Challenge to reopening assessment under s.148/156 dismissed where substantive appeal under s.246 pending; Art.226 relief denied

The HC declined to entertain merits of the challenge to reopening of assessment and demand notice under s.148/156, noting a substantive appeal under s.246 was pending before the appellate authority. Because the legal issues were the subject of that pending appeal and the impugned consent order granted a stay on deposit of 20% of the demand with installment facility, the court found no arbitrariness warranting interference under Article 226. The writ petition was dismissed.

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Issues:
1. Validity of assessment order passed by respondent.
2. Legality of notice issued under Section 148 of Income Tax Act.
3. Order passed on stay petition by respondent No.1.

Analysis:

Issue 1: Validity of assessment order
The petitioner, a cooperative society engaged in sugar manufacturing, filed its income tax return for the financial year 2011-12. The respondent No.2 issued notices under Section 142(1) and subsequently passed an assessment order under Section 143(3), accepting the returns after being convinced with the explanation provided by the petitioner. However, a notice under Section 154 was served for rectification, reducing the deduction allowed under Section 80-IA(4). The petitioner objected to the computation method and issuance of notice under Section 148, contending that reasons were not furnished as required by law. The assessment order dated 29.12.2019 reassessed the petitioner's income to a higher amount, leading to a demand notice. The petitioner challenged this order before the Commissioner of Income-Tax (Appeals) and raised objections regarding the procedural irregularities followed by respondent No.2.

Issue 2: Legality of notice under Section 148
The petitioner argued that the notice issued under Section 148 on 15.3.2019 was arbitrary and lacked reasons, which impeded its ability to raise objections effectively. The petitioner emphasized the necessity of a speaking order from the respondent No.2, which was allegedly disregarded. The petitioner cited previous court orders to support its claim that the notice was legally deficient and highlighted the importance of adhering to statutory obligations in such matters.

Issue 3: Order on stay petition
The petitioner approached the appellate authority challenging the assessment order and sought a stay on the demand. However, respondent No.1 directed the petitioner to deposit 20% of the demanded amount without adequately considering the objections raised. The petitioner contended that this order was unsustainable and deviated from established legal procedures under the Income Tax Act. The respondents opposed the petitioner's claims, asserting that the procedure followed was in compliance with the law and prayed for the dismissal of the petition.

In the final judgment, the court acknowledged the pending substantive appeal filed by the petitioner under Section 246 of the Income Tax Act and refrained from delving into the merits of the contentions related to the assessment order and demand notice. The court emphasized that the challenge in the writ petition was limited to the order passed on the stay petition by respondent No.1. The court found that the discretion exercised by the authority in granting stay subject to deposit of 20% of the demanded amount, with installment facilities, was not arbitrary, especially when the order was based on the consent of the petitioner's representatives. Consequently, the court dismissed the writ petition, allowing the petitioner to seek an extension for depositing the amount as per the impugned orders through a proper application to the respondents.

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