Court reviews challenge to Income Tax Act orders on lack of reasons for reopening notices

The court considered a challenge to orders under Section 143(3) of the Income Tax Act for Assessment Years 2007-08 and 2008-09, focusing on the lack of reasons provided for reopening notices under Section 150 of the Act. The petitioner argued the orders were unlawful due to the absence of reasons, citing GKN Driveshaft India Ltd. v/s. ITO. The Revenue defended the reopening based on an Appellate order directing reassessment within 12 months. The court stayed the orders pending further proceedings to assess the delay in compliance with the Appellate Authority's directions.

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Issues:
Challenge to orders under Section 143(3) of the Income Tax Act for Assessment Years 2007-08 and 2008-09; Lack of furnishing reasons for reopening notices; Invocation of Section 150 of the Act for reopening notices beyond six years; Dispute over whether reasons for reopening need to be provided when directed by Appellate Authority; Alleged deliberate delay in complying with Appellate Authority's directions.

Analysis:
The Petitioner contested two orders dated 31 March 2019 by the Assessing Officer under Section 143(3) of the Income Tax Act for Assessment Years 2007-08 and 2008-09, which stemmed from notices dated 11 March 2019 seeking to reopen the assessments beyond the six-year period under Section 150 of the Act. The Petitioner argued that the orders were unlawful as reasons for the notices were not provided, despite requests, contrary to the Supreme Court's decision in GKN Driveshaft India Ltd. v/s. ITO 259 ITR 19.

On the other hand, the Revenue justified the reopening notices, issued following an Appellate order directing the Petitioner to reassess for the mentioned years within 12 months. The Revenue contended that the Petitioner's failure to file the return of income and delayed request for reasons hindered the assessment process, making the application of GKN Driveshaft (I) Ltd. inapplicable and potentially disentitling the Petitioner from extraordinary writ remedy.

Regarding the requirement to provide reasons for reopening, the Revenue argued that when reopening is done as per Appellate Authority's directions, the necessity of furnishing reasons may not apply as parties are aware of the reasons from the Appellate order. The Revenue asserted that the Assessing Officer is merely following the Appellate Authority's directions, and contentions would be addressed during reassessment. The Revenue posited that GKN Driveshaft's decision might not be applicable in the current scenario, and the Petitioner's conduct could warrant dismissal of the Petition, necessitating detailed examination during the final hearing.

Additionally, the Court noted the need to assess whether the nearly eleven-month delay in complying with the Appellate Authority's directions for issuing reopening notices was deliberate, considering the GKN Driveshaft decision. As an interim measure, the Court stayed the impugned orders pending final disposal of the Petition, scheduled for 21 November 2019.

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