2015 (5) TMI 934 - HC - Income Tax

Reopening of assessment - deductions under section 80IA(4) of the Income Tax Act, 1961 on the rail system - Held that - There is no order as yet passed by the Assessing Officer and in pursuance of the notice to reassess the income allegedly escaping assessment and chargeable to tax. The Assessing Officer has yet to make up his mind. He has only sought a clarification and based, as apprehended by the Petitioner, on some general circulars. In the event any order is passed on conclusion of the reassessment proceedings and if it is adverse to the interest of the Petitioner, the Petitioner can file a Appeal against that order and seek a protective relief. We do not think that this Court should proceed on the footing and at this stage that the deduction will be revisited. In such circumstances, we dispose of this Writ Petition with a direction that the Assessing Officer shall take into consideration the objections that have been raised and forming part of this order and set out in the Writ Petition as resistance and objections of the Petitioner to reopening or revisiting the deduction under section 80IA(4) of the Income Tax Act, 1961. All pleas including those raised in this Writ Petition shall be considered by the Assessing Officer as if they have been raised in a personal hearing

Issues:
1. Prematurity of Writ Petition challenging potential adverse consequences during reassessment proceedings.
2. Concerns regarding deductions under section 80IA(4) of the Income Tax Act, 1961.
3. Interpretation of the third proviso to section 147 of the Income Tax Act, 1961.
4. Justifiability of seeking Writ relief before conclusion of reassessment proceedings.
5. Applicability of protective orders and directions in case of adverse findings.

Analysis:
1. The Writ Petition was filed by M/s. ACC Limited apprehending adverse consequences during ongoing reassessment proceedings under Article 226 of the Constitution of India. The Petitioner, represented by Mr. Mistri, raised concerns about the timing and nature of details sought by the Assessing Officer, particularly related to deductions under section 80IA(4) of the Income Tax Act, 1961, concerning the rail system. The Petitioner had previously challenged an order denying deductions, which was not wholly adverse but unsatisfactory. The Assessing Officer was now likely to revisit this deduction during reassessment, leading to the Writ Petition.

2. Mr. Mistri highlighted the third proviso to section 147 of the Income Tax Act, 1961, and the potential adverse impact on the Petitioner if the deduction was revisited. The Petitioner sought protection against any adverse findings that might affect the operations of the rail system. On the other hand, Mr. Suresh Kumar, representing the Respondents, argued that the Writ Petition was premature and that the Petitioner could avail remedies through Appeals if adverse findings were recorded.

3. The Court acknowledged the concerns raised by both parties but leaned towards the stand of the Revenue. It was noted that no adverse order had been passed by the Assessing Officer yet, and the Petitioner could challenge any unfavorable decision through an Appeal. The Court directed the Assessing Officer to consider the objections raised by the Petitioner during reassessment proceedings and provide reasons for any conclusions reached.

4. The judgment clarified that it did not express any opinion on the contentions raised but allowed the Petitioner to challenge any prejudicial orders in the reassessment proceedings. To facilitate this, the Court directed that the Revenue should not act on any prejudicial order for four weeks from its communication to the Petitioner, enabling the Petitioner to seek interim protective measures.

5. With the above directions and considerations, the Writ Petition was disposed of, emphasizing the importance of allowing the reassessment proceedings to conclude before challenging any adverse decisions and providing avenues for protective relief in case of unfavorable outcomes.

← Previous Next →