2022 (3) TMI 1406 - HC - Income Tax

Maintainability of Writ petition challenging the assessment / reassessment order - Validity of reopening of assessment u/s 147 - whether the objections raised by the petitioner pursuant to the notice u/s148 of the Income Tax Act 1961 were decided or not and if not, the assessment order passed pursuant to the notice under Section 148 would not be legally sustainable? - HELD THAT - The judgment of the Hon ble Apex Court in GKN Driveshafts (India) Ltd 2002 (11) TMI 7 - SUPREME COURT shows that, when a notice under Section 148 of the Act is given, the proper course of action for the assessee is to file a return and if he so desires, to seek reasons for issuing the notice, and the assessing authority is bound to furnish the reasons for reopening the assessment. On receipt of the reasons, the assessee is entitled to file his objections to the issuance of the notice and the assessing officer is bound to dispose of the same by passing a speaking order. In the instant case, the allegation of the petitioner is that, pursuant to the notice under Section 148 of the Act, when an objection was submitted by the petitioner, no speaking order was passed on it, rather an assessment order was passed directly. The arguments have been raised without taking note of the fact that while sending the show cause notice and draft assessment order on 24.09.2021, the order on the objections was also sent, after dealing with the objections. When no response to the show cause notice along with the draft assessment order was received, the final assessment order was passed on 28.09.2021. Accordingly, we do not find this as a fit case for maintaining a writ petition to challenge the assessment order. However, the petitioner can seek remedy by filing an appeal against the assessment order because, we have not touched the merits of the issue. Rather, the present order is only with reference to the maintainability of the writ petition in reference to the notice under Section 148 of the Income Tax Act and the objections thereupon. Thus taking note of the peculiarity of the case, the respondents shall not take any coercive action against the petitioner till the disposal of the appeal and the appellate authority is directed to expedite the hearing and decide the appeal at the earliest so that the position in reference to the legal issue regarding the acceptance of VAT towards expenditure on the income may become clear as to whether it is allowable or not. This order shall not be taken as a precedent, as it is passed after taking note of the peculiar facts of the present case only.

Summary

Issues:
Challenge to assessment order without availing appeal remedy; Maintainability of writ petition; Procedural lapse in passing reassessment order; Legal sustainability of assessment order; Disposal of objections raised by petitioner; Compliance with notice under Section 148 of Income Tax Act; Justifiability of passing assessment order directly; Applicability of GKN Driveshafts (India) Ltd case; Filing appeal against assessment order.

Detailed Analysis:

1. Challenge to Assessment Order without Availing Appeal Remedy:
The petitioner challenged the assessment order dated 28.09.2021 for the Assessment Year 2015-16 without availing the remedy of appeal. The argument was raised in reference to the judgment of GKN Driveshafts (India) Ltd -Vs- ITO, emphasizing the procedural requirement for disposing of objections raised by the assessee before passing the assessment order.

2. Maintainability of Writ Petition:
The petitioner contended that the writ petition challenging the assessment order is maintainable due to the procedural lapse and irregularity in passing the reassessment order without deciding the objections raised by the petitioner. Reference was made to the judgment in the case of Commissioner of Income Tax -Vs- Pentafour Software Employees Welfare Foundation to support the argument that objections raised by the assessee must be disposed of before proceeding with the assessment order.

3. Disposal of Objections Raised by Petitioner:
The core issue revolved around whether the objections raised by the petitioner pursuant to the notice under Section 148 of the Income Tax Act were adequately addressed. The petitioner argued that the objections remained undecided, rendering the assessment order illegal. However, the Revenue contended that the objections were duly considered, and a detailed order was passed before issuing the assessment order.

4. Compliance with Notice under Section 148 of Income Tax Act:
The petitioner highlighted the necessity for the assessing officer to dispose of objections raised by the assessee before proceeding with the assessment order, as mandated by the provisions of the Income Tax Act. The Revenue, on the other hand, maintained that the objections were duly addressed, and the assessment order was passed in compliance with the legal requirements.

5. Applicability of GKN Driveshafts (India) Ltd Case:
Both parties referred to the judgment in the case of GKN Driveshafts (India) Ltd -Vs- ITO to support their respective arguments regarding the procedural compliance with notice under Section 148 of the Income Tax Act. The Court analyzed the applicability of this judgment in the context of the present case to determine the legality of the assessment order.

6. Filing Appeal Against Assessment Order:
Ultimately, the Court concluded that the writ petition was not maintainable for directly challenging the assessment order. The petitioner was granted liberty to file an appeal against the assessment order within three weeks, emphasizing the importance of following the legal process. The Court directed the appellate authority to expedite the hearing and decide the appeal promptly to clarify the legal issue regarding the acceptance of VAT towards expenditure.

7. Conclusion:
In conclusion, the Court disposed of the writ petition without costs, allowing the petitioner to file an appeal against the assessment order within a specified period. The judgment emphasized the importance of following the legal process and seeking remedy through the appropriate channels, highlighting the significance of procedural compliance in tax assessments.