2019 (3) TMI 651 - HC - Income Tax

Reopening the assessment - bogus accommodation entries - AO had received information from the investigation wing of the department - Assessing Officer does not accept the objections so filed by assessee - as per assessee reasons proceeded on entirely erroneous footing - HELD THAT - The action of the Assessing Officer to pass the final order of assessment even before the period of four weeks as envisaged by the decision of this Court in the case of Asian Paints Ltd 2007 (1) TMI 159 - BOMBAY HIGH COURT had expired, cannot be approved. The Assessing Officer has filed an affidavit apologizing for such lapse of which we take note. The order of assessment, therefore, shall have to be set aside. While doing so, in view of the peculiar facts of the case, we permit the petitioner to file further objections to the notice of reopening of assessment. This recourse we adopt for the reason that the assessee had raised the ground of the reasons proceeding on incorrect factual premise, but the pointed objection as is elaborated before us now was not taken.

Summary

Issues:
Challenge to notice of reopening of assessment for the assessment year 2010-11 based on incorrect factual basis, objection raised by petitioner, Assessing Officer's premature reassessment order, compliance with the decision in Asian Paints Ltd case, setting aside of assessment order, permission for petitioner to file further objections, directions for revival of proceedings.

Analysis:
The petitioner challenged a notice of reopening of assessment for the assessment year 2010-11, citing reasons related to suspicious transactions involving a significant amount deposited in a bank account and subsequent transfers to another entity. The petitioner contended that the reasons were factually incorrect, as the amount in question was actually invested with a different entity. Objections to the notice were raised, but the Assessing Officer rejected them and passed a reassessment order prematurely, contrary to the decision in Asian Paints Ltd case requiring a waiting period after objections disposal.

The court noted the incorrect factual basis of the reasons and the lack of specific objections raised by the petitioner initially. However, the premature assessment order was deemed unacceptable, and the Assessing Officer apologized for the oversight. Consequently, the assessment order was set aside, and the petitioner was permitted to file further objections to the notice of reopening. The court emphasized the importance of factual accuracy in reassessment proceedings and directed the revival of proceedings from the issuance of the notice of reassessment.

In conclusion, the court quashed the assessment order, revived the proceedings, and provided a deadline for the petitioner to raise objections. The Assessing Officer was instructed to consider and dispose of the objections promptly. Additionally, a stay on the notice of reopening was extended to allow for a fair review process. The writ petition was disposed of with these directions, ensuring compliance with legal procedures and safeguarding the petitioner's rights in the reassessment process.