2021 (8) TMI 130 - HC - Income Tax

High Court upholds reassessment proceedings under Income Tax Act, emphasizing legal compliance and rejection of objections.

M/s. Financial Software & Systems (P) Ltd., Versus Deputy Commissioner of Income Tax, Company Circle 2 (1), Chennai

The High Court dismissed the writ petition challenging the validity of reassessment proceedings under the Income Tax Act. The Court held that the ... Reopening of assessment u/s 147 - Disposal of objections against reopening orders - HELD THAT:- Perusal of the objections raised as well as the reasons stated in the disposal of objections by the AO would be sufficient and further details or scrutiny cannot be made by the High Court in a writ proceedings and all such documents, materials or informations are to be considered by the AO while proceeding with the reassessment. This Court do not find any non-application of mind with reference to the order impugned dated 26.02.2016. The Assessing Officer has given reasons for rejection of the objections. Such reasons may not be acceptable to the assessee. However, it is for him to provide further details or information to the AO while proceeding with the reassessment proceedings. This being the factum of the case, this Court do not find any acceptable reason for the purpose of interfering with the orders impugned. WP dismissed. Issues:1. Challenge to the notice dated 20.03.2015 issued under Section 148 of the Income Tax Act and the order dated 26.02.2016 disposing of objections for reopening of assessment.Analysis:The petitioner, a Payment Systems Company, filed its return of income for the Assessment Year 2010-11 electronically, claiming deduction under Section 10 B of the Act. The assessment proceedings were initiated by the respondent, and an assessment order was passed under Section 143 (3) of the Act on 30.03.2013. However, a notice was issued on 20.03.2015 under Section 148 for reopening of assessment, alleging that income chargeable to tax had escaped assessment. The petitioner raised objections, contending that the basis for reopening was not in line with the factual details provided. The objections were disposed of on 26.02.2016, leading to the petitioner challenging the validity of the reassessment proceedings.The petitioner argued that the Assessing Officer failed to consider specific objections related to the issue of shares and expenses in the order disposing of objections. The petitioner emphasized that the jurisdiction to initiate reassessment proceedings was also contested. The Standing Counsel for the respondents argued that the reassessment proceedings were initiated within the four-year period, justifying the scope to proceed. The impugned order highlighted that since details regarding the issue of shares were already provided during the regular assessment, reopening the assessment would amount to reapplication of mind on the same facts, which is impermissible under reassessment proceedings. The Act allows reassessment of income but not a review of the Assessing Officer's decision.The petitioner referred to judgments of Constitutional Courts, while the respondents cited judgments in their favor. The High Court clarified that it cannot conduct a roving inquiry into facts that require scrutiny through original documents and evidence. The Court emphasized that objections should be dealt with in accordance with the Act, and the Assessing Officer must consider all relevant materials and information during reassessment proceedings. The Court upheld that the Assessing Officer had provided reasons for rejecting the objections, and if the assessee finds them unacceptable, they should provide further details during reassessment.Ultimately, the Court found no reason to interfere with the impugned orders and dismissed the writ petition, with no costs imposed.