Second s.148 notice issued during pending reassessment invalid where AO failed to dispose objections and breached natural justice

The HC held the second notice issued under s.148 during pendency of reassessment proceedings to be invalid, finding that no fresh notice may be issued while reassessment is subsisting. The court found the AO failed to dispose of the taxpayer's objections and violated principles of natural justice by supplying an adverse statement without affording a reasonable opportunity to respond. The impugned second s.148 notice and consequential notices dated 18 May 2022 and 23 May 2022 were quashed.

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Issues:
1. Challenge to notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14.
2. Jurisdiction of Assessing Officers issuing reassessment notices.
3. Disposal of objections before passing assessment order.
4. Sharing of crucial information with the petitioner.
5. Violation of principles of natural justice.
6. Legal implications of issuing multiple reassessment notices.
7. Compliance with Supreme Court judgments on assessment proceedings.

Issue 1: Challenge to notice under Section 148:
The petitioner challenged the notice dated 15th May, 2020, issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2013-14, along with reasons for reopening and approval granted by Respondent No.2. The petitioner also contested the assessment order, demand notice, and penalty imposition proceedings initiated subsequently.

Issue 2: Jurisdiction of Assessing Officers:
The petitioner raised concerns regarding the jurisdiction of the Assessing Officers issuing reassessment notices. It was argued that two reassessment notices were served simultaneously by different Assessing Officers, leading to a dispute over the Jurisdictional Assessing Officer. The petitioner contended that the assessments were conducted without following proper jurisdictional protocols.

Issue 3: Disposal of objections:
The petitioner objected to the assessment order dated 30th March, 2022, highlighting that their objections raised in a letter dated 22nd July, 2021, were not addressed before passing the assessment order. This non-disposal of objections was argued to be in violation of legal precedents, specifically referencing the Supreme Court's ruling in M/S GKN Driveshafts (India) Ltd case.

Issue 4: Sharing of crucial information:
The petitioner emphasized the importance of sharing relevant information, specifically mentioning the failure to provide a copy of a statement relied upon by the Assessing Officer before the conclusion of the personal hearing. The petitioner raised concerns about the timing and manner in which the information was shared, alleging procedural irregularities.

Issue 5: Violation of principles of natural justice:
The petitioner contended that there was a violation of principles of natural justice as they were not given a reasonable opportunity to respond to crucial information shared by the Assessing Officer. The lack of a fair opportunity to address the shared statement was highlighted as a breach of procedural fairness.

Issue 6: Legal implications of issuing multiple reassessment notices:
The Court referred to legal precedents and established principles regarding the impermissibility of issuing multiple reassessment notices for the same assessment year during ongoing reassessment proceedings. Citing relevant judgments, the Court emphasized the need for adherence to statutory limitations on issuing such notices.

Issue 7: Compliance with Supreme Court judgments:
The Court upheld the petitioner's arguments regarding the non-disposal of objections and the violation of natural justice principles. Quashing the second notice issued during ongoing reassessment proceedings, the Court remanded the matter for fresh assessment, directing the Assessing Officer to decide on objections in compliance with the Supreme Court's guidelines within a specified timeframe. The Court emphasized the importance of following legal precedents and ensuring procedural fairness in assessment proceedings.

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