2021 (3) TMI 329 - HC - Income Tax

Reopening of assessment u/s 147 - Notice after four years - Eligibility of reasons to believe - HELD THAT - In the present case, the assessment year relating to the re-assessment is 2012-13 and the notice for re-assessment has been issued on 29.03.2018 beyond the period of four years. In response to the same, the petitioner has written to the revenue on 08.04.2019 to the effect that the return of income already filed be adopted in response to the notice under Section 148 and requesting the reasons for re-assessment. This letter has been received by the revenue on 09.04.2019. Nothing has transpired till August, 2019. Under cover of email dated 11.08.2019, the Assessing Authority issues a communication dated 16.08.2019 calling for various particulars on merits. It is relevant to note that the reasons as sought for have not been furnished at that juncture and this is in contravention of the procedure set out. Notwithstanding the same, the petitioner responds under cover of email dated 16.08.2019 to which letter, there is silence till 29.12.2019 when, under cover of email of even date, the reasons are supplied. On 30th December, a notice under Section 143(2) is issued to which the assessee responds on 31.12.2019 and the impugned order has come to be passed on the same day. Reasons are to be furnished promptly extending an opportunity to the petitioner to challenge the assumption of jurisdiction under Section 147. A speaking order is to be thereafter passed by the Authority on the aspect of assumption of jurisdiction and notice to proceed with the assessment on merits would become relevant only thereafter and subject to the decision taken by him on the question of assumption of jurisdiction. These stages are conspicuous by their absence in the present case and the Assessing Authority has passed the order on 31.12.2019 without affording any opportunity to the petitioner and in complete violation of the stipulated procedure. The impugned order of assessment is thus annulled and this writ petition allowed

Summary

Issues:
Challenge to re-assessment order under Section 143(3) read with Section 147 of the Income Tax Act, 1961.

Analysis:
The High Court of Madras, in the judgment delivered by the Honourable Dr. Justice Anita Sumanth, addressed the challenge to a re-assessment order dated 31.12.2019 under Section 143(3) read with Section 147 of the Income Tax Act, 1961. The petitioner's counsel argued that the impugned order was passed in violation of the procedure set out by the Supreme Court in the case of GKN Driveshafts (India) Ltd. v. Income Tax Officer (259 ITR 19). The Supreme Court's procedure requires the assessing officer to furnish reasons promptly upon issuing a notice under Section 148, allowing the noticee to file objections and disposing of them by passing a speaking order before proceeding with the assessment. In this case, the notice for re-assessment was issued for the assessment year 2012-13 on 29.03.2018, and the petitioner requested reasons for re-assessment on 08.04.2019, which were only provided on 29.12.2019, after several delays.

Furthermore, the Assessing Authority failed to follow the prescribed procedure by not furnishing reasons promptly and by issuing a notice under Section 143(2) on 30.12.2019 without affording the petitioner an opportunity to challenge the assumption of jurisdiction under Section 147. The Court emphasized that the Authority must pass a speaking order on the jurisdictional aspect before proceeding with the assessment on merits. Since these essential stages were absent in the present case, the High Court annulled the impugned assessment order and allowed the writ petition, highlighting the Assessing Authority's complete violation of the stipulated procedure. The judgment concluded by stating that no costs were awarded, and the connected Miscellaneous Petitions were closed.