While allowing a petition filed by General Electoral Trust, the division bench of Bombay High Court observed that, Mere non filing of return of income does not give jurisdiction to the Assessing Officer to re-open the assessment.
The petitioner General Electoral Trust has challenged notice dated 31st March, 2015 issued under Section 148 of the Income Tax Act, 1961 seeking to re-open assessment for the assessment year 2008-09. The reasons in support of the impugned notice indicate that for Assessment Year 2008-09 the petitioner has not filed its return of income nor obtained PAN (Permanent Account Number). This even when the petitioner had received contribution aggregating to Rs.6.58 crores during previous year relevant to Assessment Year 2008-09.
The division bench comprising of Justices M S Sanklecha and A K Menon observed that, âmere non filing of return of income does not give jurisdiction to the Assessing Officer to re-open the assessment unless the person concerned has total income which is assessable under the Act exceeding maximum amount which is not chargeable to Income Taxâ.
The bench also observed that, âthis is provided in Explanation 2 to Section 147 of the Act. This is for the reason that in terms of Section 139(1) of the Income Tax Act the obligation to file a return of income is only when the total income of a person exceeds the maximum amount not chargeable to Tax. So also the obligation to obtain PAN only arises on the income being in excess of the maximum amount not chargeable to tax. Therefore, non filing of return of income and/or not obtaining of PAN does not ipso facto give jurisdiction to reopen an assessment under Section 147/148 of the Act.
âPrima facie the jurisdiction even in case of non filing of return of income to issue notice of re-opening notice is a reasonable belief of the Assessing Officer that income chargeable to tax has escaped assessment. The condition precedent for issuance of notice under Section 147/148 of the Act is no different in cases where no return of income has been filed. If clause (a) of explanation 2 to Section 147 of the Act is to be applied then it must be established that the income of the person to whom the notice is issued is in excess of the maximum amount not chargeable to tax. This could have been done by collecting information under Section 133B of the Income Tax Actâ.
While setting aside the impugned notice the court also observed that, âthe re-opening notice has to be tested by the terms recorded for issuing the notice and the order disposing of the objection cannot be the basis for sustaining the impugned notice. No prejudice to the Assessee, as contended by the Revenue, cannot be the basis for acquiring jurisdiction to issue a re-opening notice. Prima facie the impugned notice is without jurisdictionâ.
Read the full text of the order below.
