2020 (1) TMI 733 - HC - Income Tax

Reopening of assessment u/s 147 - reasons to believe - HELD THAT - As perused the reasons in this case and the objections filed by the Petitioner giving explanation and creditworthiness of the Petitioner. The order passed by the Respondent No.1 Assessing Officer disposing of the objections, do not show application of mind qua the objections raised by the Petitioner. Firstly there is a reference to fact that there was no scrutiny assessment, then the objection of the Petitioner on law regarding jurisdiction is commented on then it is stated that earlier no documents could be examined because it is the case of intimation u/s 143(1) AO reproduced the paragraphs regarding what is meant by reasons to believe and passed the order. In view of the fact that there is absolutely no application of mind whatsoever while disposing of the objections to the factual errors and factual aspects pointed out by the Petitioner, we find that arguable case is made out. - The earlier ad-interim order to continue

Summary

Issues:
Challenge to notice under Section 148 of the Income Tax Act for reopening assessment for the year 2012-13.

Analysis:
The petitioner, a salaried employee, challenged the notice issued under Section 148 of the Income Tax Act dated 29 March 2019 and the order dated 26 September 2019 disposing of the objections. The petitioner filed the return of income on 30 September 2012, declaring total income as ?1,55,16,550. The respondent issued a notice under Section 148 on 29 March 2019, and the petitioner filed the return on 26 April 2019. The petitioner raised objections, which were disposed of on 26 September 2019. The petitioner's counsel argued that the Assessing Officer was proceeding on suspicion without examining any documents at the stage of intimation under Section 143(1) of the Act. The counsel highlighted factual errors in the reasons supplied by the respondent, including incorrect amounts received and property purchase details. The objections raised by the petitioner were not adequately considered, and the Assessing Officer did not apply independent judgment but relied on received information.

The respondent's counsel contended that in cases where only an intimation under Section 143(1) was issued without a full assessment under Section 143(3), the Assessing Officer needs to determine if there are reasons to believe and not require proof. The respondent argued that the facts were clearly stated in the reasons provided to the petitioner, and the petitioner's contentions would be considered during reassessment proceedings. Reference was made to a previous order where the court did not interfere with a reassessment notice in a similar case. The court noted that jurisdictional requirements under Section 147 of the Act cannot be ignored simply because there was only an intimation under Section 143(1). Upon reviewing the reasons and objections, the court found that the Assessing Officer did not apply proper judgment in disposing of the objections. The order lacked consideration of the petitioner's explanations and creditworthiness, and there was no application of mind to the factual errors pointed out. The court concluded that an arguable case was made out, indicating a lack of proper assessment by the Assessing Officer.

In conclusion, the court allowed the rule, and the respondent waived service for respondent Nos. 1 and 2. The interim order granted earlier was to continue until the disposal of the petition, highlighting the court's decision to further examine the issues raised regarding the notice under Section 148 and the subsequent disposal of objections by the Assessing Officer.