed to comply with the requirement of filing a return.
  • The assessment order under Section 144 could not be interfered with in writ jurisdiction.
  • The petitioner could avail the statutory appellate remedy.

Result: The writ petition was dismissed.

 

Sections Involved

Income Tax Act, 1961

  • Section 144 – Best Judgment Assessment
  • Section 142(1) – Inquiry Before Assessment
  • Section 143(2) – Notice for Scrutiny Assessment
  • Section 147 – Income Escaping Assessment
  • Section 148 – Issue of Notice for Reassessment

Link to download the order -https://delhihighcourt.nic.in/app/case_number_pdf/2010:DHC:290-DB/SID19012010CW3052010.pdf

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