Samode Group, comprised of diversified business entities, is having its registered office located at Jaipur with various business verticals located at different places within and outside the country. The Board of directo

CS Professional · Direct Tax Law & Practice · PYQS · December 2019
Samode Group, comprised of diversified business entities, is having its registered office located at Jaipur with various business verticals located at different places within and outside the country. The Board of directors regularly have meetings with the heads of each of the business verticals, along with group Finance Director, Company Secretary, Director Taxation and other senior managers and consultants, for reviewing the business results of each of the units and to sort out the various issues. A meeting of all these heads was scheduled for 30th August, 2019 to discuss the various matters relating to taxation and to ascertain as to filing of the return of income of the group companies for the A.Y. 2019-20. The matters which were scheduled for discussion in this meeting, as listed were as under: (7) A notice under section 148 to reopen the assessment made earlier for Asst. Year 2013-14 under section 143(3) in the case of one of the companies of the Samode Group Hotels Ltd. was issued by the Assessing Officer after forming belief and recording of the reasons as per section 147 of the Act to issue such notice. The Manager (Taxation) of the company wants to challenge the validity of the notice on the ground of sufficiency of belief of the Assessing Officer for the recorded reasons. Advise as an expert, as to the validity of the notice issued under section 148 of the Income-tax Act, 1961 and comment upon the correctness of the view of Manager (Taxation). Support your answer with the provisions of Act and decided case laws.

Answer & Explanation:

Validity of notice issued u/s 148: The issuance of notice u/s 148 of the Income Tax Act, 1961 is governed by the provisions of section 147 of the Income Tax Act, 1961, where the Assessing Officer has reasons to believe that any income chargeable to tax has escaped assessment for any assessment year. The Apex Court in the case of CIT v/s. Kelvinator of India Ltd. (2010) 320 ITR 561 has held that 'the Assessing Officer has power to re-open an assessment, provided there is 'tangible material' to come to the conclusion that there was escapement of income. Reason must have a link with the formation of belief'. The Assessing Officer in the given case had issued the notice u/s 148 after forming his belief and reasons of forming of such belief were also recorded by him prior to the issue of such notice. The challenge of the assessee as to sufficiency of the belief being formed by the Assessing Officer for issuance of such notice was examined by the Apex Court in the case of Raymond Woolen Mills Ltd. V/S ITO (1999) 103 ITR 437 and it was held that the same is not maintainable. Therefore, the assessee cannot challenge about the sufficiency of belief of the Assessing Officer for issuance of notice u/s 148 as the notice so issued by the A.O is valid.

Topics: Assessment Procedures

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