2022 (1) TMI 602 - HC - Income Tax

Reopening of assessment u/s 147 - Eligibility of reasons to believe - HELD THAT - Considering the law enunciated by the Hon'ble Apex Court in GKN Driveshafts (India) Ltd., 2002 (11) TMI 7 - SUPREME COURT Tribunal has observed that the Assessing Officer has provided the reasons and also disposed of the objections though not by way of separate order but in the body of the assessment order, hence dismissed the Miscellaneous Petitions. The assessee has suppressed these material facts before this Court. It was obligatory on the part of the assessee to bring it to the notice of this Court at the time of hearing inasmuch as the disposal of the Miscellaneous Petitions in the manner as aforesaid. In the absence of challenge to the order passed in Miscellaneous Petitions, the arguments now advanced by the learned counsel for the assessee is wholly untenable - no prejudice is caused to the assessee in restoring the matter back to the file of Assessing Officer to pass a speaking order on the objections and then to conclude the assessment. With great respect, the judgments relied upon by the learned counsel for the appellant - assessee are distinguishable and not applicable to the facts and circumstances of the case. In GKN Driveshafts (India) Ltd., supra, the Hon'ble Apex Court has held that the assessee can seek reasons recorded by the Assessing Officer only after filing of the return of income. Objections could be raised thereafter which requires to be disposed of by Assessing Officer. But the assessee herein has not filed the return subsequent to issuance of notice under Section 148 of the Act nor adopted the return filed earlier. Hence, alleging non-disposal of the objections by a speaking order has been rightly considered by the Tribunal and the matter has been restored back to the file of the Assessing Officer. Hence, we find no perversity or infirmity in the order impugned. - Decided against assessee.

Summary

Issues Involved:
Challenge to assessment order under Section 260A of the Income Tax Act, 1961 for the assessment year 2005-06 based on objections not being considered before passing the order.

Comprehensive Analysis:

Issue 1: Whether the Tribunal erred in law in not annulling the assessment due to the Assessing Officer not passing a separate speaking order on objections before passing the assessment order.

The appellant argued that any assessment order without considering objections is void ab initio. Citing relevant judgments, the appellant contended that failure to pass a speaking order on objections renders the assessment unsustainable. The Court referred to previous cases emphasizing the necessity of the Assessing Officer to address objections before proceeding with the assessment. The Tribunal's direction to pass a speaking order on objections was upheld.

Issue 2: Whether mandatory conditions for issuing notice under section 148 were not complied with, rendering the assessment devoid of jurisdiction.

The appellant raised concerns regarding the validity of the notice under section 148, arguing that it was vague and lacked specificity. The Court considered the arguments but found that the Tribunal's decision to restore the matter to the Assessing Officer for fresh decision was appropriate, as the appellant had not cooperated in the assessment proceedings, leading to an ex-parte order.

Issue 3: Whether the assessing officer had jurisdiction to issue the notice under section 148.

The Court examined the circumstances leading to the ex-parte assessment order, where the appellant failed to file returns or respond to notices despite opportunities granted. The Tribunal's decision to dismiss the Miscellaneous Petitions and restore the matter to the Assessing Officer for proper consideration was deemed justified.

Issue 4: Whether the notice under section 148 was invalid, impacting the subsequent assessment order.

The Court reviewed the arguments presented by both parties and found that the Tribunal's decision to have the Assessing Officer pass a speaking order on objections was in line with legal principles. The appellant's failure to challenge the order passed in Miscellaneous Petitions and lack of prejudice in restoring the matter for proper assessment were highlighted.

In conclusion, the Court answered the substantial questions of law in favor of the Revenue, upholding the Tribunal's decision to dismiss the appeal. The judgment emphasized the importance of following due process in assessment proceedings and the necessity of addressing objections before finalizing assessments.