2016 (11) TMI 1027 - HC - Income Tax

Reopening of assessment - correctness of the reasons for reopening - Held that - The present writ petition is premature. Accordingly, this Court while rejecting the relief sought for by the petitioner, directs the petitioner to submit its objections to the reasons for reopening as furnished by the first respondent, vide proceedings dated 10.02.2015 within a period of 30 days from the receipt of a copy of this order, in which the petitioner shall raise all issues both factual as well as legal. On receipt of the reply by the petitioner, the first respondent shall consider the same without in any manner being influenced by the observations made in this order and pass a speaking order and communicate the same to the petitioner so as to enable them to workout their remedy available under the Income Tax Act.

Summary

Issues involved:
Challenge to notice under Section 148 of the Income Tax Act for reopening assessment for AY 2011-12.

Analysis:
The petitioner filed a writ petition seeking to quash a notice dated 10.02.2015 issued by the first respondent under Section 148 of the Income Tax Act, 1961, for reopening the assessment for AY 2011-12. The notice was based on the belief that income chargeable to tax had escaped assessment due to donations made to a trust alleged to be bogus. The petitioner requested reasons for reopening, which were provided on 13.05.2015. The petitioner then approached the court challenging the notice. The court noted that the Assessing Officer must follow a specific procedure when intending to reopen an assessment, including recording reasons in writing, furnishing them to the assessee, allowing time for objections, passing a speaking order, and communicating it to the assessee. As the petitioner challenged the notice before submitting objections, the court found the petition premature and directed the petitioner to submit objections within 30 days, after which the Assessing Officer would consider them and pass a speaking order, enabling the petitioner to seek remedies under the Income Tax Act.

The court emphasized that the correctness of reasons for reopening could not be tested based on factual averments in the counter affidavit. The court also clarified that the decision of the Income Tax Appellate Tribunal in a similar case could not be directly applied to the present case, especially since the appeal pertained to regular assessment proceedings. Therefore, the court held that the writ petition was premature and rejected the relief sought by the petitioner, directing them to submit objections within the specified timeframe. The Assessing Officer was instructed to consider the objections independently and pass a speaking order, allowing the petitioner to pursue remedies under the Income Tax Act based on the outcome.