2017 (3) TMI 148 - HC - Income Tax

Reopening the assessment - procedure prescribed by in the case of GKN Drive Shafts (India) Ltd. V. Income Tax Officer (2002 (11) TMI 7 - SUPREME Court) had not been followed - Held that - In our view, the judgment of Supreme Court in the matter of GKN Drive Shafts (India) Ltd. V. Income Tax Officer, with regard to the obligation placed on the Revenue to dispose of the objections once they are filed before it by the Assessee, would be binding on the Revenue in so far the procedure prescribed therein for reopening an assessment is concerned, even though, there is no specific reference to the judgment of the Supreme Court rendered in the matter of GKN Drive Shafts (India) Ltd. V. Income Tax Officer. To our mind, the Revenue, would have no other option, but to follow the prescribed procedure.

Summary

Issues Involved:
Reopening of assessment without following prescribed procedure as per Supreme Court judgment in GKN Drive Shafts (India) Ltd. v. Income Tax Officer (2003) 259 ITR 19.

Analysis:
The appeal was filed against the Income Tax Appellate Tribunal's order, challenging the reopening of assessment for Assessment Year 2008-09 without following the procedure laid down by the Supreme Court in GKN Drive Shafts (India) Ltd. v. Income Tax Officer. The main issue revolved around whether the land sold was agricultural land and whether the profit earned was taxable as capital gains. The Assessee claimed the land was agricultural, while the Revenue disagreed and initiated the reassessment process. The Assessee objected to the reopening, but the Revenue proceeded to pass the reassessment order without addressing the objections. The Tribunal failed to consider the non-compliance with the prescribed procedure in the GKN Drive Shafts case, which was raised by the Assessee. The High Court held that the Revenue must follow the prescribed procedure for reopening assessments, as per the Supreme Court judgment. The Court emphasized the obligation on the Revenue to dispose of objections raised by the Assessee before proceeding with the assessment. The Court allowed the appeal, set aside the impugned order, and remanded the matter to the Assessing Officer to first dispose of the objections by way of a speaking order and then proceed further in accordance with the law. The Court left all rights and contentions of the parties open, as the matter was not decided on merits, and no costs were awarded.