2022 (8) TMI 748 - HC - Income Tax

Validity of reopening of assessment - non - considering and disposing objection of the petitioner by passing a speaking order - HELD THAT - The impugned assessment order dated 31st March, 2022 being Annexure P-11 to the writ petition passed is in clear violation of the law laid down in the case of GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT and the same is not sustainable in law since it was passed without considering and disposing objection of the petitioner by passing a speaking order which he was obliged to do in view of the decision of the Apex Court in the case of GKN Driveshafts (supra) before proceeding any further in the impugned reassessment proceeding. In view of the discussion made above impugned assessment order is quashed and the matter is remanded back to the assessing officer concerned to first dispose of the aforesaid objection of the petitioner against impugned notice under Section 148 by passing a reasoned and speaking order and after giving an opportunity of hearing to the petitioner or its authorised representatives and any further proceeding with the impugned assessment proceeding will depend upon the final outcome of the aforesaid objection of the petitioner.

Summary

Issues:
Challenging an assessment order under Income Tax Act, 1961 for the assessment year 2014-15 based on violation of legal principles laid down by the Supreme Court in the case of GKN Driveshaft. Failure to dispose of the objection of the assessee against the notice under Section 148 before passing the assessment order.

Analysis:
The petitioner challenged the assessment order dated 31st March, 2022, under Section 147 read with Section 144B of the Income Tax Act, 1961, for the assessment year 2014-15, alleging a violation of the law established by the Hon'ble Supreme Court in the case of GKN Driveshaft. The impugned assessment order was based on a notice dated 31st March, 2021, under Section 148 of the Act. The petitioner had filed an objection to the notice on 8th July, 2021, emphasizing that the assessing officer must dispose of the objection before proceeding with the reassessment, as per the decision in the GKN Driveshaft case.

Mr. Mazumder, representing the petitioner, argued that passing a reassessment order without addressing the objection of the assessee against the notice under Section 148 is legally flawed and contravenes the principles laid down by the Supreme Court in the GKN Driveshaft case. He cited the Bombay High Court decision in IOT Infrastructure And Energy Services Ltd. case and the Madras High Court decision in M/s. Jayanthi Natarajan case to support this contention.

In response, Mr. Bhattacharji, representing the respondent income tax authority, failed to demonstrate that the objection raised by the petitioner was duly considered and disposed of before the assessment order was passed. The Court found this lack of proper consideration and disposal of the objection to be a clear violation of the legal principles set by the Supreme Court in the GKN Driveshaft case.

Consequently, the Court held that the impugned assessment order was unsustainable in law as it was passed without due consideration and disposal of the petitioner's objection. The order was quashed, and the matter was remanded back to the assessing officer to address the objection by passing a reasoned order after providing an opportunity for a hearing to the petitioner or its representatives. Further proceedings in the assessment process were directed to depend on the outcome of the objection, which must be duly considered and addressed in accordance with the law.

In conclusion, the writ petition challenging the assessment order was disposed of with the above observations and directions, emphasizing the necessity of complying with legal principles and ensuring proper disposal of objections before proceeding with reassessment proceedings.