Company in Free Trade Zone Must File Objections to Assessing Authority for Notice under Section 148

The Court directed the petitioner, a company in a free trade zone, to file objections to the assessing authority regarding a notice issued under Section 148 for the assessment year 2000-01. The petitioner's reliance on Section 43-A, not present during notice issuance, was noted. The assessing authority was instructed to address the objections before proceeding with assessment, emphasizing the importance of comprehensive review before further proceedings. The judgment disposed of the writ petition, highlighting the need for objections to be raised and addressed thoroughly in assessment proceedings.

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Issues:
Challenging validity of notice under Section 148 of the Income-Tax Act for assessment year 2000-01.

Analysis:
The petitioner, a company established in a free trade zone, filed income tax returns for several years, including declaring NIL taxable income for the assessment year 2000-01 under Section 10-A of the Act. The assessing authority issued a notice under Section 148, citing excess claim of exemption due to depreciation not deducted from income. The petitioner challenged the notice, arguing that since its income was exempt under Section 10-A, no action could be taken under Section 147. The petitioner emphasized that the depreciation claimed was consistent with previous years and irrelevant to the exemption status. The Standing Counsel contended that the petitioner wrongly claimed depreciation, constituting escaped income under Explanation 2 of Section 147. Referring to GKN Driveshafts case, the Court directed the petitioner to file objections to the reasons recorded before the assessing authority, considering the petitioner's reliance on Section 43-A inserted post-notice issuance.

The Court acknowledged the petitioner's reliance on Section 43-A, absent during the notice issuance, and directed the petitioner to submit objections to the assessing authority within four weeks. The assessing authority was instructed to address the objections through a speaking order before proceeding with the assessment. The judgment was delivered, disposing of the writ petition without delving into the substantive contentions, emphasizing the need for the petitioner to raise objections and the assessing authority to address them comprehensively before further assessment proceedings.

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