Dr. Ms. Anita Sumanth J of the Madras High Court in a single order reported at [2020] 16 ITR-OL 383 (Mad) disposed three writ petitions( two in favour of assesse and one in favour of department )on one go on a common proposition of law relating to the validity of proceedings for reassessment in terms of section 147 of the Income-tax Act, 1961. Her orders in their usual leave her words of wisdom for the department machinery. paragraph 26 thus contain such words :
26. The above settled position has been reiterated ad nauseam by courts, indisputably settling the proposition that a reassessment, be it within or beyond four years, has to be based on tangible material dehors that which is available on record, that has come to the notice of the Assessing Officer. Thus, once an intimation has been issued, be it manually by the Assessing Officer or electronically by CPC, the mechanism for selection of returns for assessment must be robust, ensuring that issues requiring scrutiny are picked up promptly and addressed in time. If the Department lets sail this ship, recourse to proceedings for reassessment is available only if the Department comes into possession of material apart from that already available as part of its records or if the primary particulars reveal discrep- ancies that are not explained or resolved by the accompanying documen- tation. This is subject, therefore, to the assessee having placed on record all material necessary for the appreciation of the issues arising for assessment including financials and annexures along with its return of income, at the first instance.”
On the merits the order go as under:
“19. The return of income filed by Indian Syntans was accompanied by financials that contained a note explaining the lease transaction and a perusal of the reasons for reassessment make it clear that the reasons are based entirely upon the documentation accompanying the return and no material extraneous to that already on record or a new, has been discov- ered by the respondent indicating income that had escaped taxation. This is the position both as regards the lease income as well as the claim of administrative expenses.
20. In such circumstances, the escapement of income, if any, cannot be attributed to the assessee. A full and true disclosure has been made in so far as all material germane to the computation of income forms part of the return of income.
21. In W. P. No. 9353 of 2018, the impugned proceedings relate to the assessment year 2015-16 and have been initiated within a period of four years from the end of the relevant assessment year, as provided for under section 147(1) of the Act. The mere fact that the respondent had not orig- inally taken the return up for scrutiny by issuing notice under section 143(2) would not debar the Department from initiating proceedings for reassessment. The impugned proceedings for reassessment are, according to the reasons for reassessment as well as the counter filed by the respond- ent, based upon certain discrepancies noted in the figure of bad and doubt- ful debts in the statement of computation of income and the financials. I
thus, find no legal infirmity in the initiation of proceedings for reassess- ment in this case.”