2022 (4) TMI 42 - HC - Income Tax

Assessment u/s 153A/153C or 147 - reasons supplied by the respondent in respect of maintainability of the notice issued u/s 148 - HELD THAT - A perusal of the impugned order clearly indicates that in para No. 5 of the impugned order the respondent No. 3 has simplicitor quoted Section 153C of the I. T. Act and has held that in view of the said section it was clear that assessing officer had reopened case of the petitioner correctly as per the provisions of Section 147 of the I. T. Act. In our view there are no reasons recorded by the respondent No. 3 in the impugned order. Various objections raised by the petitioner are required to be answered by sufficient and cogent reasons. The respondent No. 3 has not given any reasons while dealing with the objection and passing the impugned order. This Court in a case of Tata Capital Financial Services Limited 2022 (2) TMI 1093 - BOMBAY HIGH COURT after adverting to various judgments of various Courts including the judgment of the Hon ble Supreme Court in a case of Commissioner of Income Tax Vs. Vasisth Chay Vyapar Ltd. 2018 (3) TMI 56 - SUPREME COURT has formulated guidelines to be followed by the revenue while dealing with the objection raised by the assessee to the reasons furnished by the Assessing Officer. It is held by this Court that if the reasons make reference to any other document or a letter or a report such document or letter or report should be enclosed to the reasons. The order disposing the objections should deal with each objections and give proper reasons for the conclusion. In our view the impugned order is in total violation of the principles laid down by this Court in a case of Tata Capital Financial Services Limited Vs. Assistant Commissioner of Income Tax Circle 1(3)(1) and others (supra). The Assessing Officer has to deal with each and every objection raised by the petitioner by recording reasons. The proceedings are restored before the respondent No. 3 for deciding objections raised by the petitioner to the reasons supplied by the respondent No. 2 while deciding the matter afresh.

Summary

Issues:
1. Validity of notice under Sec. 148 of the Income Tax Act, 1961.
2. Rejection of objections by respondent No. 3.
3. Compliance with legal principles in passing the impugned order.

Validity of Notice under Sec. 148:
The petitioner challenged a notice dated 31.03.2021 issued under Sec. 148 of the Income Tax Act, 1961, for reassessment of the assessment year 2016-2017. The petitioner contended that the proceedings should fall under Sec. 153C of the Act, not Sec. 147. The respondent No. 3, in the impugned order, merely quoted Sec. 153C without providing sufficient reasons for rejecting objections raised by the petitioner. The Court held that the order lacked proper reasoning and violated established principles. The Court emphasized the need for detailed reasoning and adherence to guidelines while dealing with objections raised by the assessee.

Rejection of Objections by Respondent No. 3:
The respondent No. 3 rejected the objections raised by the petitioner without adequately addressing them. The Court found the impugned order to be casually passed, failing to comply with the principles set in previous judgments. The Court highlighted the importance of providing detailed reasons for rejecting objections and ensuring that each objection is properly addressed. The respondent No. 3 was directed to reconsider the objections in accordance with the law and the guidelines established by the Court in previous cases.

Compliance with Legal Principles in Passing the Impugned Order:
The Court, referring to a specific judgment, outlined guidelines for the revenue authorities to follow when dealing with objections raised by the assessee. It was emphasized that reasons referring to any document should be accompanied by the document itself. The order disposing of objections should address each objection with proper reasoning. The Court found the impugned order to be in violation of these principles and quashed it. The proceedings were ordered to be reconsidered by the respondent No. 3 within a specified timeframe, ensuring compliance with legal standards and the Court's guidelines.

In conclusion, the High Court of Bombay quashed the impugned order passed by respondent No. 3, directing a fresh consideration of the objections raised by the petitioner in accordance with the law and established legal principles. The Court emphasized the importance of providing detailed reasoning and addressing each objection raised by the assessee. The respondent No. 3 was instructed to reevaluate the matter within a specified timeframe and communicate the decision to the petitioner promptly.