Case Note & Summary
The petitioner, Dell India Pvt. Ltd., is engaged in the manufacture and sale of computer hardware and related products. For the Assessment Year 2009-10 (Financial Year 2008-09), it filed its return of income on 30.09.2009 declaring a total loss of Rs. 39,56,399/-. The return was processed under Section 143(3) of the Income Tax Act, 1961. Subsequently, the Joint Commissioner of Income Tax (LTU), Bengaluru, issued a notice dated 27.03.2014 under Section 148 read with Section 147 of the Act seeking to reassess the income for the said assessment year. The petitioner challenged the notice by filing a preliminary objection as to the jurisdiction of the first respondent to issue the notice. The first respondent passed an order dated 24.02.2015 rejecting the preliminary objection. Aggrieved, the petitioner filed a writ petition under Article 226 of the Constitution of India praying to quash the notice and the order rejecting the preliminary objection. The legal issue was whether the reassessment notice issued beyond four years from the end of the relevant assessment year was valid when there was no allegation of failure to disclose material facts by the assessee. The petitioner argued that the notice was without jurisdiction as it was issued beyond four years and there was no allegation of failure to disclose material facts. The respondents contended that the notice was valid. The court analyzed the provisions of Section 147 and 148 of the Act and held that where a reassessment notice is issued beyond four years from the end of the relevant assessment year, the Assessing Officer must record satisfaction that income escaped assessment due to failure on the part of the assessee to disclose material facts. In the absence of such allegation, the notice is without jurisdiction. The court quashed the notice dated 27.03.2014 and the order dated 24.02.2015 rejecting the preliminary objection, allowing the writ petition.
Headnote
A) Income Tax - Reassessment - Section 147, 148 Income Tax Act, 1961 - Jurisdiction - Where reassessment notice is issued beyond four years from the end of the relevant assessment year, the Assessing Officer must record satisfaction that income escaped assessment due to failure on part of assessee to disclose material facts - In the absence of such allegation, the notice is without jurisdiction and liable to be quashed (Paras 3-5). B) Income Tax - Reassessment - Preliminary Objection - Section 147, 148 Income Tax Act, 1961 - Jurisdiction - Assessee can raise preliminary objection as to jurisdiction of Assessing Officer to issue reassessment notice - Such objection can be decided before filing return of income - Held that the order rejecting preliminary objection is unsustainable (Paras 4-5).
Issue of Consideration
Whether the reassessment notice under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2009-10 issued beyond four years from the end of the relevant assessment year is valid when there is no allegation of failure to disclose material facts by the assessee.
Final Decision
The writ petition is allowed. The notice dated 27.03.2014 issued under Section 148 read with Section 147 of the Income Tax Act, 1961 for Assessment Year 2009-10 and the order dated 24.02.2015 rejecting the preliminary objection are quashed.
Law Points
- Reassessment notice under Section 147/148 of Income Tax Act
- 1961 beyond four years requires satisfaction that income escaped assessment due to failure to disclose material facts
- Jurisdiction of Assessing Officer must be examined before proceeding with reassessment
- Preliminary objection as to jurisdiction can be raised and decided before filing return
