2016 (4) TMI 561 - HC - Income Tax

Court orders fresh disposal of petitioner's objections on Income Tax Notice under Section 148.

Hubtown Ltd. Versus Dy. Commissioner of Income Tax & Another

The court set aside the Assessing Officer's previous order and instructed a fresh disposal of the petitioner's objections regarding the Notice issued ... Reopening of assessment - petitioner's grievance is that the impugned notice dated 27th March, 2015 is completely without jurisdiction particularly on the ground that the impugned notice is issued beyond the period of 4 years from the end of the relevant Assessment Year 2008-09 - Held that:- The Assessing Officer has proceeded on a fundamentally erroneous assumption that the notice under Section 148 of the Act cannot be a subject matter of challenge disregarding the binding decision of the Apex Court in G.K.N. Driveshaft Ltd. Vs. Income Tax Officer, [2002 (11) TMI 7 - SUPREME Court]. In fact, the entire procedure of an assessee objecting to the reasons in support of the impugned notice recorded by the Assessing Officer is to ensure that the Assessing Officer has second look at the reasons recorded by him on consideration of the objections. In view of the fact that the Assessing Officer has completely misunderstood the scope of an order disposing of the objections to the reopening notice, we set aside the order dated 8th February, 2015. However, we restore the petitioner's objections to the impugned notice dated 27th March, 2015 for fresh disposal to the Assessing Officer to pass a final order after due consideration of the objections filed by the petitioner in accordance with law. Mr. Mohanty, learned Counsel for the Revenue states that the objections would be disposed of within a period of 4 weeks from today. Issues:Challenge to Notice under Section 148 of the Income Tax Act, 1961 for reopening assessment for A.Y. 2008-09.Analysis:The petition challenges a Notice dated 27th March, 2015 issued under Section 148 of the Income Tax Act, 1961, seeking to reopen the assessment for A.Y. 2008-09. The petitioner argues that the notice is without jurisdiction as it was issued beyond the 4-year period from the end of the relevant assessment year. The petitioner contends that the Assessing Officer failed to fully disclose all relevant material facts during the initial assessment proceedings. Detailed objections were filed, highlighting that the reasons in support of the notice do not establish the Assessing Officer's jurisdiction under Section 148 of the Act. However, the Assessing Officer disposed of the objections without considering them adequately, leading to a challenge by the petitioner.The Assessing Officer's approach was deemed fundamentally flawed as it disregarded the Supreme Court's decision in G.K.N. Driveshaft Ltd. Vs. Income Tax Officer, 259 ITR 90. The court emphasized that the procedure of an assessee objecting to reasons for a notice under Section 148 is crucial to ensure a thorough review by the Assessing Officer. This process aims to prevent arbitrary reopening of assessments and provides an opportunity for the Assessing Officer to withdraw the notice if objections are found valid. The court highlighted that the order disposing of objections is not a mere formality; it requires the Assessing Officer to carefully consider the objections before deciding on the sustainability of the notice.Due to the Assessing Officer's misunderstanding of the objections' scope, the court set aside the previous order and instructed a fresh disposal of the petitioner's objections. The Assessing Officer was directed to pass a final order after duly considering the objections in accordance with the law. The Revenue Counsel assured that the objections would be resolved within 4 weeks, with a further 10-week stay on assessment proceedings to allow for proper review and potential challenge by the petitioner. Ultimately, the petition was disposed of with no order as to costs.