2017 (3) TMI 1678 - HC - Income Tax

Reopening of assessment - reasons to believe - approach the Court for challenging the reassessment proceedings - Held that - Delhi High Court in the case of Samsung India Electronics P. Ltd. Vs. Deputy Commissioner of Income-Tax & Ors. 2013 (11) TMI 820 - DELHI HIGH COURT , Asian Paint Ltd. Vs. Deputy Commissioner of Income-Tax & Anr. 2007 (1) TMI 159 - BOMBAY HIGH COURT ; and Garden Finance Ltd. Vs. Assistant Commissioner of Income Tax 2003 (10) TMI 17 - GUJARAT HIGH COURT wherein all the three High Courts have held that after the assessing officer disposes of the objection filed to a notice under Section 147 by a speaking order, the Assessing Officer should give substantial time between 3 to 4 weeks to the petitioner or the assessee to approach the Court for challenging the reassessment proceedings on merit, may be in a petition under Article 226 of the Constitution and it is only thereafter that the reassessment proceeding should be concluded. Taking note of all these circumstances and considering the submissions made in detail before us, we find that its a case where arguable grounds have been raised and therefore, we cannot dismiss this writ petition in limine at this stage. The objections raised by the petitioner and the justification for the objections given by the Revenue requires serious and detailed consideration. Accordingly, we are not inclined to dismiss the writ petition at this stage as canvassed by Shri Sanjay Lal, learned counsel. We admit the writ petition, direct that the interim order shall continue to remain in operation, we grant liberty to the parties to complete the pleadings and thereafter, the matter be listed for final hearing

Summary

Issues:
Challenge to reopening of assessment under Section 147 of the Income Tax Act; Validity of reasons for reopening assessment; Jurisdiction of High Court under Section 226 of the Constitution; Grounds for challenging reassessment order; Compliance with time requirements for challenging reassessment proceedings.

Analysis:
The judgment by the High Court of Madhya Pradesh involved several critical issues. Initially, the petitioner challenged the reopening of assessment under Section 147 of the Income Tax Act, arguing that the "reasons to believe" for reopening were improper and arbitrary. A previous order by the Court highlighted that challenging such actions should first be done before the assessing officer, and only then recourse to further remedies could be taken. The petitioner's objections were rejected, leading to the filing of a writ petition raising three main grounds. Firstly, the petitioner claimed not to be liable for the assessment period in question. Secondly, allegations of a lack of bonafide intentions in the reopening of assessment were made. Lastly, it was argued that the reasons for reopening lacked material evidence, rendering them baseless.

The petitioner later challenged the assessment order itself, citing judgments from other High Courts that emphasized the need for substantial time between the disposal of objections and the conclusion of reassessment proceedings. The petitioner argued that this requirement was not met in their case, justifying the admission of the petition for detailed consideration. The respondent, however, relied on a previous judgment and Supreme Court decisions to argue against the maintainability of the petition. The Court noted the differences in circumstances between the present case and the referenced judgment, emphasizing the need to address the arguable grounds raised by the petitioner.

Ultimately, the Court decided to admit the writ petition, maintaining the interim order, and allowing both parties to complete their pleadings before listing the matter for final hearing. The decision not to dismiss the petition at this stage was based on the need for a thorough examination of the objections raised by the petitioner and the justifications provided by the Revenue. The Court recognized the importance of detailed consideration in this matter, highlighting the complexity and significance of the issues involved.