2022 (2) TMI 1302 - HC - Income Tax

Reopening of assessment u/s 147 - Reasons to believe - non disposing of the objections filled against reassessment - HELD THAT - As perused the materials available on record, including the order impugned in these writ appeals, which disclosed that the learned Judge after hearing the parties and upon examining the documents produced, was of the view that there was procedural irregularity and the guidelines framed by GKN Driveshafts (India) Ltd case 2002 (11) TMI 7 - SUPREME COURT were not followed, while conducting the reassessment proceedings by the respondent; and therefore, set aside the reassessment orders and remanded the matter to the assessing officer to pass orders afresh, after complying with the required procedure as laid down under the law. This court finds no infirmity or illegality in the order so passed by the learned Judge, warranting interference. Appellants drew the attention of this court to paragraph 13 of the order impugned herein, wherein, it was stated that the matters are remitted back to the respondent to pass orders afresh on merits and pointed out that there was no reference for considering the objections filed by the appellants. Hence, the learned counsel sought liberty to the appellants to file additional objections and prayed for appropriate direction to the respondent in this regard. Respondent fairly submitted that the proceedings shall be carried out by the respondent after following the procedure as stipulated in the decision of the Supreme Court in GKN Driveshafts (India) Ltd (supra) and hence, there is no need to apprehend about the conduct of the reassessment proceedings by the respondent. Recording the aforesaid submissions made by the learned senior panel counsel appearing for the respondent, this court grants liberty to the appellants to file additional objections, if any, within a period of two weeks from the date of receipt of a copy of this judgment. Thereafter, the respondent shall consider each and every points raised in the earlier objections as well as the additional objections, if any, to be filed by the appellants and pass orders afresh, after following the procedure as laid down in GKN Driveshafts (India) Ltd case 2002 (11) TMI 7 - SUPREME COURT within a period of sixty days. Except the same, there is no modification in respect of the order passed by the learned Judge, which is impugned herein.

Summary

Issues:
1. Reassessment of income tax for the assessment year 2012-13 based on long term capital gain.
2. Legality of reassessment orders issued by the respondent.
3. Compliance with procedural requirements and principles of natural justice in reassessment proceedings.

Analysis:

Issue 1: Reassessment of income tax for the assessment year 2012-13 based on long term capital gain:
The appellants, assesses on the file of the respondent, filed their return of income for the assessment year 2012-13 electronically. The respondent passed assessment orders under section 143(3) of the Income Tax Act, 1961, making additions towards long term capital gain from the sale of property under unregistered Joint Development Agreements. Reassessment notices were issued under section 148 of the Act within the extended period of limitation. The appellants objected to the reassessment, citing procedural irregularities and lack of tangible material for reassessment.

Issue 2: Legality of reassessment orders:
The appellants challenged the reassessment orders through writ petitions, alleging illegality, lack of jurisdiction, and violation of natural justice principles. The learned Judge set aside the impugned orders and remitted the matters back to the respondent for fresh consideration, directing the appellants to appear before the Competent Authority for assessment proceedings. The Competent Authority was instructed to pass orders within a specified timeframe.

Issue 3: Compliance with procedural requirements and principles of natural justice:
The appellants contended that their objections to the reassessment were not considered adequately, and the reasons for reopening the assessment lacked substance. The Court observed procedural irregularities in the reassessment proceedings, citing the Supreme Court's guidelines in GKN Driveshafts India Limited case. The Court upheld the remand order, emphasizing the need for the assessing officer to comply with the required procedure as per the law.

In conclusion, the High Court of Madras upheld the remand order, granting the appellants the liberty to file additional objections for reconsideration of the reassessment. The Court directed the respondent to pass fresh orders within a specified timeframe, ensuring compliance with procedural requirements outlined by the Supreme Court.