2021 (5) TMI 926 - HC - Income Tax

Reopening of assessment u/s 148 - non disposing of the objections raised by the assessee against the reasons recorded before issuance of notice under Section 148 - HELD THAT - Applying the dictum as laid down 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 under Section 148 of the Act, 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. Writ application succeeds in part. The order disposing of the objections filed by the assessee 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.

Summary

Issues:
1. Challenge to Notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2012-13.
2. Validity of reassessment proceedings based on undisclosed income.
3. Proper disposal of objections raised against the notice under Section 148.

Analysis:
1. The petitioner, an Individual Assessee, challenged a Notice dated 30.03.2019 issued under Section 148 of the Income Tax Act, 1961 for Assessment Year 2012-13, alleging it to be illegal and without jurisdiction. The petitioner had previously filed returns and undergone assessment proceedings resulting in an addition to the total income. The Assessing Officer (AO) issued the impugned notice based on unexplained credit entries in the petitioner's bank account, indicating possible escapement of income.

2. The AO's reasons for reopening the assessment included unexplained credit entries of a substantial amount in the petitioner's bank account, suggesting involvement in bogus transactions and failure to disclose true income. The petitioner raised objections on jurisdictional and merit grounds, contending that the reassessment was unjustified due to full disclosure in previous assessments. However, the objections were rejected by the AO, leading to the petitioner filing a writ application challenging the notice and objection disposal.

3. The High Court found that the AO had not adequately addressed the objections raised by the petitioner, contrary to the procedure outlined by the Supreme Court. Citing precedents, the Court emphasized the need for a reasoned and detailed response to objections against reassessment notices. Consequently, the Court set aside the order disposing of objections and remitted the matter to the AO for a fresh consideration of the objections raised by the petitioner, directing the AO to pass a speaking order within six weeks.

4. The Court clarified that its decision did not delve into the merits of the case but focused on procedural lapses in handling objections. It granted the petitioner the opportunity to challenge any adverse order resulting from the fresh consideration before the appropriate forum. Additionally, the Court allowed a four-week period for the petitioner to seek legal recourse if dissatisfied with the AO's decision, ensuring due process and fairness in the reassessment proceedings.