2024 (1) TMI 1296 - HC - Income Tax

Validity of reopening of assessment - reasons provided for reopening, post issuance of notice u/s 148 was incomplete reasons as it appears from the reasons annexed to the approval u/s 151 of the Act - as stated that these reasons with the approval under Section 151 of the Act was made available to petitioner on 15th February 2022 just a day before the impugned order dated 16th February 2022 disposing petitioner's objections was passed. HELD THAT - We have also compared the reasons that were made available to petitioner vide communication dated 30th April 2021 and the reasons annexed to the approval u/s 151 of the Act. What was made available was incomplete. Therefore, we are satisfied that petitioner was not given an opportunity to effectively deal with the reasons to believe that there was escapement of income for Assessment Year 2013-2014. Therefore, we hereby quash and set aside the impugned order and remand the matter for denovo consideration. The assessment order dated 25th March 2022 also is hereby quashed and set aside. Petitioner shall file detailed objections to the notice issued u/s 148 of the Act.

Summary

Issues:
1. Incomplete reasons for reopening post issuance of notice under Section 148 of the Income Tax Act, 1961.
2. Lack of opportunity for the petitioner to effectively raise objections to the reopening.
3. Comparison of reasons provided to petitioner and those annexed to the approval under Section 151 of the Act.
4. Quashing of the impugned order and remand for denovo consideration.
5. Quashing of the assessment order dated 25th March 2022.
6. Directions for the petitioner to file detailed objections and request documents relied upon in the reasons.
7. Requirement for the Assessing Officer to pass a reasoned order after considering petitioner's objections.
8. Granting of personal hearing to the petitioner before passing any order.

Analysis:

The main ground in the petition was the incompleteness of the reasons provided for reopening post the issuance of a notice under Section 148 of the Income Tax Act, 1961. The Court noted that the reasons made available to the petitioner were incomplete, leading to a lack of opportunity for the petitioner to effectively deal with the reasons for believing there was an escapement of income for a specific assessment year. Consequently, the Court quashed the impugned order dated 16th February 2022 and remanded the matter for denovo consideration. Additionally, the assessment order dated 25th March 2022 was also quashed and set aside.

Upon comparing the reasons provided to the petitioner with those annexed to the approval under Section 151 of the Act, the Court found that what was made available to the petitioner was incomplete. This further supported the conclusion that the petitioner was not given a fair opportunity to address the reasons for the alleged income escapement. As a result, the Court directed the petitioner to file detailed objections to the notice issued under Section 148 of the Act and allowed the petitioner to request documents relied upon in the reasons within a specified timeframe.

The Court outlined a detailed procedure for the Assessing Officer to follow after the petitioner files objections, emphasizing the need for a reasoned order to dispose of the objections in accordance with the law. The Assessing Officer was instructed to address every point raised by the petitioner and grant a personal hearing with advance notice before passing any order. The Court set a deadline for the conclusion of the proceeding to ensure timely resolution of the matter, indicating that the proceeding should be concluded on or before 30th April 2024.

Finally, the Court clarified that it had not made any observation on the merits of the matter, focusing solely on procedural irregularities and the petitioner's right to a fair opportunity to address the reasons for reopening. The petition was disposed of in light of the above directions and findings.