2022 (10) TMI 241 - HC - Income Tax

Reopening of assessment u/s 147 - Necessity to consider the Petitioner's objections and pass a speaking order - HELD THAT - In terms of GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT the Respondents are required to dispose of the objections which an assessee may file to the reopening of the assessment, by passing a speaking order. Now that the Respondents are ready to consider the Petitioner's objections and pass a speaking order, there is no necessity to entertain this petition. This is more so because until such speaking order is made, there is no question of the Respondents proceeding with the proposed reassessment for the Assessment Year 2015-16. Accordingly, the Respondents are at liberty to consider the objections raised by the Petitioner and dispose of the same in accord with law and on their own merits by passing a speaking order. This speaking order will have to be communicated to the assessee. If the Petitioner's objections are to be overruled or rejected, then, the Respondents will refrain from proceeding with the reassessment for a period of four weeks from the date of communication of the speaking order.

Summary

Issues:
Challenge to impugned notice for reopening assessment for Assessment Year 2015-16.

Analysis:
The petitioner challenged the notice dated 31.03.2021 seeking to reopen the assessment for the Assessment Year 2015-16. The petitioner applied for reasons for reopening and filed objections following the procedure in GKN Driveshafts (India) Ltd vs. ITO 2003 (1) SCC 72. However, before the objections could be disposed of, the respondents issued a notice under Section 142(1) of the I.T. Act on 25.02.2022 to proceed with reassessment, calling for information. The petitioner contended that this procedure was contrary to the law laid down in GKN Driveshafts (India) Ltd. and that there was no case made out for reopening the assessment.

The respondents argued that the petition was premature as they were still considering the petitioner's objections and intended to dispose of them by making a speaking order. They stated that until the decision on the objections was communicated to the petitioner, they would not proceed with the reassessment. The court noted that as per GKN Driveshafts (India) Ltd., the respondents were required to pass a speaking order on the objections raised by the assessee before proceeding with reassessment. Since the respondents were ready to consider the objections and pass a speaking order, the court found no necessity to entertain the petition at that stage.

The court allowed the respondents to consider and dispose of the objections raised by the petitioner in accordance with the law by passing a speaking order, which must be communicated to the assessee. If the objections were overruled or rejected, the respondents were directed to refrain from proceeding with the reassessment for four weeks from the date of communication of the speaking order. The court clarified that it had not examined the merits of the contentions raised by either party, leaving all contentions open. The petition was disposed of accordingly, with no order for costs.