2008 (10) TMI 682 - HC - Income Tax

Summary

Issues involved: Challenge to validity of notice u/s 148 of Income Tax Act, 1961 and notices u/s 142(1) and 143(2) of the Income Tax Act.

Validity of Notice u/s 148:
The petitioners challenged the validity of the notice dated 31-12-2007 issued u/s 148 of the Income Tax Act, 1961. The petitioners had filed objections opposing the reopening of the assessment upon receiving the reasons for reopening. However, the assessing officer proceeded to finalize the assessment without considering the objections raised by the petitioners. The Apex Court in the case of GKN Driveshafts (India) Limited v/s. ITO has held that the assessing officer must dispose of the objections raised by the assessee before passing the assessment order. Despite the petitioners filing objections in February 2008, the assessing officer did not address them. Consequently, the notices issued u/s 142(1) and 143(2) for finalizing the assessment were quashed and set aside. The assessing officer was directed to consider the objections and pass appropriate orders, with a directive not to finalize the assessment for four weeks if the order is adverse to the petitioners.

Conclusion:
The High Court made the rule absolute with no order as to costs, emphasizing the importance of addressing objections raised by the assessee before finalizing the assessment order.