2021 (11) TMI 1065 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - as argued by assessee that detailed objection was filed by the petitioner and without giving a speaking order the impugned order has been passed - HELD THAT - Though the petitioner did not ask for a speaking order initially, nevertheless the facts on record indicate that before the assessment order was passed, by a communication dated 19.09.2018, the petitioner has asked for a speaking order. In any event, once a notice under Section 148 is issued and reasons given thereafter, it was incumbent on the part of the respondent to have passed a speaking order, in terms of the decision of the Hon-ble Supreme Court 2002 (11) TMI 7 - SUPREME COURT before passing an assessment order. Considering the same impugned order is set aside and the case is remitted back to the respondent to pass a speaking order and thereafter, complete the assessment in accordance with law.

Summary

Issues:
Challenge to assessment order under Section 147 of the Income Tax Act, 1961 for the assessment year 2011-12. Compliance with the decision of the Hon'ble Supreme Court in GKN Drive Shafts (INDIA) Ltd. Vs. Income Tax Officer & Others, 259 ITR 19 (SC). Request for a speaking order before passing the assessment order.

Analysis:
The petitioner challenged the assessment order dated 27.11.2018 issued under Section 147 of the Income Tax Act, 1961 for the assessment year 2011-12, alleging non-compliance with the decision in GKN Drive Shafts (INDIA) Ltd. Vs. Income Tax Officer & Others, 259 ITR 19 (SC). The petitioner contended that despite filing objections and requesting closure of the file, the assessment order was passed without a speaking order as mandated by the Supreme Court decision.

The respondent argued that the petitioner had an alternative remedy through an appeal before the Commissioner of Income Tax under Section 246 A of the Income Tax Act, 1961. It was further highlighted that the petitioner's objection after the assessment proceedings had recommenced was not valid, citing the necessity of a speaking order as per the Supreme Court's decision in GKN Drive Shafts case.

Upon examination of the communication between the petitioner and respondent, the Court noted that the petitioner eventually requested a speaking order before the assessment order was passed. Emphasizing the importance of a speaking order post the issuance of a notice under Section 148, the Court set aside the impugned order and directed the respondent to pass a speaking order before completing the assessment in compliance with the law.

Considering the time elapsed since the relevant assessment year and to expedite the process, the Court directed the respondent to complete the assessment within 90 days from the date of the order. The writ petition was disposed of with these directions, and no costs were awarded. The connected writ miscellaneous petitions were also closed as a result of the judgment.