2019 (7) TMI 1580 - HC - Income Tax

Reopening of assessment - validity of notice u/s 148 - Year of assessment - HELD THAT - Whether the assessment came to be reopened for the year 2000-01 seems to be on a disputed set of facts since the Department in their letter dated 16.05.2007 while replying to the petitioner s letter dated 05.04.2007 had found it necessary to reopen based on the notes of accounts on the Balance Sheet as on 31.03.2000. This aspect is disputed by the petitioner since M/s.M.Ct.M.Corporation Pvt. Ltd. was dissolved with effect from 01.04.1999 itself and they had intimated the respondent of not filing the income tax returns for the assessment year 2000-01 in view of the dissolution. When such a reply has been given by the Department it is quite possible that there could be an error with regard to the reference of the balance sheet of the Company. Even otherwise when the Department has come out with a statement that the notes of accounts on the Balance Sheet as on 31.03.2000 has entitled them to send the Notice under Section 148 it will not be appropriate for this Court to investigate into these disputed facts. Nevertheless it is also claimed that the petitioner by a subsequent communication dated 31.05.2007 had objected to the reasons for reopening the assessment. While considering such objections the respondent had rejected the same through a letter dated 18.07.2007. Since this Court is of the view that the petitioner may have certain valid grounds to raise in connection with the demerger of the petitioner s Company with effect from 01.04.1999 it would be appropriate for the respondent to reconsider the objections. In view of these disputed facts I do not intend to go into the reasonings adduced by both the parties but would rather feel it appropriate that the Assessing Officer re-considers such objections by extending due opportunity to the petitioner. Petitioner is granted liberty to raise further objections before the Assessing Officer to the Notice dated 28.03.2007 issued under Section 148 of the Income Tax Act within a period of 15 days from the date of receipt of copy of this order.

Summary

Issues involved:
Challenge to the rejection of objections to the Notice under Section 148 of the Income Tax Act for the assessment year 2000-01.

Analysis:

1. Validity of Notice under Section 148:
The petitioner challenged the Notice issued under Section 148, arguing that the Company was dissolved, making the Notice invalid. The petitioner relied on the orders of the Court sanctioning the demerger of the Company, informing the Department about the demerger, and subsequent confirmation of dissolution. The petitioner contended that the Notice for reopening the assessment cannot be sustained due to the dissolution of the Company.

2. Legal Standing of the Notice:
The respondent, relying on Section 292-B of the Income Tax Act, argued that even if the Notice was a mistake, it cannot be set aside on that ground. The respondent cited a Delhi High Court decision later confirmed by the Supreme Court to support this argument.

3. Disputed Facts and Reopening of Assessment:
The issue of whether the assessment was reopened for the year 2000-01 was based on disputed facts. The Department claimed to have reopened the assessment based on the notes of accounts on the Balance Sheet as of 31.03.2000, which the petitioner disputed due to the Company's dissolution. The Court noted the conflicting positions but refrained from investigating the disputed facts, suggesting that the Assessing Officer reconsider the objections raised by the petitioner.

4. Court's Decision and Directions:
The Court decided not to delve into the reasons presented by both parties but directed the Assessing Officer to reconsider the objections raised by the petitioner. The petitioner was granted liberty to raise further objections within 15 days, and the Assessing Officer was instructed to deal with the objections, provide a personal hearing to the petitioner, and make a final decision within 12 weeks.

5. Conclusion:
The Court concluded by granting the petitioner the opportunity to raise further objections before the Assessing Officer and directed the Officer to review the objections and make a decision within the specified timeframe. The writ petition was closed with no costs imposed.

This detailed analysis of the judgment highlights the legal arguments, factual disputes, and the Court's decision regarding the validity of the Notice under Section 148 of the Income Tax Act for the assessment year 2000-01.