2019 (12) TMI 1542 - HC - Income Tax

Reopening of assessment u/s 147 - rejecting the objections filed by the petitioners against the reasons recorded as well as the assessment orders passed under subsection (3) of section 143 read with section 147 - Petitioner invited the attention of the court to the reasons recorded to point out that though the assessment has already been made in the hands of the association of persons, the Assessing Officer sought to reopen the assessment to make protective addition in the hands of the petitioners - as submitted impugned orders are passed in violation of the principles of natural justice and that the proceedings under section 148 of the Act were wholly without jurisdiction, therefore, these petitions under Article 226 of the Constitution of India against the assessment orders are maintainable - HELD THAT - Having regard to the submissions advanced by the learned advocate for the petitioners, issue Notice, returnable on 13.01.2020. By way of adinterim relief, the operation of the assessment orders passed under section 143(3) read with section 147 as well as the impugned notices of demand issued under section 156 of the Act is hereby stayed.

Summary

Issues:
Challenging notices under section 148 of the Income Tax Act, rejection of objections against reasons recorded, assessment orders under section 143 read with section 147, and notices of demand under section 156.

Analysis:
The petitioners challenged the notices issued under section 148 of the Income Tax Act, the order rejecting their objections against the reasons recorded, the assessment orders under subsection (3) of section 143 read with section 147, and the notices of demand under section 156. The petitioners argued that the Assessing Officer sought to reopen the assessment to make a protective addition in their hands, even though the assessment had already been made in the hands of the association of persons. They contended that the Assessing Officer could not have formed the belief that income chargeable to tax had escaped assessment based on a future hypothesis or contingency. They relied on a Bombay High Court decision stating that the reason to believe must be present and cannot be based on future possibilities. The petitioners also argued that the Assessing Officer did not address this submission in the order rejecting their objections, which they claimed was a breach of natural justice principles. They cited previous court decisions equating reasons with natural justice and argued that the present case satisfied the conditions where the alternative remedy does not bar a writ petition, specifically in cases of natural justice violations and proceedings without jurisdiction.

In response to the submissions made by the petitioners, the court issued a Notice returnable on a specific date. As an interim measure, the operation of the assessment orders passed under section 143(3) read with section 147, and the impugned notices of demand issued under section 156 of the Act were stayed. The court permitted direct service on the same day.