2020 (12) TMI 571 - HC - Income Tax

Court stresses jurisdictional objections before re-assessment. Follow GKN Driveshafts procedure. Timely disposal crucial.

Krishnaraj Chandrasekar Versus The Assistant Commissioner of Income Tax Non Corporate Circle 2 Income Tax Department, The Principal Commissioner of Income Tax, Coimbatore 1 Income Tax Department

The court directed the Assessing Officer to address jurisdictional objections before proceeding with re-assessment, emphasizing the importance of ... Validity of assessment - no notices u/s 143(2) have been issued even prior to the disposal of the objections filed by the petitioner challenging the assumption of jurisdiction - HELD THAT:- This is contrary to the procedure laid down by the Supreme Court in GKN DRIVESHAFTS (INDIA) LTD. [2002 (11) TMI 7 - SUPREME COURT] and the notices under Section 143(2) are thus not tenable. As far as the 5th year is concerned, though no notice under Section 143(2) has been issued, the objections have not been disposed till date. While keeping the impugned notices issued under Section 143(2) in abeyance, R1 is directed to dispose the objections filed by the petitioner to the assumption of jurisdiction within a period of two (2) weeks after hearing the petitioner either by way of physical hearing or virtually. For this purpose, the petitioner will appear before the Assessing Authority on Monday, the 7th of December, 2020 at 10.30 a.m. without awaiting any further notice in this regard. The mode of hearing alone shall be intimated to the petitioner in advance. Issues:Challenging re-assessment proceedings under Sections 147 and 148 of the Income Tax Act, 1961.Analysis:The judgment concerns five writ petitions challenging re-assessment proceedings initiated under Sections 147 and 148 of the Income Tax Act, 1961. The Assessing Officer issued Section 143(2) notices for four assessment years, indicating an inclination towards re-assessment on merits. For the fifth year, no Section 143(2) notice was issued, and objections to the assumption of jurisdiction are pending. An order of scrutiny under Section 143(3) was passed for one year, while intimations under Section 143(1) were issued for the remaining years, followed by notices under Section 148. The Supreme Court's procedure for re-assessment, as outlined in GKN Driveshafts (India) Limited Vs. Income Tax Officer, emphasizes the need for the Assessing Officer to furnish reasons upon issuing a notice under Section 148, allowing the noticee to file objections and the officer to dispose of them before proceeding with assessment.The court clarified that the noticee must be provided with reasons for re-assessment upon request, and objections must be disposed of by the Assessing Officer before proceeding with assessment. In the present case, the issuance of Section 143(2) notices before disposing of objections challenging jurisdiction is contrary to the prescribed procedure. The court directed the Assessing Officer to dispose of the objections within two weeks after hearing the petitioner, either physically or virtually, before proceeding with re-assessment. If the jurisdiction question is decided against the petitioner, re-assessment proceedings will continue. The judgment highlighted that while the Assessing Officer can issue Section 143(2) notices for assessment on merits, doing so before addressing jurisdictional objections is premature and against the law.In conclusion, the court disposed of the writ petitions, directing the Assessing Officer to address jurisdictional objections before proceeding with re-assessment. The judgment emphasized the importance of following the prescribed procedure before initiating re-assessment proceedings, ensuring that objections are duly considered and disposed of.