2003 (3) TMI 9 - HC - Income Tax

Notice u/s 148 reasons for reopening of assessment - law is well settled that Assessing Officer is bound to furnish reasons to the assessee within a reasonable time, entitling the assessee to file the objections and as a necessary corollary, the Assessing Officer has to consider those objections and pass a speaking order. In the absence of the above compliance, the petitioner is entitled to the relief sought for in this writ petition.

Summary

Issues:
1. Assessment under section 147 of the Income-tax Act based on a notice under section 148 without providing reasons to the assessee.

Analysis:
The petitioner, a public company, filed its income tax return for the assessment year 1993-94 on the due date under the Indian Income-tax Act. Subsequently, a notice was issued under section 143(2) for scrutiny, and the assessment was completed under section 143(3) of the Act. However, years later, a notice under section 148 was issued to the petitioner, stating that income assessable to tax had escaped assessment. The petitioner contended that under section 148, they were entitled to know the reasons recorded by the assessing authority to challenge the assessment. The petitioner approached the court seeking a direction to prevent the assessment under section 147 without providing reasons, as it would deprive them of the opportunity to raise objections as mandated by law.

The petitioner argued that without the communication of reasons recorded by the assessing authority, they would be deprived of the opportunity to submit objections, thus defeating their right to proper assessment under the Act. The petitioner relied on a recent apex court judgment in GKN Driveshafts (India) Ltd. v. ITO, emphasizing the importance of the assessing officer furnishing reasons within a reasonable time to enable the assessee to file objections. The court noted that the law mandated the assessing officer to provide reasons promptly, allowing the assessee to raise objections, which must be considered through a speaking order. Failure to comply with these requirements entitled the petitioner to relief.

The court acknowledged the necessity for the assessing officer to furnish reasons promptly, allowing the petitioner to raise objections and receive a speaking order in response. Consequently, the court directed the assessing officer to provide reasons within two weeks of the court order, following which the petitioner could submit objections within two weeks. The assessing officer was required to consider these objections on merit and pass a speaking order within four weeks from receiving the objections. The court disposed of the writ petition with these directions, granting no costs and closing the related petition.

This judgment highlights the importance of procedural fairness in tax assessments, emphasizing the right of the assessee to be informed of the reasons for reassessment and to raise objections accordingly. The court's decision underscores the necessity for assessing officers to adhere to legal requirements in providing reasons and addressing objections, ensuring a transparent and just assessment process for taxpayers.