2019 (10) TMI 473 - HC - Income Tax

Court sets aside order, remits matter for speaking order, emphasizes procedural compliance

The Court allowed the writ petition in part, setting aside the order rejecting objections and remitting the matter back to the Assessing Officer for ... Speaking order requirement - reasons for reopening - reopening of assessment - notice under section 148 - remand for passing speaking order - mandate in GKN Driveshafts India Pvt. Ltd.Speaking order requirement - reasons for reopening - mandate in GKN Driveshafts India Pvt. Ltd. - The order of the Assessing Officer rejecting the assessee's objections to the reasons for reopening the assessment. - HELD THAT: - The reasons for reopening were furnished on 19.07.2018 in the brief form that the assessee had failed to furnish true and correct details. The assessee filed detailed objections on 14.09.2018. The Assessing Officer's disposal dated 09.10.2018 consists of brief observations repeating dispatch details and a tersely stated conclusion based on analysis of RDPL Singapore financials. The High Court held that the dismissal of objections by a single line order does not comply with the requirement that objections be disposed of by a speaking order. The court relied on the supervisory principle articulated in GKN Driveshafts India Pvt. Ltd., that reasons must be furnished within a reasonable time and objections, if filed, must be disposed of by passing a speaking order before proceeding further. [Paras 9, 10]The order dated 09.10.2018 rejecting the objections is not a speaking order and is set aside.Reopening of assessment - notice under section 148 - remand for passing speaking order - Relief to be afforded consequent to the finding that the objections were not disposed of by a speaking order. - HELD THAT: - Having found the rejection non speaking, the High Court remedied the procedural deficiency by remitting the matter to the Assessing Officer to consider and decide the objections on merits by passing a speaking order. The court expressly refrained from expressing any view on the merits of the reopening, including the limitation contentions, leaving those questions open for appropriate adjudication at the next stage. The Assessing Officer was directed to pass the speaking order within three weeks from receipt of the High Court's order. [Paras 11, 12]Matter remitted to the Assessing Officer to pass a speaking order on the objections within three weeks; other questions, including limitation, left open.Final Conclusion: Writ petition allowed in part: the Assessing Officer's order dated 09.10.2018 rejecting objections is set aside and the matter is remitted for a speaking disposal of the objections within three weeks; no decision is made on the merits of the reopening or limitation issues. Issues involved:Challenging notice under Section 148 of the Income Tax Act and consequential order rejecting objections for reopening assessment for the assessment year 2011-12.Analysis:1. The petitioner, engaged in the business of distribution of various products, filed its return of income for the assessment year 2011-12, which was selected for scrutiny. The case involved Transfer Pricing Officer's order, objections before the Dispute Resolution Panel, and subsequent assessment orders.2. The Income Tax Appellate Tribunal deleted certain adjustments made in the assessment order and remanded the issue for further consideration. The respondent then sought to reopen the assessment under section 147, leading to a dispute regarding the timeline for issuing the notice and the objections raised by the petitioner.3. The petitioner contended that the reopening was time-barred and objected to the reasons provided for reopening. The respondent argued that the objections were duly considered, and the order rejecting them was passed in compliance with legal requirements.4. The Court observed that the rejection of objections lacked a detailed explanation, contrary to the requirement of passing a speaking order as per legal precedents. The Court referred to the GKN Driveshafts India Pvt.Ltd. case and emphasized the necessity of a reasoned order on objections raised by the assessee.5. Consequently, the Court allowed the writ petition in part, setting aside the order rejecting objections and remitting the matter back to the Assessing Officer for passing a speaking order within three weeks. The Court left other issues, including the limitation aspect, open for future consideration.6. The judgment focused on procedural compliance and the importance of providing a detailed explanation when rejecting objections raised by the taxpayer. The Court's decision aimed to ensure adherence to legal principles and fair consideration of objections in assessment proceedings.