Court emphasizes procedural compliance in challenging income tax re-assessment notice

The court addressed a writ petition challenging a re-assessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2006-07. The petitioner directly approached the court without filing objections before the Assessing Officer, arguing the re-assessment was unjustified. The court emphasized following the prescribed procedure, directing the petitioner to file objections before the Assessing Officer. The court underscored the importance of adherence to established procedures to avoid unnecessary litigation, ensuring the petitioner's interests were protected throughout the re-assessment process.

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Issues:
1. Challenge to re-assessment notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2006-07.
2. Procedure to be followed upon receiving a notice under Section 148 as per Supreme Court guidelines.
3. Petitioner's approach of directly approaching the court without filing objections before the Assessing Officer.
4. Legal and statutory parameters of the "reasons to believe" for re-assessment.
5. Interpretation of directions issued under Section 144C(5) regarding the attribution of income.
6. Compliance with the procedure laid down by the Supreme Court in GKN Driveshafts (India) Limited for re-assessment proceedings.
7. Protection of petitioner's interest and directions to file objections before the Assessing Officer.

Analysis:
1. The judgment concerns a writ petition challenging a re-assessment notice under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2006-07. The petitioner filed the petition after receiving reasons to believe on 8th April, 2013, enclosed with the notice dated 30th March, 2013.

2. The Supreme Court's guidelines in GKN Driveshafts (India) Limited emphasize the procedure to be followed upon receiving a notice under Section 148. The noticee is expected to file a return, seek reasons for the notice, file objections, and the Assessing Officer must dispose of the objections by passing a speaking order before proceeding with the assessment.

3. The petitioner in this case directly approached the court without filing objections before the Assessing Officer. The petitioner argued that the re-assessment proceedings were unjustified and illegal, citing precedents where court interference without approaching the Assessing Officer was allowed in exceptional cases.

4. The petitioner contended that the "reasons to believe" for re-assessment did not meet legal and statutory parameters, highlighting discrepancies in the assessment order related to the remuneration cost of expatriate employees.

5. The judgment delves into the interpretation of directions issued under Section 144C(5) regarding the attribution of income, emphasizing the rejection of certain propositions made by the Assessing Officer and the Panel's decision on the issue of fixed place Permanent Establishment (P.E).

6. The court emphasized the importance of following the procedure laid down by the Supreme Court in GKN Driveshafts (India) Limited for re-assessment proceedings, stating that deviating from this procedure may not be appropriate and could lead to increased litigation.

7. To protect the petitioner's interest, the court passed directions for filing objections before the Assessing Officer within a specified period, setting a hearing date for addressing arguments on the objections. The Assessing Officer was directed to dispose of the objections by a speaking order, allowing the petitioner time to approach the court if objections were rejected.

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