2022 (5) TMI 1033 - HC - Income Tax

Validity of Reopening of assessment u/s 147 - change of opinion - HELD THAT - AO concerned has rightly proceeded with the impugned reassessment proceeding and passed the impugned assessment order. In my considered opinion none of the judgments cited by the petitioner is applicable to the instant case in view of exceptional facts and circumstances involved in this Writ Petition which have been elaborately discussed above in detail. Judgment of the Hon ble Supreme Court in the case of GKN Driveshafts 2002 (11) TMI 7 - SUPREME COURT upon which petitioner has relied, in the facts and circumstances of the case is not applicable to the present case and rather it goes against the petitioner since in the said judgment, ratio is that the Assessing Officer will be bound to furnish the recorded reasons which he had done in this case while the petitioner after receipt of the recorded reason himself had chosen not to file any objection immediately against the impugned notice as per the decision in the case of GKN Driveshafts (supra) and as such question of disposal of petitioner s objection against the impugned notice under Section 148 of the Act before issuance of notice under Section 142 (1) of the Act does not arise and the Assessing Officer after not receiving any objection, having no option, has rightly proceeded with the impugned reassessment proceedings by issuing notices under Section 142 (1) of the Act from time to time and the petitioner himself actively participated in the impugned assessment proceedings by complying with the aforesaid notices under Section 142 (1) of the Act and petitioner himself repeatedly requested the Assessing Officer to complete the impugned reassessment proceeding under Section 147 of the Act which are all matters of record, has rightly completed the assessment and passed the final assessment order which is appealable under the statute. - Decided against assessee.

Issues Involved:
1. Validity of the notice under Section 148 of the Income Tax Act, 1961.
2. Compliance with guidelines laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Pvt. Ltd. case.
3. Petitioner's conduct and participation in the reassessment proceedings.
4. Applicability of judgments cited by the petitioner.

Issue-Wise Detailed Analysis:

1. Validity of the notice under Section 148 of the Income Tax Act, 1961:
The petitioner challenged the notice dated 26th March 2021 under Section 148 and the final assessment order dated 31st March 2022 under Sections 147/143(3) of the Income Tax Act, 1961. The petitioner received the notice on 26th October 2021 and filed a return on 9th October 2021. The petitioner’s authorized representative requested the recorded reason for the notice, which was furnished on 26th October 2021. The petitioner did not object to the notice and instead requested the Assessing Officer to complete the reassessment proceedings. The petitioner complied with subsequent notices under Section 142(1) without challenging the legality of the Section 148 notice.

2. Compliance with guidelines laid down by the Hon'ble Supreme Court in GKN Driveshafts (India) Pvt. Ltd. case:
The petitioner argued that the final assessment order was passed without disposing of his objections to the notice under Section 148, thus violating the guidelines in GKN Driveshafts (India) Pvt. Ltd. The Court noted that the petitioner did not file any objections immediately after receiving the recorded reason, as required by the GKN Driveshafts case. The Assessing Officer proceeded with the reassessment due to the absence of objections and the petitioner’s active participation in the proceedings.

3. Petitioner's conduct and participation in the reassessment proceedings:
The Court observed that the petitioner actively participated in the reassessment proceedings by complying with multiple notices under Section 142(1) and repeatedly requesting the Assessing Officer to complete the reassessment. The petitioner changed his authorized representative, who for the first time objected to the reassessment on 11th February 2022, nearly nine months after receiving the recorded reason. The Court held that the petitioner’s conduct indicated a waiver of the right to object to the notice under Section 148.

4. Applicability of judgments cited by the petitioner:
The petitioner relied on several judgments, including GKN Driveshafts (India) Pvt. Ltd., Techspan India Pvt. Ltd., and Fast Finance (P.) Ltd. The Court found these judgments inapplicable due to the exceptional facts and circumstances of the case. The Court emphasized that in GKN Driveshafts, the Assessing Officer is bound to furnish recorded reasons, which was done in this case. The petitioner’s failure to object immediately after receiving the recorded reasons distinguished this case from the cited judgments.

Conclusion:
The Court dismissed the writ petition, holding that the Assessing Officer rightly proceeded with the reassessment and passed the final assessment order. The petitioner’s conduct of actively participating in the reassessment proceedings without filing timely objections invalidated his challenge to the notice under Section 148. The judgments cited by the petitioner were deemed inapplicable due to the unique facts of the case. The final assessment order is appealable under the statute, and the writ petition was not entertained.

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