2021 (8) TMI 1319 - HC - Income Tax

Reopening of assessment u/s 147 - Mandation to consider objections against reopening filled by assessee - HELD THAT - Undisputedly, the said notice came to be issued by respondent no.1, Assessing Officer, Income Tax, Special Range, Kanpur. In response to that notice, petitioner filed return through e-mode on 26.05.2021. Subsequently, on its further request, the petitioner was supplied the reasons to believe , to initiate the re-assessment proceedings by email communication along with the approval order issued by the Principal Commissioner, under section 151 of Income Tax Act. In response to the same, the petitioner has filed its written objection to the initiation of the re-assessment proceeding, vide objection dated 28.06.2021 filed on 29.06.2021 before the respondent no.1. Thus, the reassessment proceedings are stated to be pending. Undisputedly, in view of the decision of the Supreme Court 2002 (11) TMI 7 - SUPREME COURT as regularly followed by this Court by way of procedural principle, the Court does not directly entertain the challenge to re-assessment proceeding before disposal of the objection filed by the assessee to the initiation of such re-assessment proceeding. Thus the principle enunciated by the decision of Supreme Court in the case of GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT has been consistently applied by this Court. In view of above, we consider it proper that the assessee's objection dated 28.06.2021 filed on 29.06.2021 may be decided by its assessing authority before proceeding to issue any further notice to conduct the re-assessment proceeding. Order Within one week from today, the petitioner shall file a physical copy of this order along with covering application before the respondent no.1 to inform him about this order and the compliance to be made.Upon such compliance being made by the petitioner, a notice may be issued by the concerned authority within a week thereafter. It may be served on the petitioner fixing a date to decide the objection dated 28.06.2021. At least two weeks notice may be given before the date fixed. On the date fixed, the objections may be decided either upon physical hearing or through virtual proceedings, through online mode.

Summary

Issues:
Challenge to re-assessment proceedings for assessment year 2015-16.

Analysis:
The petitioner challenged the re-assessment proceedings initiated against them for the assessment year 2015-16. The notice for re-assessment was issued by the Assessing Officer, Income Tax, Special Range, Kanpur. The petitioner filed a return through e-mode in response to the notice and was later provided with the "reasons to believe" for initiating the re-assessment proceedings along with the approval order under section 151 of the Income Tax Act, 1961. The petitioner then filed a written objection to the initiation of the re-assessment proceedings, and as a result, the re-assessment proceedings are pending.

The Court, following the procedural principle established by the Supreme Court in the case of GKN Driveshafts (India) Ltd. vs Income Tax Officer and another, 2003(259) ITR 19 (SC), decided not to entertain the challenge to the re-assessment proceedings before the objection filed by the assessee is disposed of by the assessing authority. The Court emphasized the importance of deciding the assessee's objection before proceeding with issuing any further notice for conducting the re-assessment proceedings.

Under the faceless scheme, where the assessee is unaware of the identity or location of the assessing authority, the Court issued specific directions. The petitioner was instructed to file a physical copy of the order along with an application to inform the respondent no.1 about the order and compliance. Upon compliance, the assessing authority would issue a notice to decide on the objection filed by the petitioner, providing adequate notice for the hearing. The objections could be decided either through physical or virtual proceedings, ensuring the petitioner has an opportunity to present their objections and respond to queries.

Once the proceedings are completed, a reasoned order would be passed by the authority hearing the objections and communicated to the petitioner. If the objections are rejected, the re-assessment proceedings could be fixed for a later date. The Court clarified that they did not examine the merit of the challenge at that stage, leaving it open to be raised at an appropriate time.