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Judgment
Heard the counsel for the parties.
By this application, Petitioner has prayed for quashing the notice issued u/s 148 of the Income Tax Act, 1961 and the subsequent orders on the ground, inter alia, that before or after issuance of the notice u/s 148 of the Act No. reason was assigned by the authority.
Mr. Biren Poddar, learned senior counsel appearing for the Petitioner, submitted that on receipt of notice, the petition-Assessee requested the authority by filing application for furnishing the reasons for issuance of notice.
According to the learned senior counsel, objection has neither been decided properly nor reasons have been assigned. Hence, entire notice and the subsequent proceedings are vitiated in law.
From perusal of the record, it appears that after receipt of notice, Petitioner-Assessee asked for furnishing the reasons to the authority. In response to that, the authority communicated the reasons to the Petitioner. A copy of the said reasons assigned by the Respondent-authority is annexed as Annexure-8 to the writ petition.
For better appreciation, the reasons assigned by the authority are reproduced hereinbelow:
7.11.2008.--Return of income has been filed on 28.10.2005, processed u/s 143(1) of the I.T. Act on 31.3.2007. The case was selected for scrutiny through CASS. Assessment u/s 143(3) of the I.T. Act was completed 23.12.2007 on loss of Rs. 1,49,05,04,224/- has been computed on regular computation of income. However the Assessee is liable for payment of tax as per the provisions of Section 115B and the book profit have been computed at Rs. 58.22,79,435/-.
Subsequently it is noticed from the audited Profit and Loss A/c as on 31.3.2005 the Assessee has debited provisions for bad and doubtful debts amounting to Rs. 2,69,35,992/-. As per provisions of Section 115B any amount set aside to provisions made for meeting liabilities other than ascertained liabilities have to be adjusted (added back) in the net profit to arrive at book profit. This amount of provision has to be adjusted while computing the book profit of the Assessee during the course of assessment proceedings u/s 143(3) of the I.T. Act. However inadvertently the adjustment of amount of provision for bad and doubtful debts was not made. It is also seen in the earlier Asstt. Years the provisions for bad & doubtful debts were always being adjusted in book profit in the Assessee''s case. Therefore the amount set aside to provisions for bad & doubtful debts should have been adjusted in this year also. Similarly the adjustment in this year pertaining to provision for diminution in the value of investment was also not made. By not doing so the assessment resulted in escapement of income and loss of revenue.
As such, considering the above facts I have reasons to believe that income of the Assessee has escaped assessment within the meaning of Section 147 of the I.T. Act which should be re-assessed.
Therefore notice u/s 148 of the I.T. Act is issued.
From perusal of the aforesaid reasons furnished by the authority, we are of the definite opinion that the mandate of law contained in the Act as also the law laid down by the Hon''ble Supreme Court and this Court has been fully complied with.
Hence, we do not find any merit in this writ petition, which is accordingly dismissed.
Let it be clarified that this order will not prejudice the case of the Petitioner on merit.
Further it goes without saying that in the event any adverse order is passed by the revenue authority, Petitioner may avail statutory remedy.