TaxTMI 
TaxTMI 
2026 (10) TMI 201
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....r dated 11th January 2022. For the sake of convenience the said order is reproduced hereunder:- "P.C.: 1. Heard learned counsel and considered the petition as well as the affidavit in reply. Mr. Jain says he has not been served a copy of affidavit in reply. Notwithstanding that considering the petition itself we are not inclined to exercise our jurisdiction under Article 226 of the Constitution of India. 2. Petition dismissed." 4. Being aggrieved by this order, the Petitioner approached the Hon'ble Supreme Court. The Hon'ble Supreme Court, by its order dated 20th May 2022, set aside the order passed by this Court on 11th January 2022 and remanded the Writ Petition to this Court to be heard afresh. The order of the Hon'ble Supreme Court reads as under: "Issue notice. In view of our earlier decision in the case of Vishal Ashwin Patel Vs. Assistant Commissioner of Income Tax Circle 25(3) and Ors., 2022 (5) SCALE 392, the matter is to be remanded to the High Court as the impugned judgment and order passed by the High Court is a non-speaking and non-reasoned order, we request Shri Balbir Singh, learned ASG to accept notice on behalf of the....
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.... as more particularly set out in the said letter. The Petitioner, vide its reply dated 1st September 2014, gave a detailed explanation about the share capital and share premium and submitted various documents. Over and above this, to the Notice dated 9th February 2015, the Petitioner submitted its reply offering a detailed justification of the share premium charged. After all this, vide order dated 19th March 2015, the assessment for A.Y.2012-13 was completed under Section 143(3) of the IT Act determining the total income of the Petitioner at Rs. NIL and disallowing the business loss of Rs. 15,000/-. 8. It appears that for A.Y. 2016-17 the Return of Income of the Petitioner was taken up for limited scrutiny by issuing a Notice dated 11th July 2017 under Section 143(2). The issue was whether the funds received in the form of share premium were from disclosed sources and had been correctly offered to tax. In the course of these assessment proceedings for A.Y. 2016-17, a Notice was issued under Section 142(1) specifically asking the Petitioner to provide various details, the relevant portion of which is as hereunder:- "1) It is seen from Note 2 (Reserves & Surplus) of the ....
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.... 1 issued a Notice dated 2nd September 2019 under Section 143(2) to the Petitioner. 11. The Petitioner, on 2nd October 2019, submitted its objections to the reopening of the assessment. The objections to reopening the assessment were mainly on the following grounds:- a) That the reopening was totally based on a change of opinion as an exhaustive scrutiny had already been completed under Section 143(3) where specific queries were raised about the share premium, identity, creditworthiness and genuineness of the share capital transactions by issuance of Notices under Section 142(1), in reply to which the Petitioner had submitted its detailed explanations and evidence to the satisfaction of Respondent No. 1. b) That Respondent No. 1 had aptly applied his mind to the documents as submitted by the Petitioner and had passed an order under Section 143(3) on 19th March 2015 after verifying all the records on hand. Thus, the present Notice under Section 148 merely displayed a change of opinion which is not permissible in the eyes of law. c) That the present proceedings, in pursuance of the impugned Notice, would have been a second assessment of the Petitioner's ....
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....out that the said Notice was in contravention of the law laid down by this Court in the case of Asian Paint Ltd. V/S Deputy Commissioner of Income Tax [(2009) 308 ITR 195 (Bom)] which stipulated that the Assessing Officer should not proceed with the assessment in any manner whatsoever for a period of 4 weeks after serving the order disposing of the Assessee's objections against the reassessment Notice. 13. Apprehending that Respondent No. 1 will proceed with the reassessment and pass an Assessment Order, the Petitioner approached this Court by filing the present Petition. Initially on 3rd December 2019 this Court granted a stay to the impugned Notice dated 31st March 2019 issued under Section 148. This relief continued till the dismissal of the above Writ Petition on 11th January 2022. As mentioned earlier, this order (dated 11th January 2022) was challenged by the Petitioner before the Hon'ble Supreme Court, and the Hon'ble Supreme Court, by its order dated 20th May 2022, set aside the order passed by this Court and remanded the matter for a fresh hearing on merits. 14. In this factual backdrop, though several contentions were raised for challenging the issuance of the Notic....
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....ts (India) Ltd. (supra) that the Assessing Officer shall dispose of the objections filed by the Assessee before proceeding with the assessment, it really means that an Assessment Order cannot be passed under Section 143(3) read with Section 147 before disposing of the objections. He submitted that the decision of the Hon'ble Supreme Court cannot be read to mean that the Assessing Officer is precluded from issuing a Notice under Section 143(2) before disposing of the objections. He, therefore, submitted that the entire argument of the Petitioner, and which is based on the decision of the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd. (supra), is wholly erroneous and misconceived. Accordingly, Mr. Sharma submitted that there is no merit in the aforesaid argument and the Writ Petition ought to be dismissed. 16. We have heard the learned Counsel for the parties at great length on this issue. We have also perused the papers and proceedings in the above Writ Petition. In the facts of the present case, the impugned Notice issued under Section 148 is dated 31st March 2019. Hence, the present case would be governed by the law as it stood prior to its amendment on 1st April 2021. T....
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....quired to be furnished under section 139." (emphasis supplied) 18. As can be seen from this Section, before making any assessment, reassessment or recomputation under Section 147, the Assessing Officer is mandated to serve upon the Assessee a Notice requiring him to furnish a Return of Income or the income of any other person in respect to which he is assessable under the Act, in the prescribed form, verified in the prescribed manner, and setting forth such other particulars as may be prescribed. Section 148 further stipulates that the provisions of IT Act, so far as may be, apply as if such return were a return required to be furnished under Section 139. In other words, once a return is filed in answer to a Notice under Section 148, the same is processed as if it was a return filed under Section 139. In such a scenario, if that return is to be scrutinized, then necessarily, first a Notice under Section 143(2) must be issued, and thereafter, Notices under Section 142(1) can also be issued asking for further particulars and other details. Thereafter, the Assessing Officer, after examining the details, if any, furnished by the Assessee, can pass the reassessment order und....
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....cer and those are placed before the concerned higher authority under Section 151, seeking its sanction for issuance of the said Notice. Once the said higher authority, after examining the reasons for reopening the assessment, is satisfied that the income of the Assessee has escaped assessment, it grants its sanction for issuance of a Notice under Section 148. Once the sanction is received by the Assessing Officer, he proceeds to issue the Notice under Section 148. When one looks at the scheme of Section 148, it is clear that reassessment proceedings can be initiated only if the Assessing Officer has "reason to believe" that income has escaped assessment. Those reasons are then finally furnished to the Assessee to which he files his objections. If those objections are upheld by the Assessing Officer, then naturally, the reassessment proceedings are dropped. If for any reason the Assessing Officer rejects the objections, then the Assessing Officer can proceed with the assessment. Once this is the scheme, we are of the view that before proceeding with assessment, namely by initiating a Notice under Section 143(2), the Assessing Officer must dispose of the objections filed by the Asses....
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....ection 142(1) before disposing of the objections filed by the Assessee by passing a speaking order. 23. In view of what we have held earlier, we are unable to agree with the argument of Mr. Sharma that in GKN Driveshafts (India) Ltd (supra), when the Hon'ble Supreme Court has stated that the Assessing Officer shall dispose of the objections filed by the Assessee before proceeding with the assessment, the same really means that an Assessment Order cannot be passed before disposing of the Assessee's objections. There is nothing even remotely in the decision of GKN Driveshafts (India) Ltd (supra) to suggest such a conclusion. In fact, the Hon'ble Supreme Court in GKN Driveshafts (India) Ltd (supra) has been explicit in stating that the Assessing Officer shall dispose of the objections, if filed, by a speaking order, before proceeding with the assessment. If the Hon'ble Supreme Court in fact wanted to lay down that it is only an Assessment Order that cannot be passed before the objections were decided, it would have explicitly stated so. We, therefore, find that the argument canvassed by Mr. Sharma on this aspect is wholly misconceived and is therefore rejected. 24. In the facts ....