2022 (11) TMI 204 - HC - Income Tax

Validity of reopening of assessment - second notice issued u/s 148 during the pendency of reassessment proceedings - non-disposal of petitioner s objections - HELD THAT - it is settled law that during the subsistence of a reassessment proceedings, another reassessment notice cannot be issued for the same assessment year. See CIT v. Sanjay Kumar Garg 2015 (9) TMI 390 - DELHI HIGH COURT if an assessment is pending either by way of original assessment or by way of reassessment proceedings, the Assessing Officer cannot issue a notice under Section 148 but if no proceedings are pending either by way of original assessment or by way of reassessment, he can issue a notice under Section 148 within the time mentioned This Court is further in agreement with the submission of the learned counsel for the Petitioner that non-disposal of petitioner s objections dated 22nd July, 2021, was contrary to the law laid down by the Supreme Court in the case of M/S GKN Driveshafts (India) Ltd. 2002 (11) TMI 7 - SUPREME COURT This Court, is also in agreement with the contention of the learned counsel for the Petitioner that there has been a violation of principles of natural justice inasmuch as the Petitioner was not given a reasonable opportunity to respond to the statement of Sh. Kewal Krishna Arora shared by the AO with the petitioner on 25th March, 2022. The impugned second notice issued under Section 148 of the Act during the pendency of reassessment proceedings as well as the consequential notices dated 18 th May, 2022 and 23rd May, 2022 are quashed.

Summary

Issues:
1. Challenge to notice under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14.
2. Jurisdiction of Assessing Officers issuing reassessment notices.
3. Disposal of objections before passing assessment order.
4. Sharing of crucial information with the petitioner.
5. Violation of principles of natural justice.
6. Legal implications of issuing multiple reassessment notices.
7. Compliance with Supreme Court judgments on assessment proceedings.

Issue 1: Challenge to notice under Section 148:
The petitioner challenged the notice dated 15th May, 2020, issued under Section 148 of the Income Tax Act, 1961, for the Assessment Year 2013-14, along with reasons for reopening and approval granted by Respondent No.2. The petitioner also contested the assessment order, demand notice, and penalty imposition proceedings initiated subsequently.

Issue 2: Jurisdiction of Assessing Officers:
The petitioner raised concerns regarding the jurisdiction of the Assessing Officers issuing reassessment notices. It was argued that two reassessment notices were served simultaneously by different Assessing Officers, leading to a dispute over the Jurisdictional Assessing Officer. The petitioner contended that the assessments were conducted without following proper jurisdictional protocols.

Issue 3: Disposal of objections:
The petitioner objected to the assessment order dated 30th March, 2022, highlighting that their objections raised in a letter dated 22nd July, 2021, were not addressed before passing the assessment order. This non-disposal of objections was argued to be in violation of legal precedents, specifically referencing the Supreme Court's ruling in M/S GKN Driveshafts (India) Ltd case.

Issue 4: Sharing of crucial information:
The petitioner emphasized the importance of sharing relevant information, specifically mentioning the failure to provide a copy of a statement relied upon by the Assessing Officer before the conclusion of the personal hearing. The petitioner raised concerns about the timing and manner in which the information was shared, alleging procedural irregularities.

Issue 5: Violation of principles of natural justice:
The petitioner contended that there was a violation of principles of natural justice as they were not given a reasonable opportunity to respond to crucial information shared by the Assessing Officer. The lack of a fair opportunity to address the shared statement was highlighted as a breach of procedural fairness.

Issue 6: Legal implications of issuing multiple reassessment notices:
The Court referred to legal precedents and established principles regarding the impermissibility of issuing multiple reassessment notices for the same assessment year during ongoing reassessment proceedings. Citing relevant judgments, the Court emphasized the need for adherence to statutory limitations on issuing such notices.

Issue 7: Compliance with Supreme Court judgments:
The Court upheld the petitioner's arguments regarding the non-disposal of objections and the violation of natural justice principles. Quashing the second notice issued during ongoing reassessment proceedings, the Court remanded the matter for fresh assessment, directing the Assessing Officer to decide on objections in compliance with the Supreme Court's guidelines within a specified timeframe. The Court emphasized the importance of following legal precedents and ensuring procedural fairness in assessment proceedings.