Reopening can be done based on audit opinion even if query was raised during assessment proceedings: Bombay HC
Bombay High Court in the case of Sanjay Patel WP 31458/2024 has held that reopening can be done based on audit opinion even if query was raised during assessment proceedings.
Let us have a Short Overview of the case:
This writ petition filed by Sanjay Patel challenging the reopening of the assessment for the year 2017-18 based on an audit objection. The court dismissed the petition, noting that the petitioner did not file the reply on time and did not provide the necessary attachments to support the claim as well as the petitioner has alternate remedies available to raise these objections.
In this case, the petition challenges an order passed under Section 148A(d) and a notice under Section 148 of the Act, both dated 28 March 2024, for AY 2017-18.
The petitioner filed his return of income for AY 2017-18 on 3 August 2017, which was selected for scrutiny to examine the claim of deduction under Section 57 of the Act.
An assessment order under Section 143(3) was passed on 24 December 2019, accepting the returned income.
A notice under Section 148A(b) was issued on 16 March 2024, requesting the petitioner to submit a reply along with supporting documents by 25 March 2024.
The petitioner did not file the reply by the due date but submitted it via email on 27 March 2024, after the expiry of the time allowed.
An order under Section 148A(d) was passed on 28 March 2024, along with a notice under Section 148 for reopening the case.
Arguments and Submissions:
The petitioner argued that the issue for which reopening is sought was examined during the regular assessment proceedings, and reopening based on an audit objection would amount to a change of opinion, which is not permissible under the Act.
The petitioner relied on several decisions, including Mira Bhavin Mehta Vs ITO, Knight Riders Sports Pvt. Ltd Vs ACIT, and Dilip Laximan Powar Vs ITO.
The respondents defended the impugned proceedings by relying on Explanation-1 to amended Section 148 of the Act and argued that the judgments relied upon by the petitioner are distinguishable on facts.
Key Findings and Decisions:
The court noted that the petitioner did not file the reply to the show cause notice on or before 25 March 2024 and did not seek an extension.
The court observed that the petitioner had not annexed the attachments to the emails or letters filed during the assessment proceedings or to the belated reply filed to the show cause notice.
The court held that in the absence of any attachments, it could not examine the issue raised by the petitioner in the reply.
The Kerala High Court in case of Sree Narayana Guru Memorial Educational and Cultural Trust v ACIT observed that post amendment reopening can be done based on audit opinion even if query was raised during assessment proceedings.
The court also noted that the petitioner had alternate remedies under the Act and dismissed the petition with no order regarding costs.
The Copy Of the order is as under:
