2020 (9) TMI 333 - HC - Income Tax

Court orders AO to provide reasons to petitioner promptly, allow objections, and issue speaking order, following prescribed procedure.

The High Court directed the Assessing Officer to provide reasons to the petitioner within one week and allowed the petitioner to file objections to the ... Reopening assessments under section 147 and notice under section 148 - duty of the Assessing Officer to furnish reasons for issuance of section 148 notice - right of the noticee to receive reasons and to file objections - obligation to dispose objections by passing a speaking order - prohibition on passing final assessment without supplying reasons and disposing objectionsDuty of the Assessing Officer to furnish reasons for issuance of section 148 notice - right of the noticee to receive reasons and to file objections - obligation to dispose objections by passing a speaking order - Assessing Officer must supply the recorded reasons for issuance of the notice dated 26.2.2020 and afford the petitioner an opportunity to file objections which must be decided by a speaking order. - HELD THAT: - The Court applied the principle laid down in GKN Driveshafts (India) Ltd. that where a notice under section 148 is issued the Assessing Officer is bound to furnish the reasons for issuance within a reasonable time; on receipt of those reasons the noticee is entitled to file objections and the Assessing Officer must dispose of such objections by passing a speaking order. The petitioner had requested supply of reasons by representation dated 3.4.2020 which had not been complied with. In consequence, the Court directed the Assessing Officer to supply the reasons within one week of receipt of the certified copy of the order and permitted the petitioner one week thereafter to file objections; the Assessing Officer is required to consider and decide those objections by a speaking order within a reasonable time.Direction issued to supply reasons, permit filing of objections, and decide those objections by a speaking order.Prohibition on passing final assessment without supplying reasons and disposing objections - reopening assessments under section 147 and notice under section 148 - No final order pursuant to the section 148 notice shall be passed unless the procedure of supplying reasons and disposing objections as directed is complied with. - HELD THAT: - The Court restrained the Assessing Officer from proceeding to pass any final order on the basis of the section 148 notice dated 26.2.2020 until the procedural requirements-supply of recorded reasons and adjudication of the petitioner's objections by a speaking order-are fulfilled. This direction ensures compliance with the procedural safeguards recognized by the Supreme Court in GKN Driveshafts and guards the petitioner's right to a fair opportunity to be heard before finalization of the assessment.Assessing Officer barred from passing any final order pursuant to the notice until compliance with the directions to supply reasons and decide objections.Final Conclusion: Writ petition disposed by directing the Assessing Officer to supply the recorded reasons within one week of receipt of certified copy of the order, permit the petitioner to file objections within one week thereafter, and decide those objections by a speaking order within a reasonable time; no final order under the section 148 notice shall be passed until these steps are complied with. Issues:1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16.2. Requirement of providing reasons for issuing notice and opportunity of hearing to the petitioner.3. Compliance with the due procedure by the Assessing Officer.Analysis:1. The petitioner challenged the notice dated 26.2.2020 issued by the respondent No.2 under Section 148 of the Income Tax Act, 1961 for the assessment year 2015-16, alleging that her income chargeable to tax had escaped assessment. The petitioner requested reasons for the notice but had not received them, leading to the belief that no reasons were recorded by the respondent No.2. The petitioner contended that the notice was issued without following due procedure, as per Section 147 of the Act of 1961.2. The petitioner's counsel relied on the judgment of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. vs. Income-Tax Officer, emphasizing the obligation of the Assessing Officer to furnish reasons within a reasonable time upon issuing a notice under Section 148. The petitioner argued that the Assessing Officer had failed to provide reasons and was proceeding to pass a final order without granting proper opportunity of hearing. The petitioner sought adherence to the procedure outlined by the Supreme Court for issuing notices under Section 148.3. The High Court, referencing the judgment in GKN Driveshafts (India) Ltd., directed the Assessing Officer to supply reasons to the petitioner within one week of the order, following the petitioner's representation dated 3.4.2020. Upon receiving the reasons, the petitioner was granted one week to file objections to the notice dated 26.2.2020. The Assessing Officer was instructed to consider these objections and pass a speaking order within a reasonable time. The Court explicitly stated that any final order pursuant to the notice should not be passed without adhering to the prescribed procedure, emphasizing the importance of providing reasons and opportunity for objections and hearing before finalizing the assessment.