2021 (4) TMI 1028 - HC - Income Tax

Reopening of assessment u/s 147 - reference to the Settlement Commission in terms of Section 245F(2) - HELD THAT - Prima facie, it appears that the assessment order passed in respect of petitioner's trust for the Assessment Year 2014-15 is already under reference to the Settlement Commission in terms of Section 245F(2) of the Act, which has been allowed to be proceeded with under Section 245D of the Act. Further, proceedings of the Settlement Commission have already been stayed vide order of the Hon'ble Supreme Court indicated here-in-above. Furthermore, it is undisputed that the order passed under Section 12AA of the Act is already under challenge before this Court. Once the aforesaid proceedings are already pending consideration of this Court, it does not appear to reason as to why the fresh re-asseement notice was required to be issued at this stage. The matter requires consideration for which the opposite parties are granted four weeks' time to file detailed counter affidavit.

Issues:
1. Validity of notice initiating proceedings for re-assessment under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2014-15.
2. Impact of pending proceedings before the Settlement Commission under Section 245F(2) of the Act.
3. Cancellation of registration of petitioner's society under Section 12AA of the Act.
4. Escapement of income and validity of re-assessment notice in light of exemption claimed under Section 11.

Analysis:
1. The petition challenges the notice dated 06.02.2021 for re-assessment under Section 148 of the Income Tax Act, 1961 for the Assessment Year 2014-15. The petitioner had previously challenged the initial re-assessment order in Writ Petition No.5195 (MB) of 2017, which was dismissed but later remanded by the Supreme Court for disposal on merits. The registration of petitioner's society was also cancelled, and this order is under challenge in a separate writ petition.

2. The petitioner argues that as proceedings before the Settlement Commission under Section 245F(2) of the Act are pending, the re-assessment notice should not have been issued. The Settlement Commission proceedings have been allowed to proceed under Section 245D and are stayed by the Supreme Court. The validity of the re-assessment notice is questioned in light of these pending proceedings.

3. The cancellation of the petitioner's society registration under Section 12AA of the Act is cited as a basis for issuing the re-assessment notice. The respondent contends that since there is no interim order in the related writ petition, the notice is legally valid. The respondent argues that the exemption claimed under Section 11 in the income tax return for the relevant year amounts to escapement of income under Section 147 of the Act.

4. The court notes that the assessment order for the petitioner's trust is already under reference to the Settlement Commission and the registration cancellation order is under challenge in a separate writ petition. Given these pending considerations, the court questions the necessity of issuing a fresh re-assessment notice. The court grants the respondents time to file a detailed counter affidavit and stays the impugned re-assessment notice dated 06.02.2021 until further proceedings.

This detailed analysis covers the issues raised in the legal judgment comprehensively, examining the validity of the re-assessment notice in light of various legal provisions and pending proceedings.

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