2022 (3) TMI 1244 - HC - Income Tax

Reopening of assessment u/s 147 - entitled to the benefit of Section 80P - Writ petitioners submitted that in view of the change in scenario, the respondents / co-operative societies are inclined to appear before the assessing officer, by submitting their explanations and seek the reason for issuance of the notices u/s 148 of the Act and thereafter, act upon in the manner known to law - HELD THAT - We are not inclined to interfere with the order impugned herein. However, the appellant shall submit the reasons for reopening the assessment under section 148 of the Act, within a period of two weeks from the date of receipt of a copy of this judgment. On receipt of the same, the respondents / co-operative societies shall file their objections to the notices issued u/s 148, within a period of four weeks. Thereafter, the appellant shall consider the same and pass appropriate orders, in the manner known to law, as expeditiously as possible.

Issues:
Challenging notices under section 148 of the Income Tax Act, 1961 and subsequent replies issued by the appellant, interpretation of Section 80P of the Act for Primary Agricultural Cooperative Societies, impact of Division Bench judgment on cooperative societies' entitlement to Section 80P benefits, compliance with Supreme Court directives regarding reopening of assessments, and the proper course of action for the noticee upon receiving a notice under Section 148.

Analysis:

1. Challenging Notices under Section 148 and Subsequent Replies:
The respondents, being Primary Agricultural Cooperative Societies, challenged the notices dated 28.03.2019 under section 148 of the Income Tax Act, 1961, and the consequential replies dated 07.05.2019 issued by the appellant. The respondents contended that they are entitled to claim deduction under section 80P of the Act due to their status. Despite submitting relevant documents, the appellant rejected their explanations and demanded substantial tax amounts. This led to the filing of statutory appeals before the Commissioner of Income Tax (Appeals), Coimbatore, and subsequent writ petitions to quash the notices.

2. Interpretation of Section 80P for Cooperative Societies:
The judgment highlighted the significance of Section 80P of the Act, which allows cooperative societies to claim deductions. The Division Bench of the Court had previously ruled in Tax Case Appeal Nos.484 to 487 and 490 of 2016 that cooperative societies are indeed entitled to the benefits under Section 80P. However, the Revenue challenged this decision by filing a Special Leave Petition (SLP) before the Supreme Court, leading to a pending appeal. The respondents' entitlement to Section 80P benefits was a crucial aspect of the case.

3. Compliance with Supreme Court Directives:
In consideration of the pending SLP filed by the Revenue challenging the Division Bench's judgment, the learned Judge issued directions to keep all impugned notices in abeyance until the disposal of the SLP by the Supreme Court. The order specified the course of action based on the outcome of the SLP, ensuring that the rights of both the assessees and the Revenue are protected depending on the Supreme Court's decision.

4. Proper Course of Action for Noticee under Section 148:
Referring to the decision in GKN Driveshafts (India) Ltd. v. Income-tax Officer, the appellant emphasized the proper course of action for a noticee upon receiving a notice under Section 148. It was highlighted that the noticee should file a return and seek reasons for the notice, following which the Assessing Officer must provide reasons and address any objections raised by the noticee. Failure to follow this procedure could impact the assessment process.

5. Outcome and Compliance with Court Directions:
The judgment concluded by directing the appellant to provide reasons for reopening the assessments under section 148 within two weeks and allowing the respondents to file objections within four weeks thereafter. The appellant was instructed to consider these objections and proceed with the assessment in accordance with the law promptly. The decision aimed to ensure procedural fairness and compliance with legal requirements in the assessment process.

Overall, the judgment addressed the legal complexities surrounding the notices issued under Section 148, the entitlement of cooperative societies to Section 80P benefits, compliance with court directives, and the proper procedural steps to be followed by both the noticee and the Assessing Officer in such cases.

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