2024 (10) TMI 1095 - HC - Income Tax

Reopening of assessment - One of the allegations was that the petitioner had transactions with the entities that were engaged in the practice of availing/issuing bogus sale/purchase bills - HELD THAT -Petitioner replied to the aforesaid notice furnishing certain details. He stated that the income from the interest had not escaped assessment as the same was brought to tax. He also filed a copy of the return which reflected that the interest received by the petitioner was included in his total income had been assessed to tax. AO has proceeded to pass the impugned order which is, in effect, is a substantial reproduction of the said notice. The impugned order also indicates that the AO has not considered the petitioner s response that the interest, which according to the AO had escaped assessment, had been assessed to tax. This clearly indicates that the AO did not apply his mind to the reply furnished by the petitioner. The impugned order is set aside and the matter is remanded to the AO for considering the petitioner s reply afresh and to pass a reasoned order within a period of four weeks from date, after making necessary inquiries, in accordance with law. In so far as the petitioner s challenge to the jurisdiction of the AO is concerned, the said issue is pending for consideration before this Court in a batch of matter. Notwithstanding the same, this Court has not considered it apposite to interdict the proceedings. This Court directs that the proceedings as initiated by issuance of the said notice for the AY 2018-19 shall continue, however, the same would be subject to any order that may be passed in the batch of matters with regard to the jurisdiction of the AO to initiate the proceedings and to re-assess the income after issuance of the notification.The petition is disposed of in the aforesaid terms. Pending applications, also stands disposed of.

Summary

Issues:
1. Validity of order passed under Section 148A (d) of the Income Tax Act, 1961.
2. Jurisdiction of the Assessing Officer to initiate re-assessment proceedings after a specific notification.

Analysis:

Issue 1: Validity of Order under Section 148A (d):
The petitioner challenged an order dated 31.08.2024 passed under Section 148A (d) of the Income Tax Act, 1961, initiating re-assessment proceedings for the assessment year 2018-19. The petitioner contended that the order was passed without considering their reply and that the Assessing Officer (AO) lacked jurisdiction to initiate the proceedings post a specific Central Board of Direct Taxes notification. The court found merit in the petitioner's claim that the AO did not adequately consider the petitioner's response before passing the impugned order. Despite the petitioner's submission that the income in question had already been assessed to tax, the AO failed to acknowledge this fact. Consequently, the court set aside the impugned order and remanded the matter to the AO for a fresh consideration of the petitioner's reply within a specified timeframe.

Issue 2: Jurisdiction of the Assessing Officer:
Regarding the jurisdiction of the AO to initiate re-assessment proceedings post the notification dated 29.03.2022, the court noted that this issue was pending consideration in a batch of matters. However, the court decided not to halt the ongoing proceedings based on this ground. The court directed that the proceedings initiated for the assessment year 2018-19 would continue, subject to any future orders in the batch of matters concerning the AO's jurisdiction. The court preserved the petitioner's rights and contentions on this matter for future consideration. Ultimately, the petition was disposed of in the mentioned terms, and any pending applications were also resolved accordingly.