Once it was found that the Income-tax Assessing Officer had reason to believe that there was “income escaping” assessment, it was not open to this court to make a roving enquiry since the reasons were not justiciable, held Mr Justice V. Ramasubramanian.
All that could happen, by allowing proceedings to continue, was that the assessing officer might pass an order of assessment or re-assessment. The petitioner would then have a spate of statutory remedies. The judge who heard a writ petition from the Chennai-based Jayaram Paper Mills Ltd challenging a notice of July 7, 2008 issued by Assistant Commissioner of Income-Tax, Company Circle II(3), Chennai, for AY 2004-05 ruled that the reason recorded by second respondent (ACI-T) “cannot be said to be vague”.
For AY 2004-05, petitioner filed a return of income disclosing a total income of Rs 3.07 lakh. This income was arrived at by petitioner by showing an income of Rs 12.80 lakh as interest earned in money lending, under head ‘business’ and after claiming admissible expenses and set off against brought forward losses. The I-T department had contended that certain expenditure unconnected with earning of interest was found to have been claimed and also that the brought forward business loss was wrongly set off against income from other sources.
Consequently, it sought to revise the original assessment of income. Citing several case laws on the issue, the judge said that the Supreme Court made it clear in Raymond Woollen Mills Ltd vs ITO [(1999) 236 ITR 34 (SC)] that it would be open to assessee to prove assumption of assessing officer to be erroneous and that there were no new facts while participating in the proceedings.
However, reason recorded by Assistant Commissioner of I-T in this case could not be said to be vague or a mere doubt. Once it was found that assessing officer had reason to believe that there was income escaping assessment, it was not open to this court to make a roving enquiry since the reasons were not justiciable. Therefore, the case was not one that warranted interference at this stage, judge held. The writ petition was dismissed.
