2017 (1) TMI 1032 - HC - Income Tax

Validity of reopening of assessment - objections not been dealt with on merits by the Assessing Officer - Held that - It is not in dispute that even against the reasons recorded by the present Assessing Officer namely Shri M. Anand Kumar the petitioner assessee did submit the objections vide communications dated 06.09.2016 and 18.10.2016. However the same has not been dealt with on merits by the Assessing Officer who has issued the impugned notice under Section 148 of the Act on the ground that the same are submitted belatedly. However, it is not in dispute that till 06.09.2016 and 18.10.2016 the Assessing Officer had not finalized the reassessment proceeding. Therefore, the Assessing Officer ought to have considered and disposed of the objection on merits, which the Assessing Officer is bound to dispose of. Under the circumstances, present petition is disposed of at this stage by directing the Assessing Officer to consider the objections submitted by the petitioner submitted vide communications dated 06.09.2016 and 18.10.2016 and dispose of the same on merits and pass a speaking order, before finalizing and / or passing any order on reassessment - Decided in favour of assessee

Summary

Issues:
Petition to quash notice under Section 148 of Income Tax Act for reopening assessment for AY 2011-12; Two sets of reasons recorded for reopening assessment; Objections raised by petitioner-assessee on reasons recorded; Failure to consider objections on merits; Directions for Assessing Officer to consider and dispose of objections; Timeframe for challenging notice and order on objections.

Analysis:
The petitioner filed a petition under Article 226 seeking to quash the notice under Section 148 of the Income Tax Act for reopening the assessment for AY 2011-12, alleging that income chargeable to tax had escaped assessment. The court noted that two sets of reasons were recorded for reopening the assessment, by different Assessing Officers. The court directed that the reasons recorded by the present Assessing Officer should be considered, and the department was permitted to withdraw the reasons recorded by the earlier Assessing Officer.

Regarding the objections raised by the petitioner on the reasons recorded, it was observed that the objections were submitted in a timely manner, before the finalization of reassessment proceedings. The Assessing Officer, however, had not dealt with the objections on merits, citing belated submission. The court emphasized that the Assessing Officer is obligated to consider and dispose of objections on merits before finalizing any order on reassessment, citing relevant legal precedents.

The court disposed of the petition by directing the Assessing Officer to consider the objections submitted by the petitioner and pass a speaking order on merits before finalizing any order on reassessment. It was further directed that a reasonable time should be given to the assessee to challenge the notice and the order disposing of objections. If the decision on objections is against the petitioner, the Assessing Officer was instructed not to pass any final reassessment order for a period of two weeks from the date of intimation of the order.

The court made it clear that the petitioner would have the right to challenge the reopening notice on available grounds if the decision on objections was unfavorable. With these directions and observations, the court disposed of the petition, ensuring that the Assessing Officer follows due process in considering objections and finalizing reassessment orders.