Court sets aside assessment order, directs Assessing Officer to decide on objections within 90 days

The court set aside the assessment order, demand notice, and penalty notice, directing the Assessing Officer to decide on the objections filed by the petitioner within ninety days in accordance with the law. The Assessing Officer was granted the liberty to issue further notices or seek additional information, with the clarification that the rights and contentions of all parties remained open.

---

---

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 and assessment order under Section 147 read with Section 144B for the Assessment Year 2013-14.

Analysis:
The petitioner challenged the notice dated 31st March, 2021, issued under Section 148 of the Income Tax Act, 1961, and the subsequent assessment order dated 30th March, 2022. The petitioner contended that they had sold shares through online transactions at the Bombay Stock Exchange, with Securities Transaction Tax paid on the sale price received in cheques. Despite the respondent's claim of no record of the petitioner's income tax return, the petitioner had filed the return on 27th April, 2021. The petitioner further argued that the respondent violated Section 144B by passing the assessment order without issuing a prior show cause-cum-draft assessment order and without deciding on the objections to the reopening filed within the allowed time frame.

The respondent argued that the writ petition was not maintainable as the petitioner could present all contentions before the appellate forum. Citing the Supreme Court case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer and Ors., (2003) 1 SCC 72, it was noted that when a notice under Section 148 is issued, the noticee should file a return and, if desired, seek reasons for the notice. The Assessing Officer must provide reasons within a reasonable time, and the noticee can file objections, which must be disposed of through a speaking order.

The court found that the petitioner had indeed filed the income tax return for the relevant year, despite the reasons for reassessment being supplied at a later date. It was noted that the objections filed by the petitioner were disposed of before the assessment order was passed, contrary to the procedure outlined by the Supreme Court. Consequently, the court set aside the assessment order, demand notice, and penalty notice, directing the Assessing Officer to decide on the objections filed by the petitioner within ninety days in accordance with the law. The Assessing Officer was granted the liberty to issue further notices or seek additional information, with the clarification that the rights and contentions of all parties remained open.

---