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2021 (7) TMI 957 - HC - Income TaxValidity of reopening of assessment u/s 147 - petitioner made a submission that he was not a Director of the Company, namely M/s.B.Rangaswamy Naidu Orchards Private Limited and without even hearing him and not providing any opportunity to defend his case first respondent issued notice under Section 147 - HELD THAT - This Court of an opinion that the observations or certain considerations made in an order passed u/s 143 (3) of the Act, against the assessee M/s.B.Rangaswamy Naidu Orchards Pvt.Ltd., and no direct action was taken against the petitioner and admittedly in the present case no direct orders are passed and the AO has reason to believe for reopening of assessment under Section 147 of the Act and consequently issued a notice u/s 148 of the Act. Thus the petitioner is entitled for an opportunity to defend his case including the factual aspects submitted even before this Court. If at all, the petitioner claims that he was not a director of the said Company M/s.B.Rangaswamy Naidu Orchards Pvt.Ltd., it is for the petitioner to establish the same before the Authorities Competent Information for the purpose of invoking Section 147 of the Act and all further procedures contemplated under the Acts as well as the directions in the case of GKN Driveshafts India Ltd. 2002 (11) TMI 7 - SUPREME COURT are to followed scrupulously by the Assessing Officer, while undertaking the process of completion of proceedings initiated.
Issues:
Challenge to notice under Section 148 of the Income Tax Act and order passed by the second respondent in ITA No.191/16-17. Analysis: 1. The petitioner challenged a notice under Section 148 of the Income Tax Act and an order passed by the second respondent in ITA No.191/16-17. The petitioner contended that he was not a director of the company mentioned in the order dated 18.11.2016, and the observations made against him without providing an opportunity violated principles of natural justice. Consequently, a notice was issued for reopening the assessment for the Assessment Year 2009-10. The petitioner argued that both the orders and the notice were unsustainable, also citing the notice was issued beyond the period of limitation. 2. The respondents disputed the petitioner's contentions, stating that the order dated 18.11.2016 was passed under Section 143(3) of the Act and the observations were considered as information for the purpose of reopening the assessment under Section 147. The respondents emphasized that no final decision was made based solely on the observations, and the petitioner was entitled to defend the reopening proceedings following the directions of the Hon'ble Apex Court. The respondents maintained that the impugned order did not prejudice the petitioner's interest. 3. The petitioner relied on a judgment from the High Court of Delhi, but the court found the facts dissimilar. The court opined that the observations made in the order against the company did not directly affect the petitioner, and the Assessing Officer had reason to believe for reopening the assessment under Section 147. The court emphasized that disputed facts regarding the petitioner's directorship could not be adjudicated in writ proceedings and that the petitioner should establish such facts before the competent authorities. 4. The court clarified that the observations in the impugned order were to be construed as information for invoking Section 147 and that all procedures and directions from the Hon'ble Apex Court were to be followed meticulously by the Assessing Officer during the completion of the proceedings initiated. The petitioner was granted the liberty to raise legal and factual grounds, including the point of limitation, before the competent authorities, who were directed to consider all facts and legal grounds raised by the petitioner in accordance with the law. 5. In conclusion, both writ petitions were disposed of with no costs, and connected miscellaneous petitions were closed. The judgment emphasized the importance of providing the petitioner with an opportunity to defend his case and ensuring that all procedures and legal grounds were followed diligently by the competent authorities.
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