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2021 (5) TMI 702 - HC - Income TaxReopening of assessment u/s 147 - non disposing of objections properly - HELD THAT - AO while disposing off the preliminary objections filed by the writ applicant against the reasons recorded for reassessment, has not properly dealt with the objections. We take notice of the fact that, while disposing the objections, the AO has concluded that the objections made by the assessee are duly considered and not acceptable. AO has observed that the transactions made by the assessee company with Rashmi Diamond were bogus entries and the fact of difference in respect of credit entries in the bank account were not brought into knowledge of the AO during the course of assessment proceedings. AO failed to take note of various objections filed against the reasons recorded. No proper application of mind to the objections raised by the applicant and it could not be said that the objections having been disposed of by passing reason order. In the case of GKN Driveshaft 2002 (11) TMI 7 - SUPREME COURT as laid down the procedure as to the manner of dealing with the objections raised against the notice under Section 148 of the Act. The Supreme Court has held that when a notice under Section 148 of the Act is issued, the proper course of action for the noticee is to file return and if he so desires, to seek reasons for issuing notice. It was further held that the AO is bound to furnish reasons within a reasonable time and upon receipt of reasons, the noticee is entitled to file an objection to issuance of notice and AO is bound to dispose of the same by speaking order. In the case of SABH Infrastructure Ltd 2017 (9) TMI 1589 - DELHI HIGH COURT has held that the exercise of considering the assessee s objections to the reopening of the assessment is not a mechanical ritual. It is a quasi judicial function. The order disposing of the objection should deal with each objection and give proper reason for conclusion. The order should reflect proper application of mind. Applying the dictum as laid down by the Supreme Court in the case of GVK Driveshaft 2002 (11) TMI 7 - SUPREME COURT we are of the view that disposing of the objections raised by the assessee against the reasons recorded before issuance of notice u/s 148 though not part of the statutory requirement, as prescribed under the Act, however, same is guided by the directions issued by the Apex Court. The specific objections raised by the writ applicant, produced on record at page-33 to 45 to this writ application, have not been properly dealt with by the AO. The lapse is in clear violation of the decision of the Apex Court. We are of the view that the AO has passed the order mechanically and without application of his mind and not in a meaningful manner. Writ application succeeds in part. The order disposing of the objections filed by the assessee dated 18.11.2019 at Annexure A, page-18 to this petition is hereby set aside and the matter is remitted to the AO. The AO shall take into consideration the objections raised by the assessee and pass a fresh speaking order in accordance with law.
Issues:
Challenging legality of notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2012-13. Detailed Analysis: The petitioner, a Private Limited Company, challenged a notice dated 30.03.2019 issued under Section 148 of the Income Tax Act, 1961, for Assessment Year 2012-13, claiming it to be illegal and without jurisdiction. The assessment for the said year was completed on 25.03.2015, with total income determined at &8377; 2,61,725/- after adding &8377; 63,915/-. The petitioner had provided various details during assessment proceedings, including bank particulars and statements. The notice for reopening the assessment was based on information received regarding a significant credit transaction into a bank account, raising suspicions of undisclosed income. The petitioner objected to the reopening, citing lack of jurisdiction and merits, but the objections were rejected by the Assessing Officer. The petitioner then approached the High Court challenging the notice and objection rejection. The petitioner contended that the Assessing Officer failed to properly address the objections raised against the notice for reassessment. The Supreme Court's guidelines on dealing with objections under Section 148 were cited, emphasizing the necessity for a reasoned order. The High Court observed that the AO's disposal of objections lacked proper consideration and did not reflect a meaningful application of mind. The Court referred to the case law to highlight the quasi-judicial nature of considering objections and the requirement for a speaking order. Consequently, the High Court set aside the order disposing of objections and remitted the matter back to the AO for a fresh decision in accordance with law. In conclusion, the High Court found the AO's handling of objections to be inadequate and directed a fresh consideration of the objections raised by the petitioner. The Court emphasized the importance of a reasoned order while disposing of objections against a notice under Section 148. The matter was remitted to the AO for a fresh decision within six weeks, allowing the petitioner to challenge any adverse order before the appropriate forum. The Court refrained from expressing any opinion on the merits of the case, focusing solely on the procedural aspect of addressing objections.
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