2016 (11) TMI 1719 - HC - Income Tax

Reopening of assessment u/s 147 - Submission of objections so made against reopening of assessment - HELD THAT - In the light of the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT the petitioner/assessee is entitled to submit their objections to the reasons for reopening. It is only thereafter the respondent has to pass orders either accepting or rejecting the objections so made. Therefore, at this stage of the matter, the question of quashing the impugned notice does not arise in the light of the fact that after issuance of the impugned notice, by a communication dated 24.10.2016, the respondent communicated the reasons for reopening. Therefore, the petitioner has to comply with the directives of the Hon'ble Supreme Court in the decision in GKN Driveshafts and follow the procedure contemplated therein. Writ petition is disposed of granting 15 days' time from the date of receipt of a copy of this order, to the petitioner to submit his objections to the reasons for reopening communicated by proceedings dated 24.10.2016. On receipt of the objections, the respondent shall consider the same and pass a speaking order on merits and in accordance with law, within a period of 10 days thereafter.

Summary

Issues:
1. Validity of notice issued under Section 148 of the Income Tax Act, 1961 for the year 2009-10.
2. Compliance with the procedure for reopening assessment as per the decision in GKN Driveshafts (India) Ltd. Vs. ITO.

Analysis:
1. The petitioner sought to quash the notice issued by the respondent under Section 148 of the Income Tax Act, 1961, dated 3.2.2016, stating that the income chargeable to tax for the year 2009-10 had escaped assessment. The petitioner contended that the return of income for the said assessment year was already filed, and hence, the notice should be considered complied with. However, the respondent later communicated the reasons for reopening the assessment, citing the decision in GKN Driveshafts case, which allows the assessee to submit objections before any orders are passed. The court held that the petitioner must comply with the procedure outlined in the GKN Driveshafts case before seeking to quash the notice.

2. Referring to the GKN Driveshafts case, the court emphasized that the petitioner/assessee has the right to submit objections to the reasons for reopening before any further action is taken. The court directed the petitioner to submit objections within 15 days and mandated the respondent to pass a speaking order on merits and in accordance with the law within 10 days thereafter. It was also ordered that no precipitative action shall be initiated pursuant to the notice issued under Section 143(2) of the Income Tax Act dated 24.10.2016 until the orders are passed. The court's decision was based on upholding the procedural fairness and adherence to the legal requirements set forth in the relevant case law.

In conclusion, the court disposed of the writ petition by granting time to the petitioner to submit objections to the reasons for reopening assessment and directed the respondent to pass a considered order within a specified timeframe. The judgment underscored the importance of following due process and established legal principles in matters concerning income tax assessments and reassessments.