2021 (7) TMI 70 - HC - Income Tax

Reopening of assessment u/s 147 - non consideration of the objections submitted by the petitioner for reopening of assessment - HELD THAT - In the present case, reasons are furnished for reopening of assessment. The reasons are to be disposed of in a meaningful manner in view of the fact that the reopening procedures in the present case falls beyond the period of four years and within six years. Thus, the ingredients contemplated in the proviso class is to be complied with. Thus, the consideration of objections and the findings for reopening are of vital and in the absence of any reasons, one cannot form an opinion that reopening of assessment is done with reference to the conditions stipulated in the proviso class to Section 147 of the Act. Conditions under the provisions are mandatory. In order to establish the compliance of conditions, the authority competent must provide reasons stating that the conditions stipulated in the proviso class has been complied with. A non-speaking order in this regard cannot be sustained and therefore, the impugned order is to be construed as lacking, on application of mind and the objections raised by the petitioner are not considered, nor a finding is given. Contrarily, the impugned order has been passed merely reproducing the provisions of the statute which is insufficient and therefore, this Court is inclined to consider the Writ Petition.

Summary

Issues:
Challenge to the order disposing of objections to the reopening of assessment under Section 147 of the Income Tax Act, 1961.

Analysis:
The petitioner, a Private Limited Company, challenged the notice issued under Section 148 of the Act for reopening the assessment proceedings for the year 2009-10. The Assessing Officer initiated assessment proceedings in 2010 and passed the final assessment order in 2013. Subsequently, a reopening proceeding was initiated in 2016, leading to objections filed by the petitioner. The petitioner contended that the Assessing Officer committed errors in the reopening process, issuing premature notices and not considering objections properly. The petitioner's objections were detailed and specific, highlighting discrepancies between the reasons for reopening and the original assessment submissions.

The Court emphasized that the Assessing Officer must have tangible materials to reopen an assessment under Section 147 of the Act. Mere reproduction of legal provisions is insufficient. The rights of the assessee must be protected, and the Assessing Officer should adhere to prescribed procedures and principles set by the Apex Court. The Court noted that the notice issued prematurely was not acted upon, but objections were later considered after reasons for reopening were furnished.

The Court found that the impugned order disposing of objections lacked consideration of the petitioner's detailed objections, rendering it non-speaking and indicating a lack of application of mind by the respondents. It stressed that the Assessing Officer must provide reasons and consider objections meaningfully, especially for assessments reopened beyond four years but within six years. Compliance with statutory conditions, including providing reasons for reopening, is mandatory.

Consequently, the Court quashed the impugned order and remanded the matter to the respondents for reconsideration of the objections, directing them to provide reasons and consider the objections within twelve weeks. The Court allowed the Writ Petition, highlighting the importance of adherence to procedures and the necessity of providing meaningful reasons for decisions in assessment proceedings.