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 ... Validity of Reopening of assessment u/s 147 - Petitioner asked for supply of reasons along with copy of sanction letter but the same have not been supplied to her till date - non passing of speaking order - HELD THAT:- As decided in GKN Driveshafts (India) Ltd [2002 (11) TMI 7 - SUPREME COURT] when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order. In view of the above, this writ petition is disposed of with a direction to the Assessing Officer to supply the reasons to the petitioner pursuant to her representation dated 3.4.2020 (Annex.-6) within a period of one week from the date of receipt of certified copy of this order. On receipt of reasons, the petitioner may file her objections within a period of one week thereafter to issuance of notice dated 26.2.2020 and the Assessing Officer shall consider those objections and dispose of the same by passing a speaking order within a reasonable time. 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.