2019 (1) TMI 1280 - HC - Income Tax

Reopening of assessment - no proper opportunity to object to the reasons recorded - Held that - The Respondent has now filed Affidavit in reply dated 16th January, 2019 to the Petition. In the above reply, the Respondent has annexed a fully copy of the reasons recorded by the Assessing Officer before issuing the impugned notice. The same is annexed to the reply at Exh. B thereto. In support of the Petition seeks liberty to file objections to the full copy of the reasons recorded for issuing the impugned notice dated 21st March, 2018, now received by the Petitioner. This for consideration of the Assessing Officer while disposing of the objections. As the Petitioner was not given a proper opportunity to object to the reasons recorded, the request of the Petitioner is reasonable. This request on behalf of the Petitioner is also in accord with the decision of the Supreme Court in GKN Driveshaft (2002 (11) TMI 7 - SUPREME COURT). Therefore, in the circumstances, without disturbing the impugned notice dated 21st March, 2018, it would be appropriate to set aside the order dated 7th December, 2018 of the Assessing Officer disposing of the objections. This to enable the Petitioner to file its objections afresh and the Assessing Officer to dispose of the objections after due consideration.

Summary

Issues:
Challenge to notice under Section 148 for reopening Assessment Year 2011-12 due to incomplete communication of reasons.

Analysis:
The petition challenges a notice issued under Section 148 of the Act by the Assessing Officer to reopen the assessment for the year 2011-12. The petitioner argues that the reasons recorded in support of the notice were not fully communicated, hindering the ability to file proper objections as per the GKN Driveshaft case. The communicated reasons stated that the assessee company did not offer the sale consideration received from NSE. The objections raised by the petitioner were rejected by the Assessing Officer in an order dated 7th December, 2018.

The respondent filed an affidavit in reply, annexing a full copy of the reasons recorded by the Assessing Officer before issuing the notice. The petitioner, now having access to the complete reasons, seeks to file objections for the Assessing Officer's consideration. The court finds the petitioner's request reasonable, in line with the Supreme Court's decision in GKN Driveshaft. Consequently, the court sets aside the order of 7th December, 2018, enabling the petitioner to file objections afresh and the Assessing Officer to reconsider them.

The court orders the petitioner to file objections to the reasons recorded within four weeks, with the Assessing Officer required to dispose of these objections within an additional two weeks. If the objections are rejected, reassessment proceedings cannot commence for a further four weeks. The stay on the impugned notice, granted until a specified date, is extended for an additional 10 weeks. If no stay is obtained within this period, the Assessing Officer can proceed with adjudicating upon the notice.

In conclusion, the petition is disposed of with no order as to costs, ensuring the petitioner's right to effectively challenge the impugned notice based on the complete reasons provided.