2021 (7) TMI 958 - HC - Income Tax

Validity of Income Tax Notice Upheld; Court Directs Submission of Further Objections

The court upheld the validity of the notice issued under Section 148 of the Income Tax Act for reopening the assessment, finding that proper procedures ... Validity of reopening of assessment u/s 147 - admission of additional objections - HELD THAT:- The petitioner seeks further opportunity to submit elaborate objections. This Court is of the considered opinion that in the event of quashing the initiation proceedings and providing an opportunity to submit further objections, it would cause prejudice to the revenue. Petitioner may be permitted to submit all his further objections based on the statement of Ms.Subhadra G., Manager (Operations), Apollo Hospital, enabling the Assessment Officer to consider the same and accordingly, proceed with the assessment/reassessment, based on the reopening of assessment proceedings. Thus, instead of quashing the entire proceedings, as prayed for in the present Writ Petitions, it is suffice if an opportunity is provided to the writ petitioner to submit additional objections, if any, based on the materials relied on by the assessee to the Assessing Officer, with in a stipulated period and on receipt of the same, the AO shall be permitted to proceed with the assessment/re-assessment. This being the factum established, the petitioner is directed to submit his further objections along with the materials, documents, etc., to the respondent within a period of two weeks from the date of receipt of a copy of this order. On receipt of any such objections from the writ petitioner, the respondent shall consider the same along with the process of assessment/re-assessment by providing an opportunity to the writ petitioner. Issues Involved:1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment.2. Adequacy of reasons provided for reopening the assessment.3. Consideration of objections filed by the petitioner regarding the reopening of assessment.4. Non-furnishing of the statement of Ms. Subhadra G., Manager (Operations), Apollo Hospital, which was relied upon for reopening the assessment.5. Request for remanding the matter back to the Assessing Officer for fresh disposal of objections.Issue-wise Detailed Analysis:1. Validity of the notice issued under Section 148 of the Income Tax Act, 1961 for reopening the assessment:The petitioner challenged the notice issued under Section 148 of the Income Tax Act, 1961, for the Assessment Years 2015-16 and 2016-17, on the grounds that income chargeable to tax had escaped assessment within the meaning of Section 147 of the Act. The court noted that the procedures and pre-conditions for reopening an assessment under Section 147 were followed, including issuing a notice under Section 148 and providing reasons for reopening the assessment.2. Adequacy of reasons provided for reopening the assessment:The reasons for reopening the assessment were furnished to the petitioner, and the petitioner filed objections to these reasons. The court observed that the reasons provided by the Assessing Officer for reopening the assessment were clear and convincing. The Assessing Officer had reason to believe that income chargeable to tax had escaped assessment based on the information collected from Apollo Hospital records and the statement of Ms. Subhadra G.3. Consideration of objections filed by the petitioner regarding the reopening of assessment:The petitioner filed detailed objections to the reasons for reopening the assessment, which were disposed of by the respondent in the order dated 07.11.2019. The court found that the objections were considered by the Assessing Officer, and a speaking order was passed. The court noted that the Assessing Officer had followed the directives of the Supreme Court in the case of GKN Drive Shafts India Ltd. v. ITO, and the procedures under the Income Tax Act were complied with.4. Non-furnishing of the statement of Ms. Subhadra G., Manager (Operations), Apollo Hospital, which was relied upon for reopening the assessment:The petitioner contended that the statement of Ms. Subhadra G., which was relied upon for reopening the assessment, was not enclosed with the show cause notice. The court observed that the petitioner did not immediately request the statement upon receiving the show cause notice. However, the statement was subsequently furnished to the petitioner. The court acknowledged that the petitioner should have been provided with an opportunity to submit detailed objections based on the statement of Ms. Subhadra G.5. Request for remanding the matter back to the Assessing Officer for fresh disposal of objections:The petitioner requested that the matter be remanded back to the Assessing Officer for fresh disposal of objections, allowing the petitioner to submit additional objections based on the statement of Ms. Subhadra G. The court considered this request and concluded that quashing the entire proceedings would prejudice the revenue. Instead, the court directed that the petitioner be allowed to submit further objections within two weeks, and the Assessing Officer should consider these objections during the assessment/re-assessment process.Conclusion:The court disposed of the writ petitions by directing the petitioner to submit further objections along with relevant materials to the Assessing Officer within two weeks. The Assessing Officer was instructed to consider these additional objections and proceed with the assessment/re-assessment accordingly. The court emphasized that this approach would ensure that the petitioner had an opportunity to present their case without causing prejudice to the revenue.