“Feigning Ignorance of Law by Authorities Only Increases Burden of Courts”: Bombay HC Quashes Re-Assessment [Read Order]

Quashing a re-assessment notice the Bombay High Court observed that “Feigning Ignorance of Law by Authorities only increases Burden of Courts”.

The petitioner in the writ petition is Deepak Marda.

The petition challenges the impugned notice under section 148 of the Income Tax Act, 1961 and the impugned order on objection in addition to the impugned reassessment proceedings for Assessment Year (A.Y.) 2014- 15.

The Counsel for the petitioner submitted that the reopening of the assessment is made beyond four years from the end of the relevant assessment year 2014-15 without demonstrating any failure on the part of the petitioner, to disclose material facts and consequently is vitiated in terms of the first proviso to section 147 of the Income Tax Act.

The Counsel further contended that the statutory requirements under section 147 i.e. the assessee failed to disclose, truly and fully, any material facts necessary for the assessment is not established inasmuch as no such allegation is made either in the impugned notice or in the reasons recorded.

The Counsel for the respondents contended that the expression “reason to believe” cannot be read to mean that the AO should have finally ascertained the fact by evidence or conclusion. At the stage of issue of notice, the only question was with the relevant material a reasonable person could have formed a requisite belief of escapement of income and been satisfied.

The Coram consisting of Justice Kamal Khata and Justice Dhiraj Singh Thakur, observed that there is full and true disclosure by the petitioner, which transaction has been accepted under the head claimed by the petitioner. Consequently, merely because another director of the same company had disclosed the income received differently, cannot be a ground for reopening and the same is evidently a change of opinion not only based on conjectures and surmises but also a case of blindly relying on information and borrowed satisfaction which is not permitted for reopening.

The Court expressed its view that “It is axiomatic that the law declared by this Court is binding on all authorities functioning within the jurisdiction of this Court. It is not open to the Assessing Officer to feign ignorance of the law declared by this Court and pass orders in defiance of the law laid down by this Court.”

“It is an imperative duty of the authorities to be updated with the law and to apply it to the case at hand before taking decisions and passing orders. Feigning ignorance of law by authorities only increases the burden of the Courts” the Bench commented.

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