2010 (3) TMI 1082 - HC - Income Tax

Summary

Issues involved:
The judgment involves the challenge to the reopening of assessment for assessment year 2004-05 u/s 148 of the Income Tax Act, 1961 based on three reasons provided by the Assessing Officer. The assessee objected to the reopening, claiming it was a mere change of opinion without fresh material post original assessment u/s 143(3).

Reasons provided for reopening:
The three reasons furnished by the Assessing Officer for reopening the assessment were:
A. Debiting capital expenditure to profit and loss account leading to income escapement.
B. Treating liability on returnable containers as a provision, resulting in income escapement.
C. Adding back one month's investment in raw materials for suppressed sales instead of the entire year, causing income escapement.

Objections and Disposal:
The assessee objected to the reopening through a letter dated 30th July, 2009, which was disposed of by the Assessing Officer on 14th December, 2009. The principal argument was the lack of fresh material post original assessment and the reopening being a mere change of opinion.

Legal Analysis and Decision:
The High Court held that the Assessing Officer failed to consider the objections raised by the assessee and did not provide tangible material for the reopening, as required u/s 147. The court set aside the order disposing of objections and remanded the proceedings back to the Assessing Officer to pass a fresh order in line with principles laid down by the Supreme Court. The Assessing Officer was directed to pass a new order after hearing the assessee within four weeks.

Conclusion:
The impugned order was quashed, and the proceedings were remanded back to the Assessing Officer for a fresh decision. The Assessing Officer was instructed to consider the objections raised by the assessee and provide a reasoned order within four weeks. The interim order was to remain in effect during this period, and no costs were awarded.