Bombay High Court dismisses plea by minister Chhagan Bhujbal challenging tax assessment notice

The Bombay High Court recently dismissed a petition filed by Maharashtra Cabinet Minister of Food and Civil Supply Chhagan Bhujbal, challenging a show-cause notice issued to him by the Income Tax Department. The notice was towards a re-assessment of his taxable income under Section 148 of the Income Tax Act (ITA). .Bhujbal received the notice in March 2019, stating that the department had reasons to believe that some income chargeable to tax for the assessment year (AY) 2012-13 had escaped assessment within the meaning of Section 147 of ITA. As per Section 147, if an assessing officer has reasons to believe that any income chargeable to tax has escaped assessment, then he may re-assess such income and any other income that comes to his notice in the course of proceedings, or recompute the loss..A Bench of Justices KR Shriram and Amit B Borkar observed in its order that "they did not see any reason to exercise their extra-ordinary jurisdiction under Article 226 of the Constitution of India and prohibit the authority from proceeding further in the matter". In view of this, they dismissed the petition. .The notice to Bhujbal stated that he filed a return of income tax for the 2012-13 assessment year, declaring a total income of ₹3,72,997. The notice claimed that through credible information received from the Deputy Director of Income Tax, "the suspect person has defrauded the Maharashtra government by preparing fabricated documents and used them as genuine documents. The accused persons especially the public servants by misusing their designation under criminal conspiracy committed acts like to cheat government and to cause financial loss and to gain the developer KS Chamankar Enterprises".The assessment notice had thus been sent for framing a proper assessment and bring to tax the appropriate income. Bhujbal filed his objection to the notice through a letter on October 10, 2019, that was rejected by way of an order of the Department. Bhujbal then filed his submissions to comply with the notice. In response to such submissions, Bhujbal was issued a notice to show-cause as to why the 'unexplained amount' of ₹3,13,00,000, which was a transaction from the months of May and October of 2011, should not be added to income for assessment. Aggrieved by the notice, Bhujbal filed the present petition. The High Court had granted an ad-interim stay on the effect of the notice in December 2019, which was existing till disposal of the petition. .Advocate K Gopal, appearing for Bhujbal, submitted that the notice under challenge had not been validly issued and was without jurisdiction. He submitted that:the reasons do not indicate what was the amount of income which escaped assessment; andthe information based on which the notice was sent was received at 5.47 pm, while the notice was sent at 10.49 pm, which created doubt as to whether the authority could even apply its mind before sanctioning issuance of notice. .Advocate Shyam Walve appearing for the Income Tax department, contended that Bhujbal never had any problem when he received the notice in March 2019 nor when he received reasons for reopening the assessment, and neither when the objections were rejected by the order. He contended that Bhujbal "suddenly woke up and decided to challenge the notice" under Section 148 when he received a show-cause notice in December 2019. Having participated in the assessment proceedings, Bhujbal cannot challenge the notice, Walve submitted. He added that the present petition did not warrant any interference from the Court through its extraordinary jurisdiction. However, if Bhujbal is aggrieved by the assessment order, he could always challenge the same before the appellate forums as per the alternative remedies available to him, Walve stated. .The test that the Bench applied in the present case was whether the Assessing Officer has any tangible material before him for formulation of the belief that income had escaped assessment.In the present case, the Court found there to be tangible material which disclosed a reason for the reassessment. The Bench did not seem to find anything to indicate a non-application of mind and, therefore, dismissed the petition. .[Read Order]