2023 (1) TMI 1261 - HC - Income Tax

Reopening of assessment u/s 147 - procedure prescribed for reassessment - intra Court appeal by the Revenue against the order of this Court - Non furnishing of reasons - Without passing the preliminary order, AO has passed the final assessment order - HELD THAT - After receipt of the letter A.O. has called the assessee for final hearing keeping in view the paucity of time. No explanation is forthcoming as to why the reasons were not furnished, though it is an admitted position that reasons were sought as back as in April 2018. The order sheet and assessment order clearly indicate that entire proceeding has been hurriedly completed between 18.12.2018 and 28.12.2018 in order to complete the same within the time limit i.e. 31.12.2018. This Court by following the authority in GKN Driveshafts 2002 (11) TMI 7 - SUPREME COURT has held that procedure is mandatory. The dates and events recorded by us hereinabove clearly indicate that from April 2018 to December 2018, the A.O has not taken any action which is more or less similar in the case of Deepak Extrusions 2017 (3) TMI 1257 - KARNATAKA HIGH COURT . The Hon ble single Judge has rightly noticed in para 8 of the impugned order that by no stretch of imagination, it could be held that speaking order is passed by the A.O considering the objection raised by the assessee. The writ petition has been allowed by following the decision in the case of Deepak Extrusions. This is an intra-court appeal. There is no patent error to interfere with the view taken by the Hon ble Single Judge more so, when a Division Bench of this Court following an authority of the Hon ble Supreme Court of India has held that provision is mandatory in nature. Decided against revenue.

Summary

Issues: Appeal against order allowing assessee's writ petition challenging final assessment order passed without following mandatory procedure for disposal of objections under Section 292(B) of the Income Tax Act, 1961.

Analysis:
1. Background and Facts: The Revenue filed an intra Court appeal against the order allowing the assessee's writ petition challenging the final assessment order passed by the Assessing Officer (AO) without following the mandatory procedure. The AO issued a notice under Section 148 of the Income Tax Act on 23.03.2018, and the assessee sought reasons on 10.04.2018. The final assessment order was passed on 28.12.2018 without addressing the objections raised by the assessee.

2. Appellant's Submission: The Revenue argued that the defect in not furnishing reasons earlier was curable under Section 292(B) of the Act. They relied on a case where a similar matter was remanded to the AO. The Revenue contended that the objections were discussed with the assessee before passing the final order, and thus, the appeal should be allowed.

3. Respondent's Argument: The respondent argued that the mandatory procedure for disposal of objections before proceeding with the assessment was not followed, citing a relevant case law. They emphasized that the AO did not adequately consider the objections raised by the assessee, and therefore, the appeal should be dismissed.

4. Court's Analysis: The Court examined the sequence of events and found that the AO did not address the objections raised by the assessee in a timely manner. The AO hurriedly completed the proceedings between 18.12.2018 and 28.12.2018 to meet the deadline. The Court noted that the procedure for disposal of objections was mandatory, as established in previous judgments.

5. Decision: The Court dismissed the appeal, stating that there was no error in the Single Judge's decision to allow the writ petition. The Court emphasized that the provision requiring the AO to consider objections before passing the final order is mandatory. As a result, the appeal was rejected without costs.

This detailed analysis highlights the key arguments presented by both parties, the Court's examination of the facts and legal precedents, and the final decision reached by the Court in dismissing the appeal.