2018 (11) TMI 1183 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - Held that - The respondents can not proceed with the reassessment proceedings without deciding the objections and that in respect of the assessment year 2010-11 re-assessment on similar grounds was done and the said assessment is under challenge by the petitioner in appeal before the CIT (A) which is pending. In GKN Driveshafts (India) Limited Vs. ITO (2002 (11) TMI 7 - SUPREME COURT) it has been held that once notice of reassessment is given, the assessee has a right to demand reasons to believe and on supply of the reasons he may prefer objections and in case objections are so filed, the assessing officer is obliged to decide the same by a speaking order. In view of the above, since the objections of the petitioner have not been considered and decided we deem it proper that the petitioner should wait for the decision of the same. Accordingly, we are not inclined to exercise our discretionary jurisdiction in the matter at this stage and dispose of the writ petition with the direction that the respondent authority would before making the reassessment would decide the objections.

Summary

Issues:
1. Show cause notice under Section 147 of the Income Tax Act, 1961 for reassessment for the assessment year 2014-15.
2. Consideration of objections filed by the petitioner.
3. Legal obligation of the assessing officer to decide objections by a speaking order.
4. Precedent from GKN Driveshafts (India) Limited Vs. Income Tax Officer (2003) 259 ITR 19 (SC).
5. Exercise of discretionary jurisdiction by the court.
6. Direction for the respondent authority to decide objections before reassessment.
7. Advice for the petitioner regarding pending appeal for assessment year 2010-11.

Analysis:
The High Court heard the petitioner's writ petition challenging a show cause notice issued under Section 147 of the Income Tax Act, 1961 for reassessment for the assessment year 2014-15. The petitioner was provided with the 'reasons to believe' for the reassessment. However, the objections filed by the petitioner in response to the notice were not considered or decided by the assessing officer, which led to the petitioner's contention that reassessment proceedings cannot proceed without addressing the objections. Citing the case of GKN Driveshafts (India) Limited Vs. Income Tax Officer (2003) 259 ITR 19 (SC), it was highlighted that once objections are filed, the assessing officer is obligated to decide them by a speaking order.

The court acknowledged the petitioner's argument and emphasized the importance of considering and deciding objections before proceeding with reassessment. Therefore, the court declined to exercise its discretionary jurisdiction at that stage and directed the respondent authority to decide the objections before making any reassessment. Additionally, the petitioner was advised to pursue the appeal for the assessment year 2010-11, with an expectation for expeditious disposal by the appellate authority.

In conclusion, the court disposed of the writ petition with the direction for the respondent authority to address the petitioner's objections before proceeding with reassessment. The petitioner was advised to pursue the pending appeal diligently, with a hope for a swift resolution by the appellate authority.