2017 (9) TMI 747 - HC - Income Tax

Reopening of assessment - non appreciating the petitioner s objections - Held that - Assessing Officer without appreciating the petitioner s objections to the notice of reopening, rejected the same. In facts of the case, we would like to request the Assessing Officer to reexamine the objections in peculiar facts pointed out in such objections as well as those urged before us. For the above purpose, following directions are issued (i) It will be open for the petitioner to file supplementary objections with additional documents if so desired, latest by 25.09.2017 before the Assessing Officer. (ii) The Assessing Officer shall dispose of the objections of the petitioner which are already on record and additional objections if so raised in terms of above para (i). (iii) For such purpose, impugned order dated 29.08.2016 is set aside. Till the Assessing Officer passes a fresh order disposing of the objections of the petitioner, interim relief granted pending the petition directing the Assessing Officer not to pass the final order on assessment shall continue.

Summary

Issues:
1. Reopening of assessment based on cash deposits in a bank account without filing a return of income.
2. Validity of separate PAN for an entity in relation to tax assessment.
3. Assessing Officer's duty to consider objections raised by the taxpayer before reopening an assessment.

Analysis:
1. The petitioner, an educational society, was served with a notice for reopening the assessment due to sizable cash deposits in a bank account without filing a return of income. The petitioner argued that the society had already offered the amount for taxation, and the cash deposits were made by one of its educational institutions. The Assessing Officer's sole ground for reopening was the lack of a return despite cash deposits.

2. The Assessing Officer rejected the petitioner's objections, emphasizing that the educational institution had a separate PAN and had not filed a return despite the cash deposits. The court analyzed Section 139A of the Income Tax Act, stating that mere allotment of a PAN does not automatically make the entity a separate taxpayer. The court highlighted that the Assessing Officer did not consider other objections raised by the petitioner, emphasizing the importance of providing reasons and allowing objections as per legal precedents.

3. The court directed the Assessing Officer to reexamine the objections raised by the petitioner, allowing the submission of additional objections and documents. The court set aside the previous order and instructed the Assessing Officer to consider all objections before making a final decision on the assessment. The court emphasized the importance of a fair and thorough assessment process, ensuring that genuine cases are not unnecessarily burdened with tax litigation. Temporary relief was granted to the petitioner until the Assessing Officer reconsiders the objections and issues a fresh order.

Overall, the judgment focused on the proper application of tax laws, the duty of the Assessing Officer to consider objections raised by taxpayers, and the need for a fair and reasoned assessment process to prevent unnecessary hardships to taxpayers.