2023 (2) TMI 126 - HC - Income Tax

Reopening of assessment u/s 147 - challenge the non-following of the mandatory requirement of disposing of the objections raised by it - HELD THAT - Fact remains that the base order, which is in challenge before the Appellate Authority, is passed without following the required procedure of law and in complete breach of directions issued by the Hon ble Apex Court in GKN Drive Shafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT . Noticing the fact that much water has flown after the objections were raised against the notice of reopening was issued and as the petitioner is already before the Appellate Authority, this Court does not deem it appropriate and detain this petition, as the petitioner cannot ride on two horses. Without entering into the merits of the matter, the Appellate Authority is surely to consider all aspects, including the one which has been raised before this Court. In view of above, this petition is rejected. It is clarified that disposal of this petition, in no manner, shall prejudice the rights of the petitioner.

Summary

Issues:
Petition seeking writ of mandamus and/or certiorari to quash notice and assessment order for assessment year 2013-14 on grounds of being arbitrary, discriminatory, and in violation of natural justice. Reassessment notice under Section 147 for claim of service tax on export sales commission and buyback of equity shares. Non-disposal of objections in accordance with guidelines laid down in GKN Drive Shafts case. Challenge to assessment proceedings and demand notice under Section 156 for not following mandatory requirement of disposing objections.

Analysis:
1. The petitioner, engaged in manufacturing and trading, filed its return for assessment year 2013-14 and faced scrutiny with a detailed questionnaire in 2015. During the scrutiny assessment, an oral query regarding service tax on export sales commission was raised, but no addition was made. The petitioner later received a notice for reassessment under Section 147, objecting to the reopening beyond the four-year period and alleging a mere change of opinion after issues were already addressed in the original assessment proceedings.

2. Subsequently, a notice was issued due to the non-response of the petitioner, citing failure to dispose of objections in line with the GKN Drive Shafts case guidelines. Assessment proceedings were completed, leading to a show-cause notice and a demand under Section 156. The petitioner approached the Court challenging the failure to address objections properly and alleging a breach of procedural requirements and Supreme Court directions.

3. The Court, after hearing the petitioner's advocate, noted that an appeal had been filed by the petitioner to protect their rights. However, the Court observed that the base order being challenged before the Appellate Authority was passed without following due procedure and in breach of legal directions. The Court declined to intervene further, stating that the petitioner cannot pursue both the petition and the appeal simultaneously. The matter was left for the Appellate Authority to consider comprehensively, including the issues raised in the petition.

4. Consequently, the Court rejected the petition, emphasizing that the decision does not prejudice the petitioner's rights. The Court's ruling clarified that the dismissal of the petition does not hinder the petitioner's ability to pursue remedies through the Appellate Authority, which is tasked with examining all aspects, including those brought before the Court.