2017 (9) TMI 582 - HC - Income Tax

Reopening of assessment - reasons supplied by IT department for invocation of Sec.147 r.w.s. 148 by IT Department - Held That - Written objection has not decided by the Department till date. However, the Department has issued the impugned notice dated July 27, 2017. The Income Tax Authorities will afford a reasonable opportunity of hearing to the petitioners prior to disposal of the written objection of the petitioners. Accordingly it would be appropriate to set aside the impugned writing dated July 27, 2017 Authorities will pass a reasoned order, which will be communicated to the petitioners forthwith thereafter-Writ Petition is disposed off.

Summary

Issues:
1. Invocation of Section 147 read with Section 148 of the Income Tax Act, 1961 without disposing of the written objection filed by the petitioners.
2. Allegation of breach of principles of natural justice and reference to the decision in the case of GKN Driveshafts India Ltd.- Vs-ITO, reported at 259 ITR 19.
3. Request for setting aside the impugned writing dated July 27, 2017.
4. Direction for the Department to consider and decide the written objection of the petitioners with a reasonable opportunity of hearing.
5. Requirement for the Authorities to pass a reasoned order within four weeks from the date of communication of the order.

Analysis:

1. The petitioners challenged a writing dated July 27, 2017, issued by the Income Tax Department invoking Section 147 read with Section 148 of the Income Tax Act, 1961. The petitioners had requested reasons for the invocation, filed a written objection, but the objection remained undecided. The Department issued the impugned notice despite the pending objection. The Court found this procedural step inappropriate and set aside the writing dated July 27, 2017.

2. The learned Advocate for the petitioners contended that the Department's actions were against the principles of natural justice and referred to the decision of the Hon'ble Supreme Court in the case of GKN Driveshafts India Ltd.- Vs-ITO, reported at 259 ITR 19. The Court acknowledged the concern and emphasized the importance of following due process in such matters.

3. In light of the circumstances, the Court deemed it suitable to nullify the writing dated July 27, 2017, issued by the Income Tax Department. This decision aimed to rectify the procedural irregularity and ensure fairness in the assessment process.

4. The Court directed the Department to consider and decide on the written objection submitted by the petitioners while providing them with a reasonable opportunity of being heard. This directive underscored the significance of giving the petitioners a chance to present their case before a final decision is made.

5. Furthermore, the Authorities were instructed to pass a reasoned order promptly and communicate it to the petitioners within four weeks from the date of the Court's order. This timeline was established to expedite the resolution of the matter and maintain efficiency in the assessment proceedings.

In conclusion, the High Court of Calcutta addressed the procedural deficiencies in the Income Tax Department's actions, emphasizing the principles of natural justice and the need for a fair and transparent assessment process. The judgment aimed to uphold the rights of the petitioners and ensure a timely and reasoned decision by the Authorities.