2021 (9) TMI 1183 - HC - Income Tax

Validity of reopening of assessment u/s 147 - Consideration of objection raised against reopening notice - HELD THAT - As the respondent has to now dispose of the objections by passing a speaking order before proceeding with assessment in respect of aforementioned assessment year. Learned Revenue counsel, on instructions, submits that the speaking order will be passed within a fortnight and the same will be served on the writ petitioner under due acknowledgment within three days from the date of making of the speaking order. This draws the curtains on the captioned writ petition. Captioned Writ Petition is disposed of as closed, recording the stated position of the parties leaving open all the rights and contentions of both sides when proceedings move on further and are carried to its logical end

Summary

Issues involved:
Challenge to notice dated 24.03.2021 under Section 148 of the Income-tax Act, 1961 for assessment year 2015-2016. Request for reasons for reopening based on GKN Driveshafts principle. Respondent's response providing reasons for reopening. Assessee's objections to the reasons provided. Requirement for the Assessing Officer to pass a speaking order on objections before proceeding with assessment.

Analysis:

The judgment revolves around a writ petition challenging a notice dated 24.03.2021 issued under Section 148 of the Income-tax Act, 1961 for the assessment year 2015-2016. The notice was called into question in the petition. The petitioner sought reasons for the reopening of the assessment, citing the GKN Driveshafts principle, which requires the Assessing Officer to furnish reasons within a reasonable time upon request by the noticee. The respondent, in response to the petitioner's request, provided reasons for reopening the case without mentioning the petitioner's request explicitly. However, there was no dispute regarding the communication of reasons.

Subsequently, the Assessee raised objections to the reasons provided by the respondent. The judgment highlights the mechanism outlined in the GKN Driveshafts principle, emphasizing that the Assessing Officer is obligated to dispose of the objections by passing a speaking order before proceeding with the assessment for the relevant assessment year. The Revenue counsel assured that a speaking order would be passed within a fortnight and served to the petitioner promptly.

As a result, the judgment concluded by disposing of the writ petition, recording the parties' positions and leaving all rights and contentions open for further proceedings. The connected Writ Miscellaneous Petitions were also disposed of, with no order as to costs. The judgment ensures compliance with the procedural requirements and safeguards provided under the law in the context of reopening assessments under Section 148 of the Income-tax Act, 1961.