2022 (9) TMI 1253 - HC - Income Tax

Reopening of assessment u/s 147 - Necessity of discharging objections - primary grievance of the petitioner is that instead of disposing the objections raised by the petitioner against the re-opening notice, notice came to be issued by the respondent under section 142(1) in relation to the reopening proceedings in respect of the year under consideration - HELD THAT - This petition is disposed of by directing the competent authority of the respondent Income Tax authority to consider the objections filed by the petitioner to the re-opening notice under section 148 of the Act within a period of eight weeks from the date of receipt of the order on its own merits and in accordance with law. As clarified that this court has not gone into the merits of the case of the either side and nor has expressed anything on merits.

Summary

Issues involved:
1. Challenge against notice under section 148 of the Income Tax Act, 1961 seeking to reopen assessment for Assessment Year 2015-2016.
2. Allegation of large cash deposits by the petitioner trust during the year under consideration.
3. Grievance regarding issuance of notice under section 142(1) without disposing of objections against the reopening notice.

Detailed Analysis:
Issue 1:
The petitioner, a charitable trust, challenged a notice dated 31.3.2021 issued by the Assessing Officer under section 148 of the Income Tax Act, seeking to reopen the assessment for the Assessment Year 2015-2016. The petitioner had filed its return of income with 'Nil' income declared, which was selected for scrutiny assessment. The assessment was completed under section 143(3) without disturbing the return. However, the respondents issued the impugned notice for reopening based on large cash deposits made by the petitioner trust during the year. The petitioner objected to the reopening, stating it was unjustified.

Issue 2:
The crux of the reason for reopening was the large cash deposits made by the petitioner trust during the year, as per information received by the department. The petitioner responded to the notices, raising objections to the reopening. The primary grievance was that the objections were not disposed of before the issuance of subsequent notices under section 142(1) in relation to the reopening proceedings. The petitioner argued that the impugned notice should not have been issued without considering the objections raised.

Issue 3:
The petitioner's grievance was addressed by the court, directing the competent authority of the Income Tax department to consider the objections filed by the petitioner within eight weeks from the date of the order. The court clarified that it did not delve into the merits of the case and kept all contentions open for the parties to raise before the authority. The petition was disposed of, with the rule made absolute in the specified terms, ensuring the objections are considered within the stipulated time frame.

This judgment highlights the importance of due process and the need for authorities to consider objections raised by taxpayers before taking further action in reopening assessments. The court's intervention aimed to ensure a fair and lawful assessment process, maintaining the rights of the petitioner while upholding the principles of natural justice.