Reassessment Quashed Where Assessing Officer Failed to Furnish Reasons After Issuing Notice Under Section 148

The HC allowed the petition, holding that reassessment proceedings were unlawful because the A.O. failed to furnish the reasons for reopening after issuance of a notice under s.148. The court held the assessee is entitled to reasons within a reasonable time so objections can be filed and facts brought to the A.O.'s notice; non-supply of reasons rendered the assessment and demand notice unsustainable. The order of assessment, notice of demand and the s.148 notice were set aside.

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Issues involved:
The issues involved in the judgment are the failure to furnish reasons for reopening and the unreasonably short period provided for filing objections to the draft assessment order.

Reasons for Reopening:
The Assessing Officer issued a notice under Section 148 of the Income Tax Act, seeking to reopen the assessment for the year 2014-15 as income chargeable to tax had allegedly escaped assessment. The petitioner requested a copy of the reasons recorded but was informed that a return of income tax must be filed first. The petitioner faced difficulties in filing the return due to health reasons and technical glitches on the portal. Despite repeated requests, the reasons for reopening were not provided by the respondents.

Legal Principles - Furnishing Reasons:
The judgment refers to the Apex Court's ruling in GKN Driveshafts (India) Ltd. v. Income-tax Officer, emphasizing that after receiving a notice under Section 148, the assessee is entitled to seek reasons for reopening and the Assessing Officer must furnish the reasons within a reasonable time. The failure to provide reasons hinders the assessee's ability to challenge the reassessment proceedings effectively.

Judicial Precedents - Importance of Reasons:
Various judgments stress the significance of providing reasons for reopening assessments to enable the assessee to present facts that may lead to dropping the reassessment proceedings if the reopening is unwarranted. The requirement for a speaking order, as per legal precedent, aims to prevent casual initiation of reassessment proceedings and ensure erroneous ones are dropped promptly.

Unreasonable Time Period for Objections:
The petitioner was given a short period to file objections to the draft assessment order, which was deemed insufficient considering the circumstances. The court found the time granted by the Assessing Officer inadequate for the petitioner to respond effectively.

Decision and Remand:
The court allowed the petition, setting aside the order of assessment, notice of demand, and the notice for reopening. The matter was remanded to the concerned officer under the Faceless Assessment Scheme with directions to provide the petitioner with the reasons recorded for reopening. The proceedings were to be completed within three months from the date of the judgment. The writ petition was disposed of accordingly.

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