Reassessment proceeding need ot be quashed if there is Non disposal

Reassessment proceeding need ot be quashed if there is Non disposal of objections prior to issuance of the impugned Show Cause Notice (SCN)

30th April 2021

Reassessment proceeding need ot be quashed if there is Non disposal of objections prior to issuance of the impugned Show Cause Notice (SCN)

ORISSA HIGH COURT :- SRI VIRESH HEMANI VERSUS INCOME TAX OFFICER, WARD-3, ROURKELA:- No.- W. P. (C) No. 15305 of 2014

Dated.- April 23, 2021

Short Overview of the case:

Reopening of assessment u/s 147

Non disposal of objections prior to issuance of the impugned Show Cause Notice (SCN)

Observation by Court :

The Court is unable to agree with the above submission on behalf of the Department.

A perusal of the SCN reveals that there is no mention of the Petitioner’s detailed objections given in writing on 8th October, 2013.

In fact, even the counter affidavit filed by the Department is silent on disposal of such objections prior to issuance of the impugned SCN.

Indeed the requirement spelt out by the Supreme Court in GKN Driveshafts [2002 ], that an assessee’s objection to the reopening of the assessment should be disposed of by the Assessing Officer by a speaking order is a mandatory requirement that cannot be dispensed with.

Admittedly this mandatory requirement has not been complied with in the instant case. On this ground alone the re- assessment proceeding is vitiated.

Relying on the decision in Principal Commissioner of Income Tax, Kerala v. N.C. Cables Ltd [2017 DELHI HIGH COURT], Mr. Ray submitted that there was a failure by the competent authority in terms of Section 151 of the IT Act to authorize the reopening of the assessment.

Factually, the above position has not been able to be disputed by Mr. Mohapatra, learned Standing Counsel on behalf of the Department. Indeed the impugned letter dated 10th / 20th May, 2013 issued by the Joint Commissioner of Income Tax, Rourkela Range, to the ITO simply states ‘Approval is hereby accorded u/s. 151(2) of the I.T. Act, 1961 for initiation of proceeding u/s. 147 of the I.T. Act, 1961 in the case of Sri Viresh Hemani’.

There is no indication of any application of mind by the authority.

Moreover, the approval under Section 151 of the Act had to be granted by the Principal Chief Commissioner, or the Chief Commissioner, or the Principal Commissioner, or the Commissioner, if the reopening is beyond four years.

However, the above approval in the instant case was issued by the Joint Commissioner and therefore, it was not a valid approval under Section 151 of the IT Act.

Decided in favour of assessee

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