2018 (3) TMI 673 - HC - Income Tax

Reopening of assessment - reasons recorded in support of the impugned notice relied upon information which the Assessing Officer had claimed to have received from some source (without declaring the source) or giving relevant portion of information received - Held that - Without examining the other contention raised on behalf of the Petitioner, in the present facts, it would be in the interest of justice that the impugned order dated 20.11.2017 disposing of the objections is set aside and the Petitioner is given an opportunity to file his objections afresh in the context of the material now available (relied upon by the Revenue). As the Petitioner, states that they would file their fresh objections within two weeks from today. The Assessing Officer would pass fresh order after considering the fresh objections filed by the Petitioner, within a period of four weeks after filing of the objections. Thereafter the Assessing Officer will not act upon the impugned notice for a period of four weeks of communication of the order on objections, if it is adverse to the Petitioner.

Summary

Issues:
Challenge to notice under Section 148 of the Income-Tax Act, 1961 for reopening assessment for the Assessment Year 2010-2011 based on lack of disclosure of information source and relevant documents in the reasons provided.

Analysis:
The petition challenged a notice dated 31.3.2017 issued under Section 148 of the Income-Tax Act, 1961, seeking to reopen the assessment for the Assessment Year 2010-2011. The petitioner contended that the reasons for the notice did not disclose the source of information or provide relevant portions of information received, as required by guidelines set by the Delhi High Court in a previous case. The Revenue later sought to rely upon a report received from the Assistant Director of Income-Tax (Investigation), which was annexed to the affidavit-in-reply. However, the petitioner had not been given an opportunity to present objections in light of this communication, forming the basis of the reasons provided.

During the hearing, the learned counsel for the Revenue referred to a CBDT Circular dated 10.1.2018, which outlined the manner in which reopening notices should be issued. The Circular emphasized the need for reasons to mention details of the relied-upon documents. Since the facts were not disputed, the court set aside the order disposing of the objections and granted the petitioner an opportunity to file fresh objections considering the material now available. The petitioner agreed to file fresh objections within two weeks, and the Assessing Officer was directed to pass a fresh order within four weeks after receiving the objections. The Assessing Officer was also instructed not to act upon the impugned notice for four weeks after communicating the order on objections, if adverse to the petitioner.

Considering the time frame for completing the assessment for the Assessment Year 2010-2011 had expired, a stay had been granted on the assessment proceedings. To allow for the necessary procedures, a stay of the impugned notice was granted for a period of ten weeks from the date of the judgment. The petition was disposed of with all contentions of the parties expressly kept open for future consideration.