The HC agreed with the petitioner’s counsel that the power vested in the Commissioner under section 151 of the Act to grant or not to grant approval to the Assessing Officer to re-open an assessment is coupled with duty and the Commissioner is duty-bound to apply his mind to the proposal put up to him for the approval in the light of the material relied upon by the Assessing Officer and such power cannot be exercised casually, in a routine and perfunctory manner. IN THE judgement of the case- Chhagan Bhujbal Vs Income Tax Officer Ward 20(1)(3) and another, delivered on December 8, 2021, a Bombay High Court division bench consisting of Justices K.R. Shriram and Amit B. Borkar, has expressed agreement with the submission of Sham V. Walve, the counsel for the respondent- Income Tax Department that the petitioner having participated in the assessment proceedings, as in the cited decision- Amaya Infrastructure (P) Ltd. Vs Income Tax Officer Ward 12(1)(1)- [2017] 79 taxman.com345 (Bombay), now at this stage cannot challenge the notice of March 31, 2019, issued under section 148 of the Income Tax Act, 1961. In the impugned notice it has been stated that the respondents have reasons to believe that income chargeable to tax for the Assessment Year (A.Y.) 2012-13 has escaped assessment within the meaning of section 147 of the Act. This notice has been issued after expiry of four years from the end of the relevant assessment year. There has been no scrutiny assessment done under section 143(3) of the Act and the assessment has been processed under section 143(1) of the Act. Therefore, proviso to section 147 of the Act would not apply. In such a case, governing test has been formulated in the judgement of the Supreme Court in the case – Commissioner of Income Tax Vs Kelvinator of India Ltd.-(2010) 320 ITR 561(SC).

 

Therefore, the test to be applied is whether there was reason to believe that income had escaped assessment and whether the Assessing Officer has tangible material before him for the formation of that belief. Once tangible basis has been disclosed for re-opening the assessment, it would not be appropriate for this Court to prevent an enquiry whatsoever by the Assessing Officer. In this case, the reasons indeed disclose what is that tangible material. As regards the judgement of this Court in the case – German Remedies Ltd. Vs Deputy Commissioner of Income Tax –(2006) 287 ITR 494 (Bom), the HC agreed with the petitioner’s counsel that the power vested in the Commissioner under section 151 of the Act to grant or not to grant approval to the Assessing Officer to re-open an assessment is coupled with duty and the Commissioner is duty-bound to apply his mind to the proposal put up to him for the approval in the light of the material relied upon by the Assessing Officer and such power cannot be exercised casually, in a routine and perfunctory manner.

 

The Court has held in the facts and circumstances of the case that the approval granted in that case suffers from non-application of mind. It was in the peculiar facts and circumstances of the case. In this case, there is nothing to indicate that there was non-application of mind. Merely because information was received at 5.47 pm and the notice was issued by 10.49 pm, it would not mean that there had been non-application of mind. If the Court holds that , it would be merely speculative and based on conjecture. As regards the judgement in the case- Principal Commissioner of Income Tax -5 Vs Shodiman Investments (Pvt).Ltd.- (2018)93 taxman.com !53(Bombay) relied upon by the petitioner’s counsel, again in the peculiar facts and circumstances of that case, the Court concluded that the reasons do not indicate any link or nexus to connect that income chargeable to tax has escaped assessment. Moreover, in this decision facts were different and that was the case where assessment order was passed under section 143(3) of the Act and allegation was failure to disclose truly and fully all material facts by the assessee.

 

On the submissions of Department’s counsel Sham V. Valve that the petitioner having participated in the assessment proceedings, cannot challenge the notice at this stage, the Court has expressed its agreement with Mr Walve . In the Amaya Infrastructure (P.) Ltd decision also, the petitioner had participated in assessment proceedings and the Court held that in such a case, it would not be open for petitioner to contend now that this Court should exercise its extra ordinary jurisdiction and prohibit the authorities in proceeding further with the impugned notice. Paragraph 9 of the said judgement reads as under : “9. In this case we find that the petitioners have filed detailed information called for by the Assessing Officer under section 142(1) and 143(2) of the Act and thus participated in the assessment proceedings. This having been done, it is not open for the petitioner to contend now that this Court should exercise its extra-ordinary jurisdiction and prohibit the authorities from proceeding further with the impugned notice. This is particularly so as the question of jurisdiction has been raised by the petitioners before the Assessing Officer during the assessment proceedings under the Act. “In the present facts, the petitioners have participated in the proceedings before the Assessing Officer. The objections to the reasons recorded by the Assessing Officer in support of the impugned notice during assessment proceedings under the Act, is to point out to him the reassessment proceedings are bad as requirement of sections 147 and 148 of the Act are not satisfied.

 

“It would be completely different scenario where the petitioners have not participated in the proceedings before the Assessing Officer and object to exercise of jurisdiction by the Assessing Officer at the very threshold and not while participating in the reassessment proceedings. In such cases, it is not a case of a party seeking identical relief by two parallel modes. The orders passed by the Assessing Officer are subject to effective, efficacious alternative remedy under the Act. Therefore, we see no reason to exercise our extra-ordinary jurisdiction in the facts of this case.” In this case, the tax authorities have reasons to believe that income to the extent of more than Rs one lakh chargeable to tax has escaped assessment for the A. Y. 2012-13. Accordingly the proceedings under section 147 of the Act have been duly attracted. Hence it is a fit case for issuing notice under section 148 of the Act. In the circumstances of this case, The HC has stated that it sees no reason to exercise its extra-ordinary jurisdiction under Article 226 of the Constitution of India and prohibit the authority from proceeding further in the matter and dismissed the Maharashtra Minister’s petition.