2020 (2) TMI 266 - HC - Income Tax

Revision u/s 263 - contention of the petitioner is that the respondent had no basis to come to the conclusion that the orders have been passed erroneously or to dis-prejudice of the revenue as all the issues raised in the order dated 31.03.2015 were pursuant to a notice issued under Section 148 on 24.03.2014 - HELD THAT - The assessment order passed on 31.03.2015 for the assessment year 2014-15 has not clearly discussed the issue. Instead, it has accepted the returns filed by the petitioner based on the decision of this Court without actually discussing how the revised returns filed by the petitioner under Section 143 (3) of the Income Tax Act was acceptable. At the same time, it is for the petitioner to establish before the respondent as to whether the invocation of Section 263 was justified or not. Hence, the petitioner can be directed to participate in the adjudicatory mechanism prescribed under the Act. Therefore, the petitioner is directed to file its reply to the impugned notice within 30 days from the date of receipt of this order. The respondent shall pass an appropriate order within a period of 30 days thereafter.

Summary

Issues:
Challenge to notice under Section 263 of the Income Tax Act, 1961 for re-opening assessment order dated 31.03.2015.

Analysis:
The petitioner challenged the impugned notice issued under Section 263 of the Income Tax Act, 1961, seeking to re-open the assessment order dated 31.03.2015. The petitioner contended that the respondent lacked a basis to conclude that the orders were passed erroneously or to the prejudice of the revenue. It was argued that the issues raised in the order dated 31.03.2015 were in response to a notice issued under Section 148 of the Income Tax Act on 24.03.2014. The petitioner's counsel emphasized that there was no jurisdiction to invoke Section 263 of the Income Tax Act, citing relevant legal precedents.

The respondent, on the other hand, argued that the writ petition should be dismissed as the petitioner had an alternative remedy to participate in the adjudicatory mechanism under Section 263 of the Income Tax Act. After hearing both parties, the judge examined the impugned order and noted that the assessment order for the assessment year 2014-15 did not clearly discuss the issue but rather accepted the returns filed by the petitioner based on a court decision without elaborating on the acceptance of revised returns under Section 143 (3) of the Income Tax Act. The judge opined that it was the petitioner's responsibility to demonstrate to the respondent whether the invocation of Section 263 was justified. Consequently, the judge directed the petitioner to participate in the adjudicatory mechanism as prescribed under the Act by filing a reply to the impugned notice within 30 days.

The judge further instructed the respondent to issue an appropriate order within 30 days after receiving the petitioner's reply, ensuring that the petitioner would be heard before any decision was made on the merits in accordance with the law. Ultimately, the judge dismissed the Writ Petition, emphasizing that no costs were to be incurred.