2017 (10) TMI 542 - HC - Income Tax

Reopening of assessment - Held that - Department had invoked Section 148 of the Act of 1961 in respect of three assessment years as against the petitioners. The Department has also supplied the reasons for such invocation. The petitioners had replied thereto. It was incumbent upon the authorities to consider and decide the objections raised by the petitioners before proceeding to assess the reopened assessment years. In the present case, the Assessing Officer did not dispose of the objections raised, but proceeded to pass an order of assessment after reopening the assessment under Section 148. Such a procedure, in my view, is not available to the Assessing Officer. The Assessing Officer ought to have disposed of the objections raised by the petitioners by a reasoned order prior to the Assessing Officer passing an order of assessment after reopening the assessment under Section 148 of the Act of 1961. In such circumstances, the impugned order of assessment cannot be sustained. The same is set aside. All consequential steps taken pursuant to in terms of impugned order of assessment including notice under Section 271 of the Act of 1971 are also set aside.

Summary

Issues:
Challenge to proceeding under Section 148 read with Section 147 of the Income Tax Act, 1961 and notice under Section 271 of the Act of 1971.

Analysis:
The petitioners challenged the reopening of assessment for three assessment years under Section 148 of the Income Tax Act, 1961. The Department provided reasons for the reopening, and the petitioners responded to it. The petitioners contended that the authorities should have disposed of their objections before proceeding with the assessment. However, the Assessing Officer proceeded with the assessment without addressing the objections, which the Court found to be improper. The Court held that the Assessing Officer should have first resolved the objections raised by the petitioners before proceeding with the assessment under Section 148.

The Court noted that the Assessing Officer's failure to address the objections before passing the assessment order was not in accordance with the law. Therefore, the impugned assessment order was set aside, along with all consequential steps taken, including the notice under Section 271 of the Act of 1971. The Court emphasized that the Assessing Officer must evaluate the objections raised by the petitioners within four weeks from the date of the order and proceed thereafter in accordance with the law.

In conclusion, the Court disposed of the writ petition and did not award any costs. The judgment highlighted the importance of addressing objections raised by taxpayers before finalizing assessments under Section 148 of the Income Tax Act, 1961.