2016 (1) TMI 235 - HC - Income Tax

Reopening of assessment - non disposing of the objections - Held that - . In view of the decision of the Supreme Court in case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer and ors. Reported in 2002 (11) TMI 7 - SUPREME Court , upon issuance of notice for reopening, the assessee would have to raise objections upon the reasons being supplied. The Division Bench of this Court in case of Sahkari Khand Udhyog Mandal Ltd. vs. Assistant Commissioner of Income Tax reported in (2014 (6) TMI 149 - GUJARAT HIGH COURT ) has also laid down a time frame within which, the Assessing Officer is expected to dispose of representation, if raised promptly by the assessee. The Assessing Officer, by not disposing of the objections, would deprive the petitioner of an opportunity to challenge the validity of the notice itself and, in the meantime, if the assessment is framed, serious prejudice would be caused to the petitioner. Under the circumstances, the Assessing Officer is directed to dispose of the objections of the petitioner dated 15.01.2015 latest by 31.01.2016. Till then, final order of assessment shall not be passed. - Decided in favour of assessee

Summary

Issues:
1. Reopening of assessment beyond the prescribed time limit.
2. Failure to dispose of objections raised by the assessee.
3. Compliance with the time frame for disposing of objections.

Analysis:
The judgment by the Gujarat High Court addressed the issue of reopening the assessment beyond the statutory time limit. The petitioner had received a notice for reopening the assessment, which was issued after four years from the end of the relevant assessment year. The petitioner requested reasons for the notice, which were provided later. The petitioner raised objections to the reopening process, but these objections were not disposed of by the Assessing Officer. The petitioner argued that proceeding with the assessment without addressing the objections would cause prejudice.

Referring to the Supreme Court decision in the case of GKN Driveshafts (India) Ltd. vs. Income Tax Officer, the High Court emphasized that upon receiving a notice for reopening, the assessee must raise objections upon receiving the reasons. Additionally, the Division Bench of the High Court had previously set a time frame for the Assessing Officer to dispose of representations raised promptly by the assessee, as highlighted in the case of Sahkari Khand Udhyog Mandal Ltd. vs. Assistant Commissioner of Income Tax.

The High Court noted that failure to dispose of the objections would deny the petitioner the opportunity to challenge the validity of the notice itself. It was highlighted that if the assessment was completed without addressing the objections, it would cause serious prejudice to the petitioner. Therefore, the Assessing Officer was directed to dispose of the objections raised by the petitioner by a specified date to ensure compliance with the legal requirements. The High Court ordered that no final assessment order should be passed until the objections were addressed, thereby safeguarding the petitioner's rights. The petition was disposed of accordingly, with direct service permitted for communication of the judgment.