2021 (6) TMI 914 - HC - Income Tax

Reopening of assessment u/s 147 - Reassessment beyond the period of four years - HELD THAT - What is required is to scrutinize the reasons and sufficiency of the reasons need not be gone into by the High Court in a writ proceedings where the assessment is sought to be reopened by invoking Section 147 - Thus, sufficiency of the reasons cannot be gone into in a writ proceedings. High Court cannot conduct a rowing enquiry in respect of the accounts details as well as the technicalities involved in respect of the transactions. All those aspects are to be considered by the AO while passing the final order of reassessment. Perusal of the above findings of the 3rd respondent would be sufficient to hold that the requirements of Section 147 of the Act has been complied with and the initiation of reopening proceedings is well within the provisions of the Act and therefore, the respondents are at liberty to proceed with re-assessment by following the procedures and by affording opportunity to the writ petitioner/assessee, as contemplated. The respondents are directed to complete the said exercise of completion of the re-assessment proceedings within a period of four months from the date of receipt of a copy of this order.

Summary

Issues:
Challenge to notice issued under Section 148 for reopening of assessment under Section 147 for two Assessment Years.

Analysis:
The petitioner, a Partnership Firm, challenged the notice issued under Section 148 of the Income Tax Act for reopening assessments for two separate Assessment Years. The petitioner argued that the reasons for reopening had already been considered during the original assessment orders. They contended that the reopening was beyond the four-year limit and did not comply with the proviso clause of Section 147. The petitioner raised objections, stating that the reasons for reopening were previously adjudicated, and the reassessment was a mere change of opinion. The petitioner also disputed the claim of deduction under Section 80IB(10) and the treatment of transactions with a related party under Section 40A(2)(b).

The Court examined whether the procedures for reopening assessments were followed correctly. The petitioner responded to the notice, objections were raised and disposed of, and reasons for reopening were furnished. The Court emphasized that it could not delve into the intricacies of the transactions during a writ proceeding under Article 226. The sufficiency of reasons for reopening could not be assessed in a writ proceeding, as that fell under the Assessing Officer's purview during reassessment. The Court had to determine if the reasons amounted to a change of opinion.

The Court reviewed the reasons furnished by the respondent, which detailed the necessity of reassessment due to transactions with a related party and the failure to report these transactions correctly. The Court found that the requirements of Section 147 had been met, allowing the respondents to proceed with reassessment. The respondents were directed to complete the reassessment within four months from the date of the order. Consequently, both Writ Petitions were dismissed, with no costs awarded, and connected Miscellaneous Petitions were closed.