2021 (8) TMI 513 - HC - Income Tax

Validity of reopening of assessment u/s 147 - grievance of the writ petitioner is that the objections submitted by the petitioner was not disposed of on merits and the impugned assessment order had been passed directly in violation of the directives - HELD THAT - This being the lapses committed by the authorities competent, the matter is to be remanded back for fresh consideration and for the purpose of disposing of the objections filed by the writ petitioner on 26.12.2011. Accordingly, the impugned assessment order dated 28.12.2011, passed by the respondent is quashed and the matter is remanded back for fresh consideration. The respondent is directed to consider the objections filed by the writ petitioner, on merits and dispose of the same within a period of six weeks from the date of receipt of a copy of this order and thereafter, proceed with the process of re-assessment, by following the procedures, as contemplated.

Summary

Issues:
Challenge to re-assessment order under Section 143 (3) read with Section 147 of the Income Tax Act, 1961; Violation of directives issued by the Hon'ble Supreme Court of India in GKN Drive shafts India Ltd., Vs. ITO reported in 259 ITR 19 (SC).

Analysis:
The petitioner, a Company registered under the Indian Companies Act, 1956, filed a return of income for the Assessment Year 2004-05, claiming exemption under Section 10 B of the Act for income derived from the export of computer software. The assessment was initially passed, but subsequently reopened under Section 147 of the Act, with notices issued under Section 148 on two occasions. The petitioner requested reasons for the reassessment, which were furnished, and objections were submitted. However, the petitioner alleged that the objections were not disposed of on merits, contrary to the directives of the Hon'ble Supreme Court of India in GKN Drive shafts India Ltd., Vs. ITO.

The Junior Standing Counsel for the respondent failed to establish that the objections were indeed disposed of on merits as per the Supreme Court directives. Due to this lapse, the High Court decided to remand the matter for fresh consideration, specifically directing the respondent to consider the objections filed by the petitioner on merits and dispose of them within six weeks from the date of receipt of the court's order. The respondent was further instructed to proceed with the re-assessment process following the required procedures.

Consequently, the High Court quashed the impugned assessment order dated 28.12.2011 and allowed the Writ Petition, without imposing any costs. The connected Miscellaneous Petition was closed as a result of the judgment.