2016 (3) TMI 759 - HC - Income Tax

Validity of reopening of assessment - reasons in support of the impugned notice as furnished to the Petitioner were different from the reasons for which the sanction was received from the Joint Commissioner of Income - Held that - The impugned order disposing of the objections of the Petitioner are set aside. The Assessing Officer would furnish to the Petitioner the reasons in support of the impugned notice which had been sanctioned by the Joint Commissioner of Income Tax on 31st March 2015 within a period of two weeks from today. On receipt of the sanctioned reasons in support of the impugned notice, the Respondents would, if they so desire, file their objections within one week of it being served upon them. If objections as above are filed, the Assessing Officer shall dispose of the objections within a further period of 3 weeks. In the event the Assessing Officer rejects the objections, he will not proceed with / commence reassessment proceedings for a period of four weeks from the date of the service of the order rejecting of the objections. The assessment proceedings in the case of the petitioner for Assessment Year 2008-09 are stayed for a period of twelve weeks from today

Summary

Issues:
1. Discrepancy in reasons for impugned notice and sanction received from Joint Commissioner of Income Tax.
2. Setting aside impugned order disposing of petitioner's objections.
3. Directing Assessing Officer to furnish sanctioned reasons to petitioner and allowing filing of objections.
4. Stay of assessment proceedings for Assessment Year 2008-09.
5. Exclusion of time to prevent reassessment proceedings from becoming time-barred.

Analysis:

The High Court of Bombay addressed the issue of a significant discrepancy between the reasons for the impugned notice and the sanction received from the Joint Commissioner of Income Tax. The court noted that the reasons provided to the petitioner differed from those for which the sanction was obtained. Consequently, the court set aside the impugned order disposing of the petitioner's objections. The Assessing Officer was directed to provide the petitioner with the sanctioned reasons within two weeks, allowing the respondents to file objections within one week of receiving the reasons. Subsequently, the Assessing Officer was instructed to dispose of any objections within three weeks. If objections were rejected, reassessment proceedings were prohibited for four weeks from the date of the order rejecting the objections.

Furthermore, the court granted a stay on the assessment proceedings for the petitioner for the Assessment Year 2008-09 for a period of twelve weeks. It was clarified that the four-week period following the rejection of objections was included in the twelve-week stay to prevent the reassessment proceedings from becoming time-barred under section 153(2) of the Act. This exclusion of time aimed to ensure that the proposed reassessment proceedings could proceed without being constrained by statutory limitations.

In conclusion, the High Court disposed of the petition in the mentioned terms, emphasizing that no costs were to be awarded. The judgment provided a clear framework for addressing the discrepancies in reasons, ensuring due process in the objections and reassessment proceedings, and safeguarding against time constraints that could hinder the assessment process.