2021 (6) TMI 181 - HC - Income Tax

Court directs respondent to address petitioner's objections promptly, emphasizing due process.

P. Hemalatha Versus The Income Tax Officer, Ward-1, Income Tax Office, Karaikudi, The Joint Commissioner of Income Tax, Karaikudi Range, Karaikudi.

The court found merit in the petitioner's objection that there was no income escapement finding for the proposed verification exercise. It directed the ... Reopening of assessment u/s 147 - petitioner had raised a specific objection that the proposal for reopening the assessment is liable to be dropped, since there is no finding that there was escapement of income - further contended that for the purpose of carrying on verification exercise, reopening cannot be ordered - HELD THAT:- Though such specific contention was raised, instead of dealing with the same, by passing a speaking order, the first respondent chose to merely inform the assessee that the proceedings have been initiated only with the approval of the jurisdictional Joint Commissioner. The first respondent has not at all dealt with the contentions raised by the assessee. The Hon'ble Supreme Court in GKN Driveshafts [2002 (11) TMI 7 - SUPREME COURT] had specifically held that the assessing officer is bound to dispose of the assessee's objections by passing a speaking order. In as much as this requirement of law as laid down by the Supreme Court has not been complied with, the respondent is directed to dispose of the petitioner's objections by passing a speaking order within a period of four weeks from the date of receipt of a copy of this order. Issues:1. Validity of notice under Section 148 of the Income Tax Act for reopening assessments.Analysis:The petitioner, a Doctor, filed income tax returns for different assessment years which were accepted. However, a survey under Section 133A was conducted at a hospital premises, leading to a notice under Section 148 for reopening assessments. The petitioner objected to the reasons recorded for reopening, stating they were for verification, not for income escapement. The respondent justified the proceedings, leading to the filing of writ petitions challenging the notices.The petitioner contended that for one assessment year, the notice for scrutiny proceedings could only be issued by a certain date, as per Section 143(2) of the Act. Citing a Madras High Court decision, the petitioner argued against the reopening notice's validity before the expiry of the scrutiny notice period.The respondent, however, relied on a Supreme Court decision and argued against rushing to court at the notice stage. The court considered both parties' arguments and examined the reasons for reopening the assessments. The court referred to the GKN Driveshafts case, emphasizing the need for the assessing officer to furnish reasons and dispose of objections by passing a speaking order.The court found merit in the petitioner's objection that there was no income escapement finding for the proposed verification exercise. It directed the respondent to dispose of the petitioner's objections by passing a speaking order within four weeks. The court refrained from interfering with the notices but left all contentions open for further review based on the assessing officer's response to the objections.In conclusion, the writ petitions were disposed of with a direction for the respondent to address the petitioner's objections properly. The court emphasized the importance of following due process as outlined in the GKN Driveshafts case and allowed the petitioner the opportunity to revisit the court based on the assessing officer's response to the objections.