Court sets aside assessment order, remands matter for review. Deadlines set for return, reasons, objections.

The Court allowed the writ petition, setting aside the assessment order and remanding the matter back to the assessing authority. The petitioner was directed to file the return within two weeks, following which the reasons recorded must be provided within another two weeks. Any objections raised by the petitioner must be decided within two weeks, after which the assessing authority can proceed in accordance with the law.

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Issues: Challenge to initiation of proceeding under Section 148 of the Income Tax Act, 1961 for assessment year 1998-99 and re-assessment order dated 24.03.2006.

Analysis:
The petitioner, a company incorporated under the Indian Companies Act, 1956, challenged the initiation of proceedings under Section 148 of the Income Tax Act, 1961, for the assessment year 1998-99 and the subsequent re-assessment order dated 24.03.2006. The petitioner filed a return disclosing income of Rs.1640 for the year under consideration, and the Income Tax Officer passed the assessment order under Section 143 (3) of the Act. Subsequently, a notice under Section 148 was issued to reopen the proceedings, followed by notices under Section 142 (1) asking for necessary details and the filing of the return. The petitioner requested reasons for the initiation of proceedings, but the assessing authority insisted on filing the return first. The petitioner filed a writ petition challenging the validity of the proceedings, and the Court stayed the proceedings. However, the assessing authority passed the assessment order in defiance of the interim order. The petitioner contended that reasons were not provided, and the source of information was not disclosed in the assessment order.

The respondent argued that the petitioner, having not filed the return, was not entitled to the reasons recorded by the assessing authority. They cited the case law of GKN Driveshafts (India) Ltd. Vs. Income-tax Officer, emphasizing that reasons can only be provided after the return is filed. The respondent claimed that the petitioner's lack of cooperation led to the ex-parte order. The Court noted that it had passed an interim order staying the proceedings, but the assessment order was passed before the receipt of the interim order. The Court directed the petitioner to file the return in compliance with the notice under Section 148, after which the assessing authority must provide the reasons recorded. The petitioner can challenge the initiation of proceedings and participate further. If objections are filed, the assessing authority must decide on them before proceeding with the assessment.

In conclusion, the writ petition was allowed, setting aside the assessment order and remanding the matter back to the assessing authority. The petitioner was instructed to file the return within two weeks, and upon receipt, the reasons recorded must be provided within another two weeks. Any objections raised by the petitioner must be decided within two weeks, after which the assessing authority can proceed in accordance with the law.

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