Reassessment Notice Issued Within 5 Hours Of Receiving Information, Bombay High Court Says Nothing Wrong, If There Is Application Of Mind

The petitioner/assessee was Maharashtra's Cabinet Minister. He filed the return of income for the assessment year 2012–13, which was accepted without scrutiny, and an assessment order was passed.

The Assessing Officer received a letter via email stating that the assessee had defrauded the Maharashtra government. The assessee has prepared fabricated/bogus documents and used them as genuine documents to get a plot for building the State Central Library.

Consequently, the AO issued a reassessment notice to the assessee on the same day. The assessee challenged the reassessment notice before the Bombay High Court.

The issue raised was whether there was reason to believe that income had escaped assessment and whether the Assessing Officer has tangible material before him for the formation of that belief. Once a tangible basis has been disclosed for re-opening the assessment, it would not be appropriate for this court to prevent any enquiry whatsoever by the Assessing Officer. In this case, the reasons indeed disclose what that tangible material is.

The assessee contended that the AO received the information only at 5.47 p.m. and the reassessment notice was issued at about 10:49 p.m. on the same day. Thus, how could the authorities, which had granted the sanction for the issuance of notice, be said to have applied their mind?

The department has alleged that the assessee has prepared fabricated/bogus documents and used them as genuine documents to get a plot for building the State Central Library.

The court has observed that the power vested in the commissioner under Section 151 of the Income Tax Act to grant or not to grant approval to the Assessing Officer to re-open an assessment is coupled with duty, and the commissioner is duty bound to apply his mind to the proposal put up to him for approval in the light of the material relied upon by the Assessing Officer. Such power cannot be exercised casually, in a routine and perfunctory manner.

The court noted that there was nothing to indicate that there was non-application of mind. Merely because the information was received at 5.47 p.m. and the notice was issued by 10.49 p.m. would not mean that there has been non-application of mind.

Case Title: Chhagan Chandrakant Bhujbal Vs ITO

Citation: 2022 LiveLaw (Bom) 84

Case No.: Writ Petition No. 3597 of 2019

Counsel For Appellant: Advocate K. Gopal

Counsel For Respondent: Advocate Sham V. Walve

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