2010 (3) TMI 706 - HC - Income Tax

Reassessment - in the judgment of the Supreme Court in GKN Driveshafts (India) Ltd. 2002 -TMI - 6100 - SUPREME Court Held that there is absolutely no or justification for the Assessing Officer not to deal with the objections filed by the assessee to the reopening of the assessment particularly in view of the binding principle of law laid down by the Supreme Court in that regard - Decided in favor of the assessee by way of remand to AO

Summary

Issues:
Challenge under article 226 of the Constitution to the reopening of an assessment for the assessment year 2004-05.

Analysis:
The judgment by the Bombay High Court dealt with a challenge under article 226 of the Constitution regarding the reopening of an assessment for the assessment year 2004-05. The notice for reopening the assessment was issued on March 16, 2009, with reasons dated June 18, 2009. The assessee objected to the reopening, citing non-compliance with the directions of the Supreme Court in GKN Driveshafts (India) Ltd. v. ITO [2003] 259 ITR 19. During the hearing, the Revenue's counsel admitted non-compliance with the Supreme Court's directions. The court found no justification for the Assessing Officer's failure to address the objections, hence suggested setting aside the reassessment order and remitting the proceedings back to the Assessing Officer, which the assessee agreed to.

The judgment disposed of the petition by quashing the reassessment order dated December 23, 2009, and the order disposing of the objections dated December 21, 2009. It directed the Assessing Officer to pass a fresh order on the objections within four weeks, providing an opportunity for the assessee to be heard. If an adverse order is passed, the assessee has four weeks to seek remedies before enforcement. If not stayed by a court, the Assessing Officer can pass a reassessment order within two weeks. The notice dated March 16, 2009, was stayed for ten weeks to facilitate the process. The judgment kept all rights and contentions open without expressing any opinion on the merits.

In conclusion, the petition was disposed of without any costs. The judgment emphasized the importance of complying with legal directions and providing a fair opportunity for the assessee to address objections in assessment proceedings, ensuring due process and adherence to legal principles laid down by the Supreme Court.