2022 (5) TMI 1033 - HC - Income Tax

Court upholds validity of reassessment under Income Tax Act, petitioner's participation waives challenge rights. Appealable final order.

Lakshman Prasad Agarwal Versus Union of India & Ors.

Lakshman Prasad Agarwal Versus Union of India & Ors. - [2022] 446 ITR 692 (Cal) Issues Involved:1. Validity of the notice under Section 148 of the Income Tax Act, 1961.2. Compliance with guidelines laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Pvt. Ltd. case.3. Petitioner's conduct and participation in the reassessment proceedings.4. Applicability of judgments cited by the petitioner.Issue-Wise Detailed Analysis:1. Validity of the notice under Section 148 of the Income Tax Act, 1961:The petitioner challenged the notice dated 26th March 2021 under Section 148 and the final assessment order dated 31st March 2022 under Sections 147/143(3) of the Income Tax Act, 1961. The petitioner received the notice on 26th October 2021 and filed a return on 9th October 2021. The petitioner’s authorized representative requested the recorded reason for the notice, which was furnished on 26th October 2021. The petitioner did not object to the notice and instead requested the Assessing Officer to complete the reassessment proceedings. The petitioner complied with subsequent notices under Section 142(1) without challenging the legality of the Section 148 notice.2. Compliance with guidelines laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Pvt. Ltd. case:The petitioner argued that the final assessment order was passed without disposing of his objections to the notice under Section 148, thus violating the guidelines in GKN Driveshafts (India) Pvt. Ltd. The Court noted that the petitioner did not file any objections immediately after receiving the recorded reason, as required by the GKN Driveshafts case. The Assessing Officer proceeded with the reassessment due to the absence of objections and the petitioner’s active participation in the proceedings.3. Petitioner's conduct and participation in the reassessment proceedings:The Court observed that the petitioner actively participated in the reassessment proceedings by complying with multiple notices under Section 142(1) and repeatedly requesting the Assessing Officer to complete the reassessment. The petitioner changed his authorized representative, who for the first time objected to the reassessment on 11th February 2022, nearly nine months after receiving the recorded reason. The Court held that the petitioner’s conduct indicated a waiver of the right to object to the notice under Section 148.4. Applicability of judgments cited by the petitioner:The petitioner relied on several judgments, including GKN Driveshafts (India) Pvt. Ltd., Techspan India Pvt. Ltd., and Fast Finance (P.) Ltd. The Court found these judgments inapplicable due to the exceptional facts and circumstances of the case. The Court emphasized that in GKN Driveshafts, the Assessing Officer is bound to furnish recorded reasons, which was done in this case. The petitioner’s failure to object immediately after receiving the recorded reasons distinguished this case from the cited judgments.Conclusion:The Court dismissed the writ petition, holding that the Assessing Officer rightly proceeded with the reassessment and passed the final assessment order. The petitioner’s conduct of actively participating in the reassessment proceedings without filing timely objections invalidated his challenge to the notice under Section 148. The judgments cited by the petitioner were deemed inapplicable due to the unique facts of the case. The final assessment order is appealable under the statute, and the writ petition was not entertained.