Writ-----

---- Revision petition before C.I.T. to stay reassessment rejected---Writ petition to stay reassessment proceedings ---Assessee, on facts, trying to obstruct assessment---Writ petition liable to be dismissed in limine-- Constitution of India, Art.226---Indian Income Tax Act, 1961, Ss. 147, 148 & 264.

The Central Excise Authorities conducted a search against the assessee and when information was given to the Income-tax Authorities, notices for reassessment were issued. A revision petition before the Commissioner of Income-tax for stay of reassessment was rejected. On a writ petition against such dismissal:

Held, that in the reassessment proceedings, the burden was on the Revenue to establish that there was income which escaped assessment. For the purposes of assessment, both sides have the right to adduce evidence. The assessee had been trying to obstruct assessment proceedings which should be discouraged. The petition was liable to be dismissed in limine.

Rakesh Kumar Agarwal for Petitioner.

Ashok Kumar for Respondents.

JUDGMENT

M.C. AGARWAL, J. ---By this petition under Article 226 of the Constitution of India, the petitioner challenges an order, dated March 22, 1996, a copy of which is Annexure " 10" to the writ petition passed by the Commissioner of Income-tax Meerut, in proceedings, purporting to be under section 264 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), and rejecting an application moved by the petitioner for staying the reassessment proceedings for the assessment years 1984-85,1985-86, 1986-87, 1987-88 and 1989-90, pending before the Deputy Commissioner of Income-tax Special Rage-II, Ghaziabad.

I have heard Sri Rakesh Kumar Agarwal, learned counsel for the petitioner, and Sri Ashok Kumar, learned counsel for the respondents.

The petitioner carries on the business of manufacture and sale of tin container and agriculture implements. Its 'assessments for the aforesaid assessment years were duly made under section 143 of the Act. Subsequently, the Central Excise Authority conducted a search and seizure operation against the petitioner and recovered documents which showed that the petitioner had sought import licences for much larger quantity of raw materials than the quantity shown in the books of account as having been purchased and used for the manufacture of goods. When this information was conveyed by the Central Excise Authority to the income-tax authorities, the Assistant Commissioner of Income-tax Investigation Circle, Ghaziabad, issued a detailed notice, dated September 22, 1993, a copy of which is Annexure "2" to the writ petition mentioning the relevant details and requiring the assessee-petitioner to show-cause why action under section 147 of the Act may not be taken and notice under section 148 may not be issued. The petitioner sent a reply, dated November 3, 1993, stating that the orders of the excise authorities relevant to the show-cause notice are pending in appeal before the Customs, Excise and Gold (Control) Appellate Tribunal, and that detailed explanation had been made before the excise authorities and requested the Assessing Officer to keep the reassessment proceedings under section 147 of the Act in abeyance till the decision of the Appellate Tribunal. The petitioner has not disclosed when the aforesaid reply was actually delivered to the Assessing Officer. The Assessing Officer issued notices under section 148 of the Act, copies of which are cumulatively marked an Annexure "4" to the writ petition. The notice for the assessment year 1989-90 was issued on November 8, 1993, and served on November 9, 1993. The other notices are, dated January 21, 1994, and were served on January 29, 1994. The petitioner came to this Court in Writ Petition No. 1193 of 1995, which was disposed of by order, dated December 22, 1995. The relevant portion of the order passed by this Court is as under:

"Therefore, the Assistant Commissioner of Income-tax, Investigation Circle, Ghaziabad, issued a show-cause notice, dated September 22, 1993 (Annexure ' 4' to the writ petition), purchased to the said show-cause notice, the petitioner filed a reply, dated November 3, 1993 (Annexure '5' to the writ petition), stating that the detailed explanation about discrepancies had been made before the CEGAT. No more details were given by the petitioner in the said reply.

The case of the petitioner before us is that no inference could be drawn on the basis of Form 'A', recovered from its business premises by the Excise Department during the raid, because in those forms inflated figures with a view to importing larger quantity, more quantity was mentioned. Counsel for the petitioner submits before us that the higher figures- were mentioned in Form 'A', and import licence were also materials, but actually import was made of much lesser quantity of the raw material under those import licences. It is also submitted by counsel for the petitioner that the details of actual import were not furnished before the Income-tax Authority, because the detailed explanation was already given to the CEGAT. It is submitted that if an opportunity is afforded now to the petitioner, then the evidence of actual import against the import licence can be given to the Income-tax authorities.

On these facts, we dispose of this petition finally with the observations that the assessing authority will give an opportunity to the petitioner to adduce evidence to show that much lesser quantity of raw material against the import licence was actually imported and consumed by the petitioner. The petitioner will be called upon by the assessing authority to furnish a detailed reply within two weeks from the date of a certified copy of this order is produced before him by the petitioner, which the petitioner undertakes to produce before him within a week from today.

Until a decision by a speaking order on such reply to be furnished by the petitioner, no further proceedings under section 148 of the Act will be taken against the petitioner pursuant to impugned reasons, dated August 21, 1995 (Annexure "7" to the writ petition), recorded by the Department".

As is evident from the facts mentioned above notices under section 148 had already been issued and served on the petitioner and the petitioner appears not to have disclosed that fact to the Court and obtained the aforesaid order by representating that the proceedings were still at the stage on show-cause notice, dated September 22, 1993, while in fact notices under section 148 had already been served and, therefore, no proceedings under section 148 was pending. A proceeding under section 148 consists of the recording of reasons under subsection (2) of section 148 and an issue of notice under section 1480. Once this is done, there is nothing which is required to be done under section 148 and what remains to be done by the Assessing Officer is an assessment under section 147. Therefore, the petitioner by his own default procured an order from this Court that was of no legal consequence because the opportunity to adduce evidence and the recording of a speaking order were necessary only when a final order of assessment was passed in which the assessee's contentions may have been wholly or partially accepted. However, in compliance with the aforesaid order passed by this Court, the Deputy Commissioner of Income-tax, Special Range-II, Ghaziabad, to whom the case seems to have been transferred recorded his impression about the material on record and ultimately observed as under:

"The above makes it clear that the reply of the assessee is not corroborated by any clinching and convincing evidence. In view of this, I hold that proceedings under section ~ 148 have been validly taken. The material offered by the assessee and further supporting evidence which may be submitted by the assessee will be examined on merits after giving due opportunity to the assessee during the course of final assessment proceedings."

This note is, dated February 5, 1996, a copy of which has been annexed as Annexure ".7" to the writ petition. The petitioner again came to this Court in Writ Petition No.207 of- 1996 branding the note, dated February 5, 1996, as an order and this Court vide order, dated March 8, 1996, ordered as under:

"We are of the opinion that the petitioner has an alternative remedy under section 264 of the Income Tax Act to file a revision before the Commissioner. Hence, we dismiss the writ petition on the ground of alternative remedy. If the petitioner files a stay application alongwith the revision, the same shall be considered and considered expeditiously."

The petitioner then filed a revision petition before the Commissioner of Income-tax Meerut, and moved an application praying for staying the reassessment proceedings for the aforesaid years. The Commissioner rejected the application observing that under section 264 of the Act, he has no power to stay the assessment proceedings. It is against the said order that the petitioner has come to this Court.

It is settled law that proceedings of reassessment commence with the issue of the notice for reassessment under section 148. As already stated such notices were already issued and. served in November, 1993, and January, 1994. Before issuing the notices the officer is not required to convene the assessee, intimate to him the nature of the alleged escapement or give him an opportunity of being heard. The assessee-petitioner did not challenge the notice. In this reply, dated November 3, 1993, a copy of which is Annexure "3" to the writ petition, he merely requested that the assessment proceedings be kept pending till the disposal of the appeal by the CEGAT. It came to this Court, about two years after the service of notices under section 148. On the service of notices under section 148, the reassessment proceedings came into existence which would terminate by an assessment order being made under section 147 or by the notices being quashed. The petitioner did not seek quashing of the notices under section 148 when it came to this Court in Writ Petition No. 1193 of 1995. This Court directed the assessing authority to give an opportunity to the petitioner to adduce evidence to show that much lesser quantity was imported and consumed. This was a part of the exercise for reassessment in which the assessing authority also had the opportunity to investigate and produce evidence. Yet this Court restrained the respondent assessing authority from proceeding further under section 148 until decision by a speaking order on the assessee's reply. The assessing authority then recorded, on February 5, 1996, a finding that proceedings under section 148 have been validly taken and further evidence will be examined in the assessment proceedings. The petitioner again came to this Court in Writ Petition No.207 of 1996 challenging the so-called order, dated February 5, 1996, and this Court dismissed the same observing that the petitioner had the alternative remedy of revision under section 264.. Consequently, a revision petition was filed and an application was made for staying the assessment proceedings. The Commissioner rejected the request on the ground that he had no such power.

The assessment proceedings are pending since January, 1994. The assessment proceedings should be completed within the period of limitation. The assessee has the remedy of appeal if the reassessments result in any demand. In the reassessment proceedings the burden is on the Revenue to establish that there was income which escaped assessment. For the purposes of assessment both sides have the right to adduce evidence. The petitioner has been trying to obstruct the assessment proceedings which should be discouraged. In thy view, there was no justification for staying the assessment proceedings when the petitioner did not challenge the initiation of section 147 by the issue of notices under section 148 at the earliest and even 'in Writ Petition No. 1193 of 1995. The petition is, therefore, dismissed in limine with costs.

M.B.A./1547/FC Petition dismissed.