2021 (8) TMI 1294 - HC - Income Tax

Validity of reopening of assessment u/s 147 - condition precedent for re opening of an assessment under Section 147 of the Act is not satisfied in the present case - HELD THAT - An order of assessment under Section 143(3) had been passed at the original instance and thus the proviso to Section 147 would stand attracted and would have to be satisfied. The proviso casts responsibility upon the Department to establish that the escapement of income alleged has been occasioned by virtue of the assessee not having made a full and true disclosure of its taxable income in its return of income/in the course of original assessment. Also attention drawn to the reasons recorded, communicated on 09.07.2021, wherein, in both the points cited as being the basis for the impugned re assessment, reference is made to verification of the records of assessment including Form 3CD of the audit report. Thus, and prima facie, the documents relied upon in support of proceedings for re assessment are very much part of the records. According to the petitioner, there is no other, let alone tangible material, that has been discerned to justify the impugned proceedings. As the petitioner has, and rightly, filed an objection to the assumption of jurisdiction before the Assessing Authority and orders are awaited in regard to the same, it would be appropriate that the procedure for re-assessments, as set out by the Hon ble Supreme Court in the case of GKN Drive Shafts 2002 (11) TMI 7 - SUPREME COURT is complied with. Since the impugned proceedings are yet to culminate in a speaking order on the aspect of jurisdiction, I am of the view that this Writ Petition is pre-mature and that the petitioner should await passing of the speaking order. Let the respondent hear the petitioner and pass orders on the objections dated 12.07.2021 within a period of four (4) weeks from today.

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act, 1961 based on lack of satisfaction of conditions for reassessment under Section 147.

Analysis:
The petitioner challenged a notice issued under Section 148 of the Income Tax Act, 1961, contending that the conditions for reopening an assessment under Section 147 were not met. The petitioner argued that since an order of assessment under Section 143(3) had already been passed, the proviso to Section 147, requiring the Department to establish non-disclosure of taxable income, should apply. The reasons for reassessment referred to verification of audit report records, which the petitioner claimed were already part of the assessment records, with no additional material to justify the reassessment.

The court noted that the petitioner had raised objections to the jurisdiction of the Assessing Authority, awaiting orders on the same. Referring to the GKN Drive Shafts case, the court emphasized the need to follow proper procedures for reassessments. The court highlighted that the noticee should file a return upon receiving a notice under Section 148, request reasons for the notice, and submit objections, which the assessing officer must address in a speaking order.

In conclusion, the court found no reason to interfere with the challenged order but advised the petitioner to await a speaking order on jurisdiction before proceeding with the assessment. The court dismissed the Writ Petition as premature, instructing the respondent to hear the petitioner's objections and issue orders within four weeks. The assessment would be subject to the resolution of jurisdictional issues. The court dismissed the Writ Petition and did not award costs, also dismissing connected Miscellaneous Petitions.