2003 (10) TMI 15 - HC - Income Tax

Reopening of the assessment - procedure to be adopted - when a notice under section 148 of the Income-tax Act is issued, the proper course of action for the noticee is to file a return and if he so desires, to seek reasons for issuing notices. The Assessing Officer is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the Assessing Officer is bound to dispose of the same by passing a speaking order

Summary

Issues involved:
Reopening of assessment under the Income-tax Act, 1961 based on notices under section 148 for the assessment years 1996-97 to 2001-02.

Analysis:
The petitioners, sister concerns, had their assessments completed for the mentioned years under section 143(1) of the Income-tax Act without initiation of proceedings under section 143(2). However, in March 2003, they received notices under section 148 for reopening the assessments. Initially, the Assessing Officer did not provide the reasons for reopening despite a request. The petitioners contended that the original returns should be considered as returns under section 148, but the assessing authority required them to file new returns. Upon further request, the reasons for the notice were eventually provided by the Assessing Officer.

Senior counsel for the petitioners argued that the reasons disclosed by the Assessing Officer did not show any material supporting the opinion of income escapement, suggesting a jurisdictional issue with the notices under section 148. The counsel emphasized the right of the petitioners to know the reasons for reopening and to file objections, citing the decision in G.K.N. Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19. It was also highlighted that the petitioners could challenge the reasons recorded in proceedings under article 226 of the Constitution of India.

In response, the senior counsel for the respondent referred to the procedure outlined by the Supreme Court in G.K.N. Driveshafts (India) Ltd.'s case [2003] 259 ITR 19, emphasizing the requirement for the noticee to file objections upon receiving reasons for the notice under section 148. The Supreme Court's directive was that the Assessing Officer must dispose of any objections by passing a speaking order before proceeding with the assessment.

In line with the Supreme Court's guidance, the court directed the petitioners to file objections to the reasons provided for the reopening within three weeks. The Assessing Officer was instructed to consider these objections and issue a speaking order before moving forward with the assessment based on the returns filed by the petitioners. The decision was to be promptly communicated to the petitioners after the objections were addressed.

Therefore, the writ petitions were disposed of with the instruction for the petitioners to raise objections to the jurisdiction of the Assessing Officer within the specified timeline, ensuring compliance with the procedural requirements set forth by the Supreme Court's decision in similar cases.