2022 (11) TMI 1268 - HC - Income Tax

Reopening of assessment - non disposal of objections - HELD THAT - Our attention is drawn to the order dated 09.03.2022 received through e-mail by the assessee in relation to the very assessment year. The total income of the assessee is computed as nil. This, according to learned counsel, is no longer available on the website. The reason put forth by the other side is possibly because on 08.03.2022 the Court granted the interim order in favour of the petitioner. Not only the issue of disposal of objection has been put to the rest, but, ultimately, the assessment has been framed where no addition has been made to the income which has thus favoured the petition. The cause of the petition therefore no longer survives.

Summary

Issues:
Challenge to show cause notice under Section 148 of the Income Tax Act for reopening income tax assessment for the assessment year 2017-18.

Detailed Analysis:

1. Issue of Reopening Assessment:
The petitioner sought to challenge the show cause notice issued under Section 148 of the Income Tax Act, aiming to reopen the income tax assessment for the assessment year 2017-18. The respondent provided reasons for reopening, alleging that the petitioner benefited from bogus LTCG/STCL related to a penny stock, leading to an alleged escape of income amounting to Rs. 1,05,50,023.

2. Objection Raised by Petitioner:
Upon receiving the notice, the petitioner objected to the reassessment proceeding on 31.01.2022, urging the respondent to drop the initiative for the relevant year.

3. Court Intervention and Petition Prayers:
The petitioner approached the High Court apprehending that the respondent had not addressed the objection raised, potentially resulting in the framing of assessment based on the impugned notice. The petition prayed for the quashing of the notice, a stay on its implementation, and further relief as deemed just and proper.

4. Court Proceedings and Orders:
The Court, upon hearing both parties, noted that the assessment for the relevant year had been completed, with no additions made to the income, resulting in a favorable outcome for the petitioner. Consequently, the Court disposed of the petition, vacating the interim relief granted earlier.

5. Affidavit-in-Reply by Respondent:
The respondent, through an affidavit-in-reply, denied the petitioner's averments, contending that the prescribed procedure as per the GKN Driveshafts judgment had not been completed, rendering the petition premature. The respondent also argued that the grounds against the reopening of assessment were not sustainable.

6. Final Disposition of the Petition:
Given that the assessment had been completed with no additions to the income, the Court found that the cause of the petition was no longer relevant. As a result, the petition was disposed of, and the interim relief was vacated immediately.

In conclusion, the High Court of Gujarat addressed the challenge to the show cause notice for reopening the income tax assessment for the assessment year 2017-18, ultimately finding in favor of the petitioner due to the completion of assessment without any additions to the income, leading to the disposal of the petition and the vacation of interim relief.