India Power Corporation Limited vs Deputy Commissioner Of Income Tax & Ors

The Court: A notice dated September 28, 2018 issued under Section 148 of the Income Tax Act, 1961 and the resultant order thereon dated November 28, 2018 are under challenge in the present writ petition.

Learned Advocate appearing for the petitioner submits that, there was no material before the authorities, to assume jurisdiction under Section 147 of the Income Tax Act, 1961. He submits that, the petitioner cannot be held to be guilty of not making full and correct disclosure of the accounts before the Assessing Officer. Consequently, it cannot be said that, there is any income which escaped assessment during the relevant assessment year. He draws the attention of the Court to the queries raised by the Assessing Officer during the assessment proceeding. He submits that, the petitioner gave a detailed reply thereto by a writing dated February 20, 2015. The quantum of Tax Deducted at Source (TDS), both on account of loan as also interest, were furnished to the Assessing Officer. The Assessing Officer considered such material and passed an order of assessment. He submits that, the TDS was not dealt with by the assessment order as, the Assessing Officer did not find any reason to re-work the TDS claimed. He submits that, the petitioner preferred an appeal from the order of assessment, however, on different point. Such appeal is pending. He then draws the attention of the Court to the notice under Section 148 of the Act of 1961 and submits that, the charge against the petitioner is in respect of TDS which was dealt with by the Assessing Officer during assessment. Therefore, the authorities were acting without jurisdiction in assuming jurisdiction under Section 147 and 148 of the Act of 1961. In support of his contention that, an issue raised in the assessment proceeding cannot be re-opened under Section 147 and 148 of the Act of 1961 when such issue stands settled by the Assessing Officer, he relies upon the judgment and order dated June 15, 2016 passed in Writ Petition No. 1700 of 2008 (Ernst & Young Pvt Ltd Vs. Deputy Commissioner of Income Tax, Circle-8, Kolkata & Ors.) and (2005)274 ITR 25 (Cal) (Amiya Sales & Industries Vs. Asst. Commissioner of Income-Tax). Referring to the impugned notice, he submits that, the authorities could not have invoked the provisions of Section 40(A)(ia) of the Act of 1961. In support of such contention, he relies upon (2014) 361 ITR 452 (Commissioner of Income Tax Vs. S.K. Tekriwal).

Learned Advocate appearing for the respondent submits that, the TDS was not deposited with the government. Consequently, there is income escaping assessment, requiring the authorities to invoke provisions of Section 147 and 148 of the Act of 1961. What would be construed as true and full disclosure under the Act of 1961, he relies upon AIR 1993 SC 2390 (M/s. Phool Chand Bajrang Lal and another Vs. Income-Tax Officer and another).

In the present case, the authorities have issued the impugned notice dated March 27, 2018 under Section 148 of the Act of 1961 for the assessment year 2012-13. The reasons in support of such exercise of power, as appearing in the writing dated September 28, 2018, states that, the TDS certificate on which the petitioner relies upon are invalid certificates and have no legal standing. In fact, it is doubted as to whether the amounts covered under the TDS were deposited with the government or not.

It appears from the records that, the Assessing Officer had issued a notice under Section 142 of the Act of 1961 in respect of the assessment proceeding, calling for details with regard to the TDS and all other issues. The petitioner relies upon a writing dated February 20, 2015 to support the contention that, TDS issue was dealt with by the Assessing Officer in the assessment proceeding for the relevant assessment year. The Assessing Officer passed an order of assessment without dealing with the TDS specifically. Such order of assessment is dated March 30, 2015. Apparently, the petitioner being aggrieved by certain portions of the order of assessment preferred an appeal which is pending. The department did not carry any appeal against the order of assessment dated March 30, 2015.

In this factual background, the issues that arises are, whether, the petitioner is guilty of not making true and full disclosure and whether, income has escaped assessment requiring the department to invoke provisions of Section 147 and 148 of the Act of 1961 or not.

Ernst & Young Pvt. Ltd. (Supra) is of the view that, where, the issue of TDS was dealt with by the Assessing Officer, the department had no ground to invoke provisions of Section 147 and 148 of the Act of 1961. Amiya Sales & Industries (Supra) is of the similar view. M/s. Phool Chand Bajrang Lal and Another (Supra) lays down what can be construed as a true and full disclosure. In the facts of that case, the Supreme Court did not find the assessee to have made a full and true disclosure for the authorities not to invoke the provisions of Section 147 and 148 of the Act of 1961. S.K. Tekriwal (Supra) deals with the provisions of Section 40(A)(ia) of the Act of 1961. It notes that a portion of the judgment and order was under challenge. The judgment and order under challenge finds that there was no allegation that the Tax Deducted at Source was not deposited with the government account.

As noted above, the department is doubting the deposit of the TDS amount with the government. It is, therefore, imperative that such issue is looked into under the provisions of Section 147 and 148 of the Act of 1961.

In the facts of the present case, therefore, I am not minded to find that, the authorities have acted beyond jurisdiction in invoking the provisions of Section 147 and 148 of the Act of 1961.

WP 599 of 2018 stands disposed of. No order as to costs.