2021 (6) TMI 77 - HC - Income Tax

High Court faults Assessing Officer's inadequate response to objections in income tax assessment reopening case under Section 148.

Mysoon Exports Private Limited Versus Income Tax Officer

The High Court found that the Assessing Officer did not adequately address the objections raised by the writ applicant regarding the reopening of the ... Reopening of assessment u/s 147 - non dealing with objection raised by the applicant against reasons to believe - HELD THAT:- Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft [2002 (11) TMI 7 - SUPREME COURT] we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 of the Act, though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind. In other words not in a meaningful manner. This writ application succeeds in part. The order disposing of the objections filed by the assessee to this petition is hereby set aside and the matter is remitted to the AO. Issues:Challenge to Notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2012-13.Detailed Analysis:1. The writ applicant, a private limited company, challenged a Notice dated 30.03.2019 issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2012-13, claiming it to be illegal and without jurisdiction. The company had filed its return of income on 29.09.2012, and the assessment was completed on 31.03.2014 under Section 143(3) of the Act. The Assessing Officer (AO) sought to reopen the assessment based on information received regarding certain transactions involving entities with alleged lack of creditworthiness. The AO believed that income to the tune of a specific amount had escaped assessment, leading to the issuance of the impugned notice.2. The writ applicant objected to the reopening of the assessment, both on the grounds of jurisdiction and merit, but the objections were rejected by the respondent. The writ applicant contended that the AO failed to address the objections properly and mechanically disposed of them without providing cogent reasons. The applicant also argued that the reopening of the assessment was beyond the four-year period from the relevant assessment year and amounted to a change of opinion, which is impermissible in law.3. The High Court, after hearing arguments from both parties, found that the AO did not adequately address the objections raised by the writ applicant. The Court emphasized that the AO's order should reflect a proper application of mind and provide reasons for conclusions. Referring to previous legal precedents, the Court held that the AO's failure to address the objections in a meaningful manner amounted to a violation of established procedures. Consequently, the Court set aside the order disposing of objections and remitted the matter back to the AO for a fresh decision in accordance with the law.4. The Court directed the AO to consider the objections raised by the assessee and pass a fresh speaking order within six weeks. It clarified that it had not expressed any opinion on the merits of the case and was solely remitting the matter for proper consideration. The Court also granted the assessee the right to challenge any adverse order before the appropriate forum and allowed a period of four weeks for recourse to legal remedies if needed.